Daily Morning Report

Tuesday, April 2–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Asian and European stock indexes were mixed to slightly up in quieter trading overnight, following Monday’s good gains. U.S. stock indexes are pointed toward steady to mixed openings when the New York day session begins. The U.S. indexes are at or near their recent multi-month highs and are enjoying solid price uptrends on the charts.

In overnight news, Australia’s central bank, the Royal Bank of Australia, left its monetary policy unchanged at the bank’s regular meeting. The RBA did warn that the Aussie economy is not meeting its inflation target and doing so may take a while. This continues a theme of very low, and possibly even problematic, inflation in the major economies of the world. Low inflation is the enemy of raw commodity market bulls.

The World Trade Organization has cut its 2019 world trade growth forecast to 2.6% from 3.7%, mainly due to the U.S.-China trade war. The WTO also said trade growth in 2017 slowed to 3% from 4.6% in 2017.

The Euro zone February producer price index came in at up 0.1% from January and up 3.0%, year-on-year. Those figures were in line with market expectations.

Bitcoin prices made a sudden jump higher in overnight trading, but the reason is unclear.

The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are also higher, hit another 4.5-month high overnight and are trading just above $62.00 a barrel.

U.S. economic reports due for release Tuesday include the weekly Goldman Sachs and Johnson Redbook retail sales reports, durable goods orders, the ISM New York report on business, and domestic auto industry sales.

–Jim

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Monday, April 1–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

On this first day of the second quarter, Asian and European stock indexes were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Risk appetite in the world marketplace remains elevated to start April.

In overnight news, China got some upbeat manufacturing data to boost Asian shares Monday. The Caixin-Markit China purchasing managers index (PMI) came in at 50.5 in March from 49.2 in February. A reading above 50.0 suggests growth in the sector.

In other overnight news, the Euro zone jobless rate was reported at 7.8% in February, which is unchanged from January and in line with market expectations. The Euro zone March consumer price index came in at up 1.4%, year-on-year, versus up 1.5% in February. The March CPI reading was just a bit below trade expectations, continuing a worldwide theme of very low inflation. Last autumn, notions among many economists and market watchers were growing that inflation was creeping back into the world marketplace, and possibly becoming problematic. Those ideas have all but disappeared now.

Minneapolis Federal Reserve Bank President Neel Kashkari said Monday now is not the time to lower U.S. interest rates. While he said risks to the U.S. economy have increased, Kashkari said the Fed needs more time to see if those risks pan out. He said he is worried about low inflation. Kashkari was interviewed by the Wall Street Journal and is one of the Fed’s more dovish members on U.S. monetary policy.

The key outside markets today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are higher, hit a 4.5-month high overnight and are trading around $60.50 a barrel.

It’s a busy day for U.S. economic reports Monday, including retail sales, the U.S. manufacturing purchasing managers index (PMI), manufacturing and trade inventories, construction spending, the ISM manufacturing report on business, and the global manufacturing PMI.

–Jim

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The U.S. dollar index is a basket of six major world currencies weighted against the greenback. The USDX is a good gauge of the overall health of the U.S. economy. This week the USDX has rallied and its price is close to the multi-month high scored a few weeks ago. The greenback bulls have regained technical power to suggest a challenge of the March high, and even higher. Stay tuned!Gree

Friday, March 29–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Asian and European stock indexes were mostly firmer overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. Today is the last trading day of the week, of the month, and of the quarter, which makes it an extra important trading day from a charts and technical perspective. Traders and investors are exhibiting a bit more risk appetite late this week, which has buoyed world stock markets but has helped to sink the safe-haven gold and silver markets.

The U.S. and China held high-level trade talks in Beijing late Thursday and Friday. U.S. Treasury Secretary Steven Mnuchin said those talks were productive. However, Larry Kudlow, President Trump’s economic advisor, said on Thursday any final U.S.-China trade accord is likely to come months down the road. There is no clear consensus in the marketplace on the eventual outcome of the U.S.-China trade talks, which means that when any final result is announced it is likely to cause at least some volatility in some markets.

The U.K. Parliament is likely to vote Friday on another option offered by Prime Minister Theresa May to break the Brexit deadlock. There are not high expectations for her latest plan to be approved by the MPs. Today is the day the U.K. was set to leave the European Union. May’s options moving forward on the matter are increasingly limited, with speculation of a general election being held in the near future.

The key outside markets today see the U.S. dollar index higher and hitting another 2.5-week high today. The USDX is back near its recent multi-month high. Meantime, Nymex crude oil prices are higher and trading around $60.00 a barrel. Oil prices are still trending higher on the daily bar chart even though price action has been sideways this week.

U.S. economic reports due for release Friday include personal income and outlays, the Chicago ISM business survey, new residential sales and the University of Michigan consumer sentiment survey.

–Jim

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Thursday, March 28–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Asian and European stock indexes were mostly firmer overnight. U.S. stock indexes are pointed toward weaker slightly higher openings when the New York day session begins.

There was more dour economic news coming out of the European Union Thursday, as Euro zone factory export orders fell to a two-year low. The European Commission’s Economic Sentiment indicator—a combination of business and consumer sentiment–fell to 105.5 in March from 106.2 in February, for the lowest reading in 2.5 years.

On the Brexit front, the U.K. Parliament late Wednesday rejected all eight options offered by Prime Minister Theresa May to break the Brexit deadlock. May’s options moving forward on the matter are increasingly limited, with speculation of a general election being held in the near future.

The U.S. and China are holding high-level trade talks that are taking place in Beijing. The key figures were meeting for dinner Thursday evening. There is no clear consensus on the eventual outcome of the U.S.-China trade talks, which means the final result could cause volatility in markets.

The U.S. economic data point of the day is the third reading on fourth-quarter gross domestic product. GDP is seen up 2.2% versus the last 4Q estimate of up 2.6%.

The key outside markets today see the U.S. dollar index higher. Meantime, Nymex crude oil prices are weaker and trading just above $59.00 a barrel.

U.S. economic reports due for release Thursday includes the weekly jobless claims report, the third estimate of four-quarter gross domestic product, the Kansas City Fed manufacturing survey, and pending home sales.

–Jim

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Nymex crude oil futures prices continue to trend higher, including this week briefly pushing above the key $60.00-a-barrel level. The oil market bulls have the firm near-term technical advantage to suggest prices continuing to trend sideways to higher in the near term. This is also good news for other raw commodity markets, given crude oil’s status as the leader of the raw commodity market sector. Stay tuned!