Daily Morning Report

Friday, May 3–Jim Wyckoff’s Morning Markets Report

Asian stock markets were mixed to flat overnight, while European stocks were mostly firmer. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. “Sell in May and go away.” U.S. stock indexes have sold off the first two days in May. That old saying suggests selling stocks in May and not coming back to the buy side until late summer. Such a scenario would be a bullish element for competing classes like raw commodities.

Focus is on this morning’s April U.S. employment report from the Labor Department. That report is expected to show a non-farm payrolls rise of 190,000. However, Wednesday’s very strong ADP jobs gain (up 275,000 versus expectations of up 177,000) has many thinking today’s more important Labor Department jobs number will be higher.

In overnight news, the Eurozone’s April consumer price index was reported up 1.7%, year-on-year, from a reading of up 1.4% in March. Meantime, the March producer price index was up 2.9%, year-on-year, in the Euro zone. The European Central Bank has targeted a rate of around 2% for annual Euro zone inflation.

The World Gold Council is forecasting that world central banks will buy 500 to 600 tons of gold this year, compared to around 400 tons in recent years. However, in 2018 global central banks bought 652 tons. It’s interesting and somewhat ironic that supposedly smart world central bankers continue to buy gold as a store of value, while many supposedly smart financial advisors tell individual investors to shy away from an asset that produces no yield or dividend. It can be argued that owning gold is like having a weapon for personal protection: you don’t need it until you really need it.

The key “outside markets” today see the U.S. dollar index modestly higher. Meantime, Nymex crude oil prices are near steady and trading just below $62.00 a barrel.

Other U.S. economic data due for release Friday includes the advance economic indicators report, the U.S. services PMI, and the ISM non-manufacturing report on business.

–Jim

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The Comex gold futures market remains in a 2.5-month-old downtrend on the daily bar chart and the bears have the overall near-tem technical advantage. That means the path of least resistance for prices will remain sideways to lower until a bullish technical clue surfaces to suggest otherwise. Remember, my daily reports will provide you those early chart clues on price trend changes, or acceleration. Stay tuned!

Thursday, May 2–Jim Wyckoff’s Morning Markets Report

Asian stock markets were mixed to firmer overnight, while European stocks were mixed to weaker. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. U.S. stocks are at or near record and/or multi-month highs scored this week.

Traders and investors are still digesting Wednesday afternoon’s Federal Open Market Committee (FOMC) statement and press conference from Fed Chairman Jerome Powell. While the Fed made no changes in U.S. monetary policy, the statement and Powell’s comments did move markets. The FOMC statement said some members were worried that inflation is too low, which the marketplace initially read as dovish on monetary policy. However, at Powell’s press conference, when asked about worrisome low inflation, he said elements causing present lower inflation are “transitory.” While there is no clear consensus at all on the timing or direction of the next Fed interest rate move, it seems most of the marketplace now feels there is less of a chance the Fed will cut U.S. interest rates anytime soon. That’s because Powell not only said very low inflation was transitory, he was also very upbeat on assessing the U.S. economy’s prospects.

The gold market sunk Wednesday afternoon following the Fed meeting, while the U.S. dollar index rallied off its lows to post modest gains. U.S. Treasury bond and note futures prices initially rallied on the FOMC statement but then lost all those gains after Powell’s remarks. U.S. stocks rallied modestly on the Fed news.

In overnight news, the Bank of England left its monetary policy unchanged at its regular meeting today.

Also, the Euro zone’s April manufacturing purchasing managers index (PMI) came in at 47.9, which was just above expectations but still a downbeat report. A reading below 50.0 suggests contraction in the sector.

Focus will quickly turn to Friday morning’s April U.S. employment report from the Labor Department. That report is expected to show a non-farm payrolls rise of 190,000. However, Wednesday’s very strong ADP jobs gain (up 275,000 versus expectations of up 177,000) has many thinking Friday’s more important Labor Department jobs number will be higher.

The key “outside markets” today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are lower and trading just below $63.00 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, the ISM New York report on business, the global manufacturing PMI, and manufacturers’ shipments and inventories.

–Jim

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Wednesday, May 1–Jim Wyckoff’s Morning Markets Report

Those Asian and European stock markets that were open overnight were mixed in very quiet trading. Most overseas markets in European and Asia were closed for the May Day holiday today. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.

The U.S. economic data highlight of the week is today’s conclusion of the Federal Open Market Committee (FOMC) meeting that began Tuesday morning and ends Wednesday afternoon with a statement and a press conference from Fed Chairman Jerome Powell. No change in U.S. monetary policy is expected at this meeting. However, as usual, the FOMC statement and Powell’s comments will be parsed by the marketplace for clues on the timing of future monetary policy changes, and on inflation prospects.

Another important U.S. economic report released today is the ADP national employment report for April, which is forecast to come in at up 177,000. This report is a precursor to the more important employment situation report from the Labor Department on Friday morning.

The key “outside markets” today see the U.S. dollar index down again on more profit taking after hitting a two-year high last week. Meantime, Nymex crude oil prices are lower and trading around $63.50 a barrel.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the U.S. manufacturing purchasing managers index (PMI), construction spending, the ISM manufacturing report on business, and the weekly DOE liquid energy stocks report.

–Jim

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The Nymex crude oil futures market early this week is recovering from the sharp sell off seen late last week. Bulls are working to keep a price uptrend in place on the daily bar chart. Price action the rest of this week is likely to be extra important for direction in the coming weeks. See the support and resistance lines on the chart. The direction in which prices move above the resistance line or below the support line will likely determine the price trend at least into mid-summer. Stay tuned! Remember, my daily reports will provide you those early chart clues on price trend changes, or acceleration.

Tuesday, April 30–Jim Wyckoff’s Morning Markets Report

Asian and European stock indexes were mixed in more subdued trading overnight. U.S. stock indexes are pointed toward steady to slightly lower openings when the New York day session begins. The U.S. stock indexes are near record or multi-month highs amid solid near-term price uptrends being in place.

In overnight news, the Euro zone reported its gross domestic product growth for the first quarter at 1.5%, year-on-year, which is better than the 0.9% growth rate seen in the fourth quarter and better than forecast. The Euro zone also reported its jobless rate at the lowest level in over 10 years.

The U.S. economic data pace picks up starting today, including the Federal Open Market Committee (FOMC) meeting that begins this morning and ends Wednesday afternoon with a statement and a press conference from Fed Chairman Jerome Powell. No change in U.S. monetary policy is expected at this meeting.

U.S.-China trade talks resume today, with U.S. officials in Beijing. U.S. Treasury Secretary Mnuchin said in an interview late Monday that the talks are near conclusion and could wrap up next week. He added there remains some work to do on the matter, however. Most of the marketplace is fairly optimistic the U.S. and China will reach a trade deal in the coming weeks.

The key “outside markets” today see the U.S. dollar index down on profit taking after hitting a two-year high last Friday. Meantime, Nymex crude oil prices are higher and trading around $64.00 a barrel.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the employment cost index, the S&P-Cash-Shiller home price index, the ISM Chicago business survey, the consumer confidence index, and pending home sales.

–Jim

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