Daily Morning Report

Thursday, January 17–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly lower overnight. Traders and investors are now lamenting reports out this week that the U.S. and China trade talks may not be going as well as many thought just last week. Adding to the murkiness is reports that U.S. federal prosecutors will file criminal charges of theft of intellectual property against the big Chinese technology firm Huawei. The lingering government shutdown may also be negatively impacting the U.S. equities. The added uncertainty of limited, fresh U.S. economic data is an underlying negative for many markets and maybe also for some big companies.

U.K. Prime Minister Theresa May survived a no-confidence vote from Parliament late Wednesday, but the markets were little impacted on the protracted Brexit drama playing out.

In other overnight news, the Euro Zone’s consumer price index for December came out at unchanged from November and up 1.6%, year-on-year, which was in line with market expectations. This is yet another very tame inflation report coming from a major world economy. This report lends credibility to the recent shift in the thought-process of many market watchers—to more accommodative monetary policies coming from the world’s major central banks in the coming months.

The important outside markets today see the U.S. dollar index slightly higher. Meantime, Nymex crude oil prices are weaker and trading just below $52.00 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report and the Philadelphia Fed business survey. Once again, the federal government’s partial closure is cancelling many economic reports, including some scheduled for today.

–Jim

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The U.S. dollar index is a basket of six major world currencies weighted against the greenback. See on the daily bar chart that the USDX has made a strong rebound this week, but is still in a near-term price downtrend. The USDX is an important “outside market” that has a daily price impact on many other markets. Reason: Most major world commodities are priced in U.S. dollars on the world markets. Changes in the value of the dollar influence the prices of products priced in dollars but which have to be purchased with non-U.S. currency. Stay tuned!

Wednesday, January 16–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mixed overnight, as traders in Europe don’t appear too concerned about the U.K. Parliament voting down on Tuesday evening Prime Minister Theresa May’s Brexit plan. The rejection was expected by the marketplace. Now, May faces a no confidence vote Wednesday, which she is expected to survive. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Focus in the U.S. will be on quarterly corporate earnings reports.

The important outside markets today see the U.S. dollar index slightly higher following strong gains on Tuesday. Meantime, Nymex crude oil prices are slightly lower and trading just below $52.00 a barrel. Brent crude oil futures are presently trading just above $60.00 a barrel.

U.S. economic data due for release Wednesday includes the Federal Reserve’s beige book, the weekly MBA mortgage applications survey, import and export prices, the NAHB housing market index and the weekly DOE liquid energy stocks report. Several major U.S. economic reports have been postponed because of the continuing U.S. government partial shutdown.

–Jim

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Tuesday, January 15–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly firmer overnight. U.S. stock indexes are also pointed up when the New York day session begins.

The global equities markets were boosted overnight in part on news China’s central bank said it will act to stimulate the world’s second-largest economy via tax cuts, more credit availability to smaller companies and infrastructure spending. This news follows some very weak import and export data reported by China on Monday.

However, weak economic numbers coming from Germany, the work horse of the European Union, did dampen enthusiasm among traders and investors in Europe. Germany’s gross domestic product in 2018 was today reported up 1.5% versus up 2.2% in 2017. The 2018 GDP reading was the lowest in five years. China is Germany’s biggest trading partner.

Brexit is back on the front burner of the marketplace this week. Voters in the U.K. later today are likely to reject Prime Minister Theresa May’s latest Brexit plan, which could put the entire Brexit situation into serious turmoil. Such would likely prompt Europeans to seek out safe-haven assets such as gold.

The U.S. government partial shutdown is the longest on record. The matter is not a serious drag on the marketplace, but many markets are lacking normal economic reports to drive their daily price action, which is causing uncertainty and some anxiety amid the dearth of news, which is generally bearish for those impacted markets.

The important outside markets today see the U.S. dollar index higher. The index remains in a near-term price downtrend. Meantime, Nymex crude oil prices are higher and trading just above $51.00 a barrel.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the producer price index, the Empire State manufacturing survey, and the IDB/TIPP economic optimism index. There are also several Federal Reserve officials slated to give speeches today.

–Jim

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The Nymex crude oil futures market has seen a solid rebound from the December low, including negating a downtrend line. Now, bulls are working on a fledgling price uptrend. This week’s trading action will be extra important for the oil market. Oil traders will likely find out if the recent rally was just a corrective bounce in a market that is still overall technically bearish. Or, the price uptrend will be maintained to give the bulls even more confidence prices have bottomed out and will continue to trade sideways-to-higher in the coming weeks. Stay tuned

Monday, January 14–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were lower overnight, while U.S. stock indexes are also pointed down when the New York day session begins.

There is keener risk aversion in the market place to start the trading week, following some very downbeat economic news coming out of China. China’s exports in December were down a surprising 4.4%, year-on-year. Exports were up 5.4% in November. China’s imports fell 7.6% in the same period. In past months both imports and exports saw double-digit gains. The trade war with the U.S. has really hurt China’s economy, the latest import and export numbers suggest. Such will likely embolden the U.S. is its trade posture against China. Last week the two sides met in Beijing and are scheduled to meet next in the U.S.

There was also dour economic news coming out of the European Union Monday. The Euro zone’s factory output dropped 1.7% in November from October, for the largest monthly drop in three years. The reading was down 3.3%, year-on-year, for the biggest drop in six years.

In other overnight news, Newmont Mining and Goldcorp reported the two companies plan to combine to create the world’s largest gold miner.

Brexit is back in the minds of traders and investors in Europe. Voters in the U.K. on Tuesday are likely to reject Prime Minister May’s latest Brexit plan, putting the entire Brexit situation into serious turmoil.

The U.S. government partial shutdown is now the longest on record. The matter is not a serious drag on the marketplace, but many markets are lacking normal economic reports to drive their daily price action, which is causing uncertainty and some anxiety amid the dearth of news, which is generally bearish for those impacted markets.

The important outside markets today see the U.S. dollar index slightly lower. The index remains in a near-term price downtrend. Meantime, Nymex crude oil prices are lower and trading just below $51.00 a barrel.

There is no major U.S. economic data due for release Monday.

–Jim

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