E-mini S&P Futures (December)
Yesterday’s close: Settled at 2892.50, down 45.00
Fundamentals: The revolving U.S and China trade headlines continue and just like that the S&P was nearly 2% off last night’s low. China said Monday it would never consider changes in intellectual property laws and yesterday the U.S blacklisted 28 Chinese companies, outlawing them from purchasing components from the U.S without government approval. With talks deteriorating ahead of meetings set to begin tomorrow in Washington it was also rumored Chinese delegates could leave before initially scheduled. All it took was one headlines to snap back; China is open to a partial trade deal despite the tech blacklist as long as tariffs are not increased as planned this month or in December. The tailwind was aided by a false Financial Times report that China will increase agriculture purchases from $20 billion to $30 billion in order to close the trade gap. This was wrong and China only plans to increase purchases in Soybeans by just $10 million. Back to the one headline of China being open to a partial trade deal. When were they ever not open to a partial trade deal that allows them to keep intellectual property laws and an unlevel playing field as is?
Fed Chair Powell made headlines yesterday calling fresh asset purchases not a new phase of Quantitative Easing. He is on the schedule today to speak for the third day in a row at 10:00 am CT. The argument now is by expanding their balance sheet, is the Fed introducing QE4? While on the surface this sounds like nothing less than a bubble wrapped version of QE4, one must consider the stronger demand of the U.S Dollar. Although the Dollar Index has yet to achieve levels from 2017, the bulk of this comparison involves the Euro and other major developed currencies. The Dollar broadly against all of the world’s currencies has accelerated in relative value. The strong demand for the Dollar increases yields and the Federal Reserve must fight this increase by naturally purchasing government assets such as T-Bills and Bonds. Kansas City Fed President George, a dissenter in September, also speaks at 10:00 am CT. The Fed releases the Minutes from that September meeting at 1:00 pm CT.
JOLTs Job Openings and Wholesales Inventories will be closely watched at 9:00 am CT and there is a 10-year Note auction at noon.
Technicals: Last night’s rebound has quickly dissipated for fundamental and technical reasons. On the technical side, major three-star resistance in the S&P and NQ were both achieved at ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook, actionable bias and proprietary levels for the S&P, NQ, Crude Oil and Gold emailed out each morning.