Daily Morning Report

Monday, October 1–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Reports of a U.S.-Canada trade deal over the weekend have boosted U.S. equities. Chinese markets are closed until Friday for a public holiday.

Reports from China on Sunday said the U.S.-China trade war is taking a toll on China’s manufacturing sector, which has reduced its overall production. The Caixin manufacturing purchasing managers index (PMI) fell to 50.0 in September from 51.0 in August—ending 15 straight months of expansion.
This is leading to speculation China’s monetary officials could act to stimulate the economy, including devaluing its currency, the yuan, on the world foreign exchange market.

In other overnight news, the Euro zone jobless rate was reported at 8.1% in August versus 8.2% in July.

Focus in Europe is still on the new anti-establishment Italian government’s economic plan to address its fiscal and financial problems. The Euro currency has been pressured by this matter, which could be the next flash point in the currency and financial markets.

The key outside markets today find the U.S. dollar index slightly lower. Meantime, November Nymex crude oil prices are slightly higher and trading around $73.50 a barrel. Nymex crude prices are at contract and eight-month highs. Brent crude oil futures are at a four-year high.

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As the month and the quarter wind down, the Euro currency bears have rapidly gained technical strength. See on the daily bar chart for the December futures contract that prices have negated an uptrend line, to now suggest some more selling pressure and a test of the August low, and maybe even below. Stay tuned!

Friday, September 28–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. There is still little risk aversion in the marketplace at present, as evidenced by recent strength in the U.S. stock market that sees the major indexes not far below their recent record highs.

Today is the last trading day of the week, of the month, and of the quarter, which makes it an extra important day from a technical chart perspective. Also, late this week could be seeing portfolio and fund managers squaring their positions for “window-dressing” purposes as the month and the quarter wind down.

In overnight news, inflation in the Euro zone heated up a bit. Consumer prices in the region rose at a 2.1% annual rate in September. The reading was the highest in a year and a half.

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Thursday, September 27–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.

Traders are still digesting this week’s Federal Open Market Committee (FOMC) meeting that saw the Fed on Wednesday afternoon slightly raise U.S. interest rates, by 0.25%, to a range of 2.0% to 2.25%. The move was expected and marks the third rate rise this year. The FOMC removed the word “accommodative” from its statement, which suggested to some the U.S. central bank is moving closer to the end of the current rate-hike cycle. The Fed is now on pace to raise rates another quarter-point this year and then three times in 2019. The Federal Reserve officials said long-term U.S. inflation prospects remain unchanged and non-problematic despite the recent strong U.S. economic growth. Fed Chairman Jerome Powell held a press conference after the FOMC statement. He said the U.S. economy is in a good place right now, but added the Fed’s monetary policy is still leaning to the accommodative side.

Veteran market watchers reckon the Fed cannot keep tightening U.S. monetary policy by raising interest rates while at the same time see the U.S. economy growing so strongly–and without igniting inflation fears. President Trump has already weighed in on the matter and has admonished the Fed for raising interest rates.

Meantime, China-U.S. relations continue to sour, as Trump on Wednesday accused China of meddling in the upcoming U.S. elections.

Focus in Europe is now on the new Italian government’s economic plans to address its fiscal and financial problems, which are required by European Union law. Many believe Italian lawmakers won’t comply with EU rules on the matter. The Euro currency is pressured today on reports Italy will delay its fiscal and economic projections.

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The soybean and corn markets have seen good price recoveries that past week that suggest seasonal price bottoms are in place. However, such does not mean price uptrends are imminent in those markets. Corn and soybeans are now in full U.S. harvest mode, which will have farmers doing heavy selling right off the combines, creating commercial hedge pressure in the futures markets that will likely persist for several weeks. Look for sideways and choppy trading until at least early November. Stay tuned!

Wednesday, September 26–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mixed to mostly firmer overnight. U.S. stock indexes are also pointed toward firmer openings when the New York day session begins.

Traders and investors are awaiting the conclusion of the two-day FOMC meeting that began Tuesday morning and ends Wednesday afternoon with a statement. The FOMC is widely expected to slightly raise U.S. interest rates at this meeting, marking the third rate rise this year. Fed Chairman Jerome Powell will also hold a press conference after the meeting. As usual, the marketplace will parse the Fed’s and Powell’s wording for clues on the pace of future Fed rate hikes and the Fed’s inflation expectations.

Focus in Europe is now on the new Italian government’s economic plans to address its fiscal and financial problems, which are required by European Union law. Many believe Italian lawmakers won’t comply with EU rules on the matter.

The key outside markets today find the U.S. dollar index slightly higher. Meantime, November Nymex crude oil prices slightly lower and trading just above $72.00 a barrel. Supply worries have boosted oil recently. U.S. sanctions against Iran begin in early November, which will likely take much of that country’s oil off the world market. President Trump has singled out Iran in front of the United Nations this week as being a terrorist state that needs heavy economic sanctions. Trump also called out the OPEC oil cartel for holding prices artificially high, saying OPEC countries may not get financial or military support from the U.S.

Other U.S. economic data due for release today includes the weekly MBA mortgage applications survey, new residential sales and the weekly DOE liquid energy stocks report.

–Jim

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