Daily Morning Report

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!

Monday, December 3–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Risk appetite is back in full force to start the trading week, following the weekend news out of the G20 meeting in Argentina that the U.S. and China have agreed on a cease-fire in their trade war. Asian and European stock markets rallied sharply, while crude oil and gold prices were also posting good gains on hopes for better world economic growth if the two largest economies stop their trade hostilities. U.S. stock indexes are pointed toward sharply higher openings when the New York day session begins.

The U.S. dollar index is weaker as secondary world currencies were boosted Monday, including the Chinese yuan, on the U.S.-China truce.

The positive outcome of the weekend U.S.-China trade meeting was not completely unexpected by the marketplace, as expectations on the results had varied widely. Still, the outcome was at the least better than many expected. The U.S. and China gave each other 90 days to make further progress on their trade tiff.

The U.S.-China trade cease-fire gave traders and investors a double-barrel shot of upbeat news, following last week’s surprisingly dovish comments coming from Federal Reserve Chairman Jay Powell.

In other news, the OPEC oil cartel meeting is getting under way in Vienna, Austria. Reports said Qatar plans to pull out of the cartel in January. Oil prices were also lifted in part on comments from Russian and Saudi Arabian officials that they want to extend production cuts.

The death of former U.S. President George H.W. Bush over the weekend gives the U.S. financial markets an unexpected mid-week closure on Wednesday, for a national day of mourning.

U.S. economic data due for release Monday includes the U.S. manufacturing purchasing managers index (PMI), construction spending, the ISM manufacturing report on business, the global manufacturing PMI and domestic auto industry sales.

–Jim

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Friday, November 30–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European stock markets were mostly lower overnight. Asian stock indexes were mixed. U.S. stock indexes are pointed toward lower openings when the New York day session begins. While the U.S. stock index bulls have had a good week, the bears still possess the overall near-term technical advantage.

All marketplace eyes are now on the Group of 20 meetings that begin Friday in Buenos Aires, Argentina and will feature a face-to-face meeting between U.S. President Trump and Chinese President Xi Jinping on Saturday. The world’s two largest economies are locked in a heated trade war. Come Monday morning, many markets could be very active at their openings, given the keen uncertainty on the outcome of the U.S.-China meeting on trade.

In overnight news, the Euro zone jobless rate was unchanged in October, at 8.1%. Meantime, consumer prices in the bloc rose 2.0% in November, on an annual basis, versus up 2.2% in October. It appears that just recently inflation worries worldwide have ebbed a bit, what with the big drop in crude oil prices.

The key outside markets today find Nymex crude oil futures prices lower and trading just below $51.00 a barrel. A key OPEC oil cartel meeting is scheduled for next week in Vienna, Austria.

The other key outside market today finds the U.S. dollar index trading firmer and near the recent highs.

U.S. economic data due for release Friday is light and includes the ISM Chicago business survey.

–Jim

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The Nymex crude oil futures market dropped to a 13-month low below $50.00 a barrel late this week. Prices are in a steep downtrend and there are no early clues that a market bottom is close at hand. The next strong support levels in crude lie below the $45.00 level, which suggests that’s where prices are headed. Importantly, the large speculative “fund” traders are going to be reluctant to get bullish on any raw commodity futures market as long as the sector leader, crude oil, remains in a tailspin. Stay tuned!