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Equities Profit Taking. Bearish Crude. USD Up, Yuan Weak, Gold Down.

11/08/2018 10:30 am EST


Bill Baruch

President and Founder, Blue Line Futures

What to expect today ahead of the Fed announcement. Bill Baruch, president and founder of Blue Line Futures, previews E-mini S&P, Gold, Crude, Forex, Treasury markets and today’s economic calendar. Follow daily reports on and short Midday Markets video.

Bill Baruch’s Midday Market Minute short video for Nov. 8 here.
Crude continues lower.

Bill Baruch’s FX Rundown short video for Nov. 7-8  here.
Euro peaks. Yen, Gold finish low. Aussie poised to gain. CAD stronger


E-mini S&P (December)

Wednesday’s close: Settled at 2816.50, up 57.50.

Fundamentals: Equity markets boasted a strong post-election relief rally after polls were correct in their predictions. The S&P (SPX) gained 2.1% and NQ (IXIC) 2.9%. We are seeing some profit taking this morning ahead of this afternoon’s Federal Reserve policy decision at 2:00 pm EDT. This will be the last foreseeable meeting that does not provide economic projections and a Fed Chair presser.

There is only a 7.2% probability that the Fed raises interest rates today. Ultimately, they are not expected to rock the boat given that absence of projections and presser, however, their statement will be dissecting in every which way to understand their intended path in 2019. As of this morning, there is a 75% probability they hike in December and 54.9% chance they follow that up with a second hike in March.

China posted robust Trade Balance data Wednesday night with both Exports and Imports crushing expectations. The interesting component here is the threat of higher tariffs in January. With our ear to the ground, we can confidently say that demand is being front-loaded. Strong seasonals and this front-loaded trade demand could masquerade soft fourth quarter growth due to dissipating policy tailwinds; this falls in line with our narrative of heightened uncertainty in the first quarter.

Wednesday, Attorney General Jeff Sessions resigned. The official classification of his exit could put into question the appointment of his replacement, Matt Whitaker. With the Mueller investigation front and center, drama in Washington is certainly not going anywhere.

Technicals: The S&P closed above the 200-day moving average Wednesday for the first time since October 17. Price action blew through key support levels and faces major three-star resistance at ...

Today’s economic calendar

China releases inflation data this evening.

Domestically, this week’s economic calendar is very light and Weekly Jobless Claims are down 1,000 from the previous week to 214,000 ahead of PPI and the freshest look at November University of Michigan Surveys of Consumers data.

On the earnings front, Cardinal Health (CAH), D.R Horton (DHI) and others report this morning. Disney (DIS) headlines after the bell.


Crude Oil (December)

Wednesday’s close: Settled at 61.67, down 0.54.

Fundamentals: The headline Crude read on Wednesday’s EIA inventory report was bearish, confirming a build for the seventh straight week and a large one at that. Further denting the hopes of the bulls was an increase in production in the lower 48 states of 400,000 bpd.

If you are sifting through the details for a bright spot it would be the seventh straight draw for Distillates, confirming its seasonally stronger time of year. In fact, Heating Oil has not broken its 200-day moving average. The question becomes, at one point will refinery output catch up to this demand and we believe any week now.

Given the latest jawboning from OPEC about potentially cutting production next year and midterms in the rearview mirror, if Crude and Distillates can draw in the same week, we bet price action would respond in a very bullish manner as bulls are now certainly under-positioned and this would signal further drawdowns coming down the pipeline.

Technicals: Crude Oil swung to a new low of ... 


Gold (December)

Wednesday’s close: Settled at 1228.7, up 2.4.

Fundamentals: Given the overnight price action coming into Wednesday, Gold posted a disappointing session. The U.S. dollar (USD) has broadly worked higher during the same time from and though the Dollar Index (DXY) is not accelerating, commodities are broadly lower. The Chinese yuan (CNY) is 0.2% weaker this morning despite strong Trade Balance data out of China.

The Federal Reserve’s policy decision is due at 2:00 pm EDT and though there are no economic projections or press conference, the statement will be looked at closely for any hints towards their path of hiking in 2019. If the Fed shows any concern due to recent volatility, weakening commodity prices over the last month or uncertainties for growth, look for Gold to respond.

Technicals: Gold is testing into key support at ... 

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View a short video: Bill Baruch: Trading Futures. Gold, USD, yuan.

Recorded: TradersExpo Chicago July 24, 2018.
Duration: 4:34.

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