Daily Morning Report

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!

Wednesday, January 30–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were again narrowly mixed overnight, ahead of key news events to play out this week. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. A negative earnings report from Apple, released late Tuesday, has U.S. investors in a tentative mood today.

The economic highlight at mid-week is the Federal Reserve’s Open Market Committee (FOMC) meeting that began on Tuesday morning and ends Wednesday afternoon with a statement on monetary policy. No change in monetary policy is expected. However, traders want to know if the Fed today will tip its hand regarding the course of monetary policy in 2019. Markets could become active and volatile following the results of the meeting, which includes a press conference by Fed Chairman Jerome Powell after the FOMC statement. Powell is getting a reputation for putting his foot in his mouth while making comments to the press or at speeches.

The U.K. parliament on Tuesday evening backed the “Plan B” Brexit initiative from Prime Minister Theresa May. The Parliament had rejected May’s initial Brexit plan. The British pound was not significantly impacted by the news.

U.S. and China high-level trade officials are meeting in Washington, D.C, on Wednesday and Thursday. There is no consensus at all on any progress that may or may not be made at this week’s talks. The U.S. government this week filed new charges against the high-tech company from China, Huawei. President Trump also plans to speak to the Chinese delegation that is in Washington this week.

The political situation in Venezuela is still very fluid at present, with the potential for civil violence. The U.S. on Monday slapped economic sanctions on the country, which is a major oil producer.

Gold prices hit an eight-month high today, partly on notions of an easier Fed monetary policy in the coming months, and also on some safe-haven demand.

The outside markets today see the U.S. dollar index trading near steady. Meantime, Nymex crude oil prices are firmer and trading around $53.50 a barrel.

U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the ADP national employment report, the Treasury’s quarterly refunding announcement, pending home sales and the weekly DOE liquid energy stocks report.

–Jim

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Tuesday, January 29–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

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

There are several world news elements at work early this week, which are making traders and investors a bit nervous. Gold prices are benefitting from the risk aversion and hit a seven-month high overnight, at just above $1,308.00.

The U.S.-China trade war that has been playing out for months finds high-level officials from both countries meeting in Washington, D.C, on Wednesday and Thursday. There is no consensus on any progress that may or may not be made at this week’s talks, but stock and financial market traders are this week leaning to the negative side of any successful outcome. The U.S. government this week has filed new charges against the high-tech company from China, Huawei. Comments from U.S. and Chinese officials have been all over the map recently.

The political situation in Venezuela is still very fluid at present, with the potential for civil violence. The U.S. on Monday slapped economic sanctions on the country, which is a major oil producer.

The Federal Reserve’s Open Market Committee (FOMC) meets on Tuesday morning through Wednesday at midday, with a statement on monetary policy on Wednesday afternoon. No change in monetary policy is expected. Markets could become active and volatile following the results of the meeting, which includes a press conference by Fed Chairman Jerome Powell. Powell is getting a reputation for putting his foot in his mouth while making comments to the press or at speeches.

The U.K. parliament on Tuesday votes on the “Plan B” Brexit initiative from Prime Minister Theresa May. May’s last Brexit plan was voted down a few weeks ago and May survived a no-confidence vote by Parliament.

The outside markets today see the U.S. dollar index trading near steady. Meantime, Nymex crude oil prices are firmer and trading around $52.50 a barrel.

U.S. economic reports due for release Tuesday include the weekly Goldman Sachs and Johnson Redbook retail sales reports, advance economic indicators, S&P/Core-Logic home indexes, and the consumer confidence index.

–Jim

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The gold market last Friday popped sharply higher, hit a seven-month high and also closed at a technically bullish weekly high close. The bulls also managed to keep a price uptrend in place on the daily bar chart, after trend-line support had been challenged recently. The path of least resistance for the yellow metal remains sideways to higher and the bulls now have momentum on their side. Stay tuned!