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Trade Tensions Ease Slightly


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May 14, 2019

STOCK INDEX FUTURES

U.S. stock index futures advanced when President Donald Trump said he believed discussions with China will be very successful, with the outcome anticipated in three or four weeks.

Responding to President Trump, the Chinese governments top diplomat said China and the U.S. both have the ability and wisdom to reach an agreement that is good for both.

President Trump said he wouldmeet Chinese President Xi Jinping next monthat the June 28-29 Group of 20 summit.

The April National Federation of Independent Business small business optimism index was 103.5, which compares to expectations of 102.4.

U.S. import prices rose less than expected in April, increasing 0.2% from the previous month. The increase was much smaller than the 0.6% gain that was predicted by economists.

Because of the volatility and political uncertainties of the U.S.-China trade situation, now is a good time to avoid stock index futures and instead focus on the long side of flight to quality vehicles, such as the Swiss franc, the Japanese yen, the interest rate futures market and gold.

CURRENCY FUTURES

After four days of declines the U.S. dollar index is higher, as trade tensions subside.

The euro currency is lower on news that German economic sentiment collapsed in May, according to the ZEW research institute. ZEW's measure of economic expectations fell to minus 2.1 in May from 3.1 points in April when economists forecast a rise to 5.0.

The Canadian dollar is lower on news that Canadian home prices were unchanged in April, failing to increase for eighth consecutive months.

I would trade the flight to quality currencies, the Swiss franc and the Japanese yen, from the long side since these currencies are likely to continue to be the main beneficiaries of the ongoing trade issues between the U.S. and China.

INTEREST RATE MARKET FUTURES

New York Federal Reserve Bank PresidentJohn Williams said tariffs will likely stoke inflation in the coming year.

Williams said U.S. monetary policy is in the right place and that he doesn't see the need to have an upward or downward bias regarding the future path of interest rate policies.

Kansas City Federal Reserve Bank PresidentEsther Georgewill deliver a speech about the Federal Reserve and the U.S. economy at 11:45 central time this morning.

Financial futures markets are predicting there is a 72% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its December 11 policy meeting, which compares to 70% yesterday.

SUPPORT AND RESISTANCE

June 19S&P 500

Support 2795.00 Resistance 2834.00

June 19 U.S. Dollar Index

Support 97.010 Resistance 97.370

June 19Euro Currency

Support 1.12270 Resistance 1.12840

June 19Japanese Yen

Support .91260 Resistance .91960

June 19Canadian Dollar

Support .74140 Resistance .74440

June 19Australian Dollar

Support .6935 Resistance .6977

June 19 Thirty Year Treasury Bonds

Support 149^0 Resistance 149^24

June 19Gold

Support 1294.0 Resistance 1307.0

July 19Copper

Support 2.7100 Resistance 2.7450

June 19 Crude Oil

Support 60.55 Resistance 62.34

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For more information about these markets, please contact Alan at 312.242.7911 or via email at alan.bush@admis.com. Thank you.

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Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.



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About the author


Alan Bush has been a commodity analyst since 1976 focusing on the fundamental and technical aspects of stock index, interest rate and foreign currency markets. He has authored several articles for Stocks Futures and Options magazine and produced the “Futures Tech Focus” program, which is a technically based market outlook.

Alan served on the faculty of Oakton College as instructor of a course entitled, “Principles of Technical Analysis.” He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been frequently quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago’s WMAQ radio business reports.

Alan can be reached at (312) 242-7911, or via email at alan.bush@admis.com.

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