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U.S. Retail Sales Stronger than Expected


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July 16, 2019

STOCK INDEX FUTURES

S&P 500 and NASDAQ futures advanced to record highs today.

U.S. retail sales increased 0.4% in June from a month earlier, which compares to expectations of a 0.1% gain.

Prices for foreign-made goods imported to the U.S. declined 0.9% in June, which is the latest indication that inflationary pressures remain limited. Economists expected prices to fall 0.8%.

Industrial production in June was unchanged when a .1% increase was expected and capacity utilization in June was 77.9%, which compares to the anticipated 78.2%.

Two 9:00 central time reports are scheduled. May business inventories are expected to be up .4% and the July housing market index is anticipated to be 65.

Federal Reserve ChairmanJerome Powellwill speak at 12:00.

My view remains that the global reflation scenario is on track and easier credit conditions from most of the worlds central banks, including the Federal Reserve, are coming and will be the dominant fundamental that supports stock index futures in the long term.

CURRENCY FUTURES

The U.S. dollar index advanced when the stronger than expected U.S. retail sales report was released.

The British pound fell to its lowest level against the U.S. dollar since June of 2017 due to Brexit uncertainties and increasing prospects of easier credit policies from the Bank of England.

The Australian dollar is lower after the Reserve Bank of Australia, in the minutes of its July 2 policy meeting, left open the prospect of additional interest rate cuts in coming months, if conditions in the labor market do not improve.

INTEREST RATE MARKET FUTURES

In addition to Fed Chair Powell, Federal Reserve speakers today are Atlanta Federal Reserve Bank PresidentRaphael Bosticat 9:05, Dallas Federal Reserve Bank PresidentRobert Kaplan at 11:20 and Chicago Federal Reserve Bank PresidentCharles Evans at 2:30.

Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its July 30-31 policy meeting. A second rate cut is anticipated by financial futures markets later this year.

I expect at least a partial price recovery now that the bearish U.S. retail sales report is out of the way.

SUPPORT AND RESISTANCE

September 19S&P 500

Support 3009.00 Resistance 3027.00

September 19 U.S. Dollar Index

Support 96.500 Resistance 97.000

September 19Euro Currency

Support 1.12580 Resistance 1.13240

September 19Japanese Yen

Support .92800 Resistance .93230

September 19Canadian Dollar

Support .76600 Resistance .76880

September 19Australian Dollar

Support .7030 Resistance .7064

September 19 Thirty Year Treasury Bonds

Support 153^4 Resistance 154^12

August 19Gold

Support 1408.0 Resistance 1423.0

September 19Copper

Support 2.7000 Resistance 2.7300

August 19 Crude Oil

Support 59.07 Resistance 60.13

Contact Alan for more extensive information on these markets 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 information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by Archer Daniels Midland Company. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. 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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