Markets are cautions going into tomorrow’s jobs report, notes Bill Baruch, President of BlueLineFutures.com.
E-mini S&P (ESM)
Yesterday’s close: Settled at 2879.75, up 12.75
Fundamentals: U.S benchmarks are clinging to yesterday’s gains and a busy back-half of the week is about to get underway. Today, President Trump will have a highly regarded meeting with Chinese Vice Premier Liu He at the White House in hopes of moving closer to a trade deal. While sources close to the talks have lauded the final stages of a deal, Bloomberg led reports yesterday that China will have until 2025 to meet the conditions of a deal. From our prospective, a five-plus year timetable before this trade deal is fully enforceable would not be a deal at all. It would seem that keeping tariffs on China up to the point is the pinnacle of the final stages.
We look to Europe this morning on several fronts. First, German Factory Orders contracted at the worst pace in two years, however, yearly the outcome was much worse, and we will spare you the gruesome description. This comes on the heels of Manufacturing PMI contracting at the fastest pace in a decade. With German Industrial Production on deck tomorrow morning, all is clearly not well in the world. At 6:30 am CT, the ECB releases the Minutes for their latest policy meeting. Here, they went full dove announcing the reintroduction of targeted longer-term refinancing operations (TLTROs) later this year. Lastly, U.K Parliament finally agreed on something, barely; if no agreement is reached by the April 12 deadline, Prime Minster May will have to go to the EU and ask for another extension.
The U.S calendar is a bit lighter ahead of tomorrow’s crucial Nonfarm Payroll. Weekly Initial Jobless Claims are due at 7:30 am CT. Later, we look to Cleveland Fed President Mester at noon CT and NY Fed President Williams at 3:00 pm CT.
Crude Oil (CLK)
Yesterday’s close: Settled at $62.46, down 0.12
Fundamentals: Yesterday’s EIA report was bearish showing an addition of 7.238 million barrels of crude oil to inventories. Furthermore, despite the Baker Hughes Rig Count falling precipitously, the lower 48 states added 100,000 barrels-per-day in estimated production. So, why has Crude Oil not gone lower and why has it not traded below $62 as we said was highly likely in yesterday’s Midday Markey Minute? Even despite President Trump recently targeting OPEC and Saudi Arabia for higher prices via a tweet, the bullish seasonality coupled with the planned supply and export cuts from the Saudis in April and the Venezuela situation has kept a virtual put option under the market for bulls. Furthermore, the closure of the Houston Channel potentially bloated yesterday’s data. We have been bullish crude oil for much of the last 45 days before turning neutral ahead of yesterday’s data.
Technicals: Price action settled right at our $62.56 upside target yesterday but is building a floor at $62.
Gold (GCM)
Yesterday’s close: Settled at $1,295.3, down 0.1
Fundamentals: Gold continues to find a wall at the psychologically important $1300 mark. Germany posted another dismal manufacturing component with Factory Orders a horrific whiff. This has lifted Treasury prices from the basement of yesterday’s drop, but the uptick in the dollar against the euro has kept any bid in gold under wraps in the near-term. While we find this poor global data supportive for gold in the longer-term, the broader picture is waiting for tomorrow’s jobs number.
Technicals: There is a lack of enthusiasm in this market as it consolidated above major three-star support.
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com
