Daily Morning Report

Friday, December 7–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mixed but stable overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.

There is still some anxiety in the world marketplace Friday, following the news Thursday that Chinese tech giant Huawei’s chief financial officer was arrested in Canada, on behalf of the U.S., and the U.S wants to extradite her. China has called on Canada to release her, ahead of her scheduled hearing on extradition to the U.S. today. This matter has sparked fears U.S.-China trade tensions could rise further despite the recent agreed-upon truce.

Traders and investors are awaiting what is arguably the most important U.S. economic report of the month: the Labor Department Employment Situation Report for November, released this morning. The key non-farm jobs number in the report is forecast at up 198,000. Given the recent talk of a slowing U.S. economy and maybe a less hawkish Federal Reserve heading into 2019, today’s jobs report will be even more closely scrutinized by the marketplace.

In overnight news, the Euro zone economy grew at a paltry rate of 1.6% in the third quarter, year-on-year, which was slightly less than forecast.

The key outside markets today find the U.S. dollar index near steady. Meantime, Nymex crude oil prices are also near steady following another drop Thursday. The OPEC oil cartel is meeting in Vienna, Austria again today. Reports said OPEC heavyweight Saudi Arabia has not agreed to a production cut and is now skeptical an agreement can be reached. This has many crude oil market watchers wondering about any collective production cut being extended, after most reckoned such would be the case before the meeting began.

Other U.S. economic data due for release Friday includes the University of Michigan consumer sentiment survey, monthly wholesale trade and consumer credit. There are also a couple of Federal Reserve officials speaking today.

–Jim

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Thursday, December 6–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Risk aversion is back in full force in the world marketplace Thursday. World stock markets were lower overnight, with U.S. stock indexes set to open sharply lower on strong follow-through selling from big losses Tuesday. U.S. stock and financial markets were closed Wednesday for a national day of mourning the death of former President George H.W. Bush.

There are several bearish factors at work spooking world stock markets. Chinese tech giant Huawei’s chief financial officer was arrested in Canada, on behalf of the U.S., and will be extradited to the U.S. Her company may be shipping high tech products to Iran, which would violate U.S. sanctions against Iran. This sparked fears the U.S.-China trade tensions could rise further, despite last weekend’s trade truce between the world’s two largest economies. Chinese government officials said Thursday they are still planning to work with U.S. trade officials over the next 90 days to come to agreement.

A big drop in crude oil prices Thursday is also weighing on trader and investor sentiment. Nymex crude oil prices are sharply lower and trading just above $51.00 a barrel. The OPEC oil cartel is meeting in Vienna, Austria on Thursday. Reports said OPEC heavyweight Saudi Arabia has not yet agreed to a production cut, but that it may before the meeting ends on Friday. This has many crude oil market watchers wondering about any collective production cut being extended, after most reckoned such would be the case before the meeting began.

Trader are also anxiously awaiting another speech from Federal Reserve Chairman Jerome Powell today, wondering if he will elaborate on U.S. monetary policy direction.

Another feature in the marketplace recently that also has the stock market wobbly is falling U.S. Treasury yields (rising prices). The five-year T-Note yield this week dropped below the lower maturities. A fully inverted yield curve has been historically bearish for the U.S. economy and stock market. Right now the 10-year Treasury note yield remains above the 2-year, so the yield curve is not fully inverted.

The other key outside markets today find the U.S. dollar index modestly higher.

And it’s a very busy day of U.S. economic data due for release Thursday, which includes the weekly jobless claims report, the Challenger job-cuts report, the ADP national employment report, the U.S. international trade report, the U.S. and global services PMIs, manufacturers’ shipments and inventories, the ISM non-manufacturing report on business, monthly chain store sales, and the weekly DOE liquid energy stocks report. Several Fed officials also speak today, including Chairman Powell.

–Jim

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The U.S. stock index futures sold off sharply Tuesday, to put the bears back in near-term technical control. See on the daily bar chart the strong support and resistance lines for the e-mini S&P March futures. The direction in which prices move out of the trading range bound by those lines on the chart will be the direction of the next near-term trend in prices. Right now, technical odds favor a breach of chart support at the October low of 2,603.00. Stay tuned!

Wednesday, December 5–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower overnight, following the big sell off in the U.S. stock indexes Tuesday. The initial trader and investor euphoria over a U.S.-China trade dispute cease-fire for 90 days has rapidly dissipated. U.S. stock indexes did post modest rebounds in overnight trading. U.S. stock and financial markets are closed today for a day of mourning former U.S. President George H.W. Bush. Other commodity futures markets will be open today.

A feature in the marketplace recently that also has the stock market bulls spooked is falling U.S. Treasury yields (rising prices). The five-year T-Note yield is presently below the lower maturities. A fully inverted yield curve has been historically bearish for the U.S. economy and stock market. Right now the 10-year Treasury note yield remains above the 2-year, so the yield curve is not fully inverted.

The key outside markets today find the U.S. dollar index lower. Meantime, Nymex crude oil prices are near steady and trading around $53.00 a barrel. The OPEC oil cartel will meet in Vienna, Austria on Thursday. Reports earlier this week said Russian and Saudi Arabian officials plan to extend production cuts. However, reports today said Saudi Arabia may not have agreed to a cut yet.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey and the Federal Reserve’s beige book.

–Jim

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Tuesday, December 4–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The initial trader and investor euphoria regarding a U.S.-China trade dispute cease-fire for 90 days has quickly dissipated. The marketplace has quickly realized “the devil is in the details” on getting this matter resolved. The matter will likely continue to produce uncertainty in markets, with comments from U.S. and China government officials continuing to tweak the markets—just like was the case before the meeting between Presidents Trump and Xi last weekend.

A feature in the marketplace just recently is falling U.S. Treasury yields (rising prices). Notions of a less hawkish Federal Reserve in the coming months have helped to boost T-Bond and T-Note prices.

In overnight news, the Euro zone producer price index for October came in at up 0.8% from September and up 4.9%, year-on-year. Those numbers were hotter than expected.

The key outside markets today find the U.S. dollar index solidly lower. The U.S.-China trade truce has boosted the world’s secondary currency markets, which in turn is pressuring the greenback. Meantime, Nymex crude oil prices are higher and trading around $54.00 a barrel. Some short covering is seen in the oil market recently, following steep losses. The OPEC oil cartel will meet in Vienna, Austria on Thursday. Reports said Russian and Saudi Arabian officials plan to extend production cuts. Also, Canada will curtail its crude production.

The death of former U.S. President George H.W. Bush and a national day of mourning Wednesday will close the U.S. stock and financial markets. Other U.S. futures markets will remain open as normal.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York report on business, and the IBD/TIPP economic optimism index.

–Jim

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The U.S. grain markets got a boost early this week after the U.S. and China called a truce on their trade war. However, the world’s two largest economies have a lot of heavy lifting to do in the next 90 days to resolve their trade differences. Still, the cease-fire is a positive first step to opening up bigger grain-trading avenues between the U.S. and China. The key for corn and soybean market traders this week will be if Monday’s gains can be followed up with more price strength in the near term. Trading in the grain markets this week is likely to set the tone for price action the next three months. Stay tuned!