Market Brief – Tuesday 4/9/19

Stocks started the day lower as President Trump threatened $11 billion worth of tariffs on European goods over European Union subsidies for Airbus. Investors realized that tariffs are bullish for stocks and managed to push stock prices off their early morning lows. For those who think the trade wars are coming to an end, U.S.-Japan trade talks begin next week.

The International Monetary Fund lowered its outlook for global growth again as they see growth falling to the lowest since the Great Financial Crisis. The IMF is expecting global growth to be around 3.3% this year, which is lower than their initial 3.5% estimate for 2019 that they announced back in January. The IMF warns the risk to global growth is to the downside.

The JOLTS job openings survey plunged by -538k job openings in February as employers back off on their hiring plans. Despite the reduction in job openings, February was the twelfth consecutive month where the number of job openings exceeded the number of unemployed workers.

Today’s $38 billion 3-year Treasury auction saw surprising demand for domestic bidders who doubled their take from last month by snapping up 18.7% of the auction. Foreign bidders took 42.7%, down a little from March, which left the dealers with 38.6% of the auction.

Stocks were modestly lower, and Treasury yields slightly lower in light trading as more corporations are blacked out from buying their stocks back. Goldman Sachs recently reported that the largest buyer of stocks, by a huge margin, has been corporations. When they slow down or stop their purchases, Goldman concluded stock prices are likely to head much lower.

Agricultural commodities were down slightly for the third day in a row, but buyers continue to step in on the dips. A major storm that is currently developing over the Rookies is expected to dump a large amount of rain across the farming region in the next couple days. With more rain will bring more flooding, along with more crop and farmland damage.

Physical gold moved higher in early trading but was rejected at its 50-day moving average. Since price rallies start with a break and a confirmation against its 50-DMA, rejection at the bottom side of its 50-DMA is a bearish signal.

The American Petroleum Institute reported crude oil inventories as Crude +4.09mm (+2.5mm expected), Cushing -1.3mm, Gasoline -7.1mm (largest draw since September 2017), and Distillates -2.4mm. Crude oil prices rose following the report.