Daily Morning Report

Tuesday, February 5–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly firmer in quieter dealings overnight. Chinese markets and some other Asian markets are closed this week for the Lunar New Year holiday, which could make for quieter trading in world markets most of this week. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.

In overnight news, the Euro zone reported downbeat retail sales in December, at off 1.6% from November and up a paltry 0.8%, year-on-year. The monthly decline was the most in eight years. Meantime, the Euro zone January services purchasing managers index (PMI) came in at a better-than-expected 51.2, which was unchanged from December.

President Trump had dinner with Fed Chairman Jerome Powell and Treasury Secretary Steve Mnuchin at the White House Monday evening, to discuss the U.S. economy—the first time Powell and Trump had a face-to-face conversation since Powell became the Fed chair. Trump had considered firing Powell just a few months ago. Then Powell and the Fed shifted their tenor on U.S. monetary policy to a more dovish stance.

The U.S. highlight of the day will be President Trump’s State of the Union speech in the evening. Many market watchers will want to know what the president says about U.S.-China trade relations. The trade talks appear to be progressing ahead of the early-March deadline for a deal being reached.

The outside markets today see the U.S. dollar index trading higher again. Meantime, Nymex crude oil prices are up and trading just above $55.00 a barrel. Political turmoil in Venezuela, a crude oil exporter, is a bullish element for the oil market.

U.S. economic reports due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the U.S. services PMI, the IBD/TIPP economic optimism index, the ISM non-manufacturing report on business, and the global services PMI.

–Jim

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Monday, February 4–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mixed in quieter dealings overnight. Chinese markets are closed this week for the Lunar New Year holiday, which could make for quieter trading in world markets this week. U.S. stock indexes are pointed toward near steady openings when the New York day session begins.

Traders and investors are in generally upbeat moods early this week, following a strong U.S. jobs report released last Friday, and on ideas the U.S. and China are moving closer to a trade deal as the early-March deadline for an agreement approaches. U.S. and Chinese officials are set to meet again in China in mid-February, after meeting last week in Washington, D.C.

In overnight news, the Euro zone producer price index for December came in at down 0.8% from November and up 3.0%, year-on-year. That’s yet another inflation report from a major world economy that is not at all worrisome.

The outside markets today see the U.S. dollar index trading higher. Meantime, Nymex crude oil prices are slightly up and trading just above $55.00 a barrel.

U.S. economic reports due for release Monday includes the ISN New York report on business, manufacturers’ shipments and inventories, and the employment trends index.

–Jim

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The soybean futures market has been trending higher in choppy fashion since mid-September. The grain market bulls got some good news late Thursday when President Trump said China will buy more U.S. ag products. If soybeans push and close above the resistance line seen on the daily chart, the bulls would gain more power to then begin to suggest an assault on major psychological resistance at $10.00. Stay tuned!

Friday, February 1–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mixed overnight. U.S. stock indexes are also pointed toward mixed openings when the New York day session begins.

The big economic data point Friday’s is the U.S. jobs report for January from the Labor Department. The key non-farm payrolls number is forecast to come in at up 170,000 in the month. Wednesday’s U.S. ADP national employment report came in at up 213,000 in January. That was well above the average trade guess of up 183,000 and hints that the Friday non-farm jobs number could come in stronger than expected. A strong jobs reading today could work to counter the bullish effect many markets experienced following Wednesday’s dovish FOMC statement.

In overnight developments, China got some more downbeat economic news when its unofficial manufacturing purchasing managers index (PMI) came in below expectations. The Chinese manufacturing PMI fell to 48.3 last month. A reading below 50.0 suggests contraction in the sector.

Inflation in the Euro zone remains tame. The European Union Statistics agency reported today the January inflation rate at 1.4%, year-on-year, which is the lowest number in 10 months.

U.S. and China high-level trade talks concluded Thursday, with President Trump late in the day saying they were constructive and China will buy more U.S. products.

The outside markets today see the U.S. dollar index trading slightly lower. Meantime, Nymex crude oil prices are near steady and trading just below $54.00 a barrel.

Other U.S. economic reports due for release Friday includes the U.S. manufacturing PMI, monthly wholesale trade, the University of Michigan consumer sentiment survey, construction spending, the global manufacturing PMI, and domestic auto industry sales.

–Jim

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Thursday, January 31–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly higher overnight. U.S. stock indexes are pointed toward mixed openings when the New York day session begins, following solid gains posted on Wednesday.

Traders and investors are still digesting the Federal Reserve’s Open Market Committee (FOMC) meeting that concluded Wednesday afternoon. The FOMC statement contained no monetary policy changes but the FOMC members said they will now be patient on future Fed rate hikes due to muted inflationary pressures and some concerns about global economic growth. The statement also suggested the Fed will not be in such a hurry to further reduce its balance sheet of U.S. securities. Fed Chairman Jerome Powell said at his press conference that “the case for raising U.S. interest rates has weakened somewhat.” While no change in monetary policy was expected, the FOMC statement was deemed fully dovish on U.S. monetary policy. The U.S. stock market rallied sharply, the U.S. dollar index sold off and gold prices also shot higher.

U.S. and China high-level trade officials are meeting in Washington, D.C, with today scheduled to conclude the meetings. There is no consensus at all on any progress that may or may not be made at this week’s talks. Markets will react to any significant announcements coming out of the meeting.

The next big economic data point is Friday’s U.S. jobs report for January from the Labor Department. The key non-farm payrolls number is forecast to come in at up 170,000 in the month. Wednesday’s U.S. ADP national employment report came in at up 213,000 in January. That was well above the average trade guess of up 183,000 and hints that the Friday non-farm jobs number could come in stronger than expected.

In overnight news, the Euro zone got some more downbeat economic data, as its GDP growth for 2018 was reported at 1.8% versus 2.4% in 2017. However, GDP growth in the fourth quarter was up a bit from that of the third quarter.

The outside markets today see the U.S. dollar index trading near steady following Wednesday’s selling pressure. Meantime, Nymex crude oil prices are slightly lower and trading around $54.00 a barrel.

U.S. economic reports due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the employment cost index, the ISM-Chicago business survey, and new residential sales.

–Jim

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The U.S. dollar index has backed well down from the December high amid choppy trading conditions. Bulls still have the overall near-term technical advantage but price action the past few sessions has favored the bears. In fact, a minor bearish pennant or flag pattern may be forming on the daily bar chart. It’s very likely going to take a fresh geopolitical event to unnerve the marketplace and in turn give the greenback bulls a solid boost. Otherwise, look for more choppy and sideways trading in the USDX in the near term. Stay tuned!