Daily Morning Report

Friday, May 17–Jim Wyckoff’s Morning Markets Report

World stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. News reports out of China late Thursday painted a bleaker picture of the U.S.-China trade discussions, including questioning whether any further talks are scheduled between the world’s two largest economies. This has helped to pressure world stock markets to end the trading week. Also, the U.S. stock indexes have had a very good week after Monday’s sell off. It could be that traders are booking some profits heading into the weekend.

The Chinese yuan continued to depreciate against the U.S. dollar Friday, due to the U.S.-China trade war. European traders are a bit unsettled and the British pound has sold off this week on news that British Prime Minister Theresa May will resign. That’s creating more uncertainty on the Brexit matter. And the Australian dollar continues to wilt against the greenback, with the Aussie hitting lows not seen in around 10 years.

In other overnight news, the Euro zone reported its April consumer price index at up 0.7% from March and up 1.7%, year-on-year. Those numbers were right in line with market expectations.

Simmering on the back burner of the world marketplace this week is rising U.S.-Iran tensions. The U.S. has sent a naval task force to the Persian Gulf and there is talk that President Trump may send thousands more troops to the region. It’s very likely this situation will intensify before it fully plays out.

The key “outside markets” today see the U.S. dollar index slightly higher, while Nymex crude oil prices are also up and trading around $63.50 a barrel.

U.S. economic data due for release Friday includes the University of Michigan consumer sentiment survey and leading economic indicators.

–Jim

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Grain futures prices have made strong rebounds this week, on heavy short covering from the large speculators (funds) and also some bargain hunting. This week’s price action suggests market bottoms are in place and that prices could start to trend up. Weekly closes on Friday that are at or near the weekly highs would be a better clue price uptrends can be sustained. It appears grain traders have factored into prices all the bearish U.S.-China trade news, and are now focused on wet weather in the Corn Belt (and more on the way) that has seriously slowed corn and soybean planting progress—to the point that yields will be impacted negatively. Remember, we are at the beginning of “weather market” season in the grains. If you’d like to read an interesting story on weather markets in the grains, just send me an email at jim@jimwyckoff.com and I’ll attach it and send it back to you. Stay tuned!

Thursday, May 16–Jim Wyckoff’s Morning Markets Report

World stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Following Monday’s downdraft that pushed the U.S. stock indexes to six-week lows, the indexes have made solid recoveries.

There are two markets features this week: rising government bond yields due to concerns about slowing world economic growth. The U.S.-China trade war is mostly to blame for those worries. The second feature is a solid rebound in grain futures prices. That’s mostly due to big speculative funds covering their short futures positions.

On the U.S.-China trade war front, President Trump on Wednesday signed an executive order that essentially bans some U.S. telecommunications equipment from Chinese companies.

A U.S.-China trade theme continues in the world marketplace: one day the two sides are upbeat on a deal getting done; the next day their tone is sour. Such will keep the markets very uncertain on the matter.

The key “outside markets” today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are firmer and trading around $62.50 a barrel.

U.S. economic data due for release today includes the weekly jobless claims report, the Philadelphia Fed business survey, and new residential construction.

–Jim

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Wednesday, May 15–Jim Wyckoff’s Morning Markets Report

World stock markets were mixed overnight, with European indexes mostly down and Asian stocks mostly higher. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.

Traders and investors are somewhat assuaged at mid-week following more upbeat comments from President Trump and China officials Tuesday that suggested the world’s two largest economies want an amenable resolution soon in their trade war.

Economic data coming out of China today showed more decelerating growth. It’s industrial production, retail sales and fixed-asset investment all slowed in April from March and came in below expectations.

The world marketplace at present seems to be overlooking a U.S. military build-up in the Middle East. President Trump is sending 100,000 U.S. troops to the region, to complement the U.S. naval task force steaming to the Persian Gulf. This week’s attacks on two Saudi oil tankers in the Strait of Hormuz showed that tensions in the region are on the rise—namely a U.S.-Iran stare-down.

Meantime, the Euro zone reported its first-quarter GDP at up 0.4% from the fourth quarter of last year and up 1.2%, year-on-year. Those numbers were right in line with market expectations and help to confirm European Union economic growth remains tepid.

The key “outside markets” today see the U.S. dollar index slightly firmer. Meantime, Nymex crude oil prices are lower and trading around $61.00 a barrel.

It’s a very busy day for U.S. economic data releases, including the weekly MBA mortgage applications survey, retail sales, the Empire State manufacturing survey, industrial production and capacity utilization, manufacturing and trade inventories, the NAHB housing index, Treasury international capital data and the weekly DOE liquid energy stocks report.

–Jim

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The Nymex crude oil futures market has seen its price uptrend negated recently, which is a technical clue that a market top is in place. Bulls are working to stabilize the market and have so far been successful, to suggest more sideways and choppy trading in the near term. However, if prices drop below solid chart support at $60.00, more technical damage would be inflicted to suggest a fresh leg down in prices, including a challenge of $50.00 a barrel. Stay tuned!

Tuesday, May 14–Jim Wyckoff’s Morning Markets Report

World stock markets were mixed overnight, with European indexes mostly higher and Asian stocks mostly weaker. U.S. stock indexes are pointed toward higher openings when the New York day session begins. The world stock markets are trying to stabilize following Monday’s rout in the wake of the failed U.S. trade talks and the imposition of new tariffs by the U.S. and China against each other.

There has been technical damage inflicted on U.S. stock indexes to suggest they have put in near-term tops and can now only trade sideways at best for at least the time being.

Many commodity markets have been hit hard by the U.S.-China trade war, including grain and livestock markets that are presently at multi-month or multi-year lows.

The key “outside markets” today see the U.S. dollar index slightly higher. The greenback bulls have faded a bit recently. Meantime, Nymex crude oil prices are higher and trading around $62.25 a barrel. There are technical clues the oil market has put in a near-term top.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index, and import and export prices.

–Jim

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