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Stock Index Futures Holding Up Well in Spite of a Less Optimistic U.S.-China Trade Outlook


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July 17, 2019

STOCK INDEX FUTURES

U.S. stock index futures are holding up well in spite of yesterdays comments from President Donald Trump when he suggested talks between Washington and Beijing have stalled and warned that he could apply new tariffs on $325 billion worth of China made goods in the coming months.

Housing starts fell 0.9% in June from the prior month to1.253 million when 1.260 were expected. Residential building permits, which can signal how much construction is in the pipeline, declined 6.1% from May to an annual rate of 1.220 million, which was the biggest monthly drop since March 2016. Analysts anticipated permits would total 1.300 million.

At 1:00 central time the Federal Reserve will release its Beige Book on the economy. This book, which is a snapshot of business conditions around the country, is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee.

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 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.

Canada's consumer price index increased 2.0% on a year-over-year basis in June, which compared with a 2.4% gain in the previous month. Market expectations were for a 1.9% rise in June.

Canada's factory sector rebounded as expected in May. Manufacturing sales increased 1.6% in May from the previous month, which matched market expectations.

INTEREST RATE MARKET FUTURES

Futures are mostly higher with most of the gains in the 30 year Treasury bond futures. Some of the buying can be attributed to a less optimistic outlook for a U.S.-China trade deal.

Kansas City Federal Reserve Bank PresidentEsther Georgewill deliver a speech on the economic outlook at the 2019 Agricultural Symposium in Kansas City, Missouri at 11:30.

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.

In the longer term, higher prices are likely for futures, as most major central banks are likely to embark on a new round of accommodation.

SUPPORT AND RESISTANCE

September 19S&P 500

Support 3001.00 Resistance 3017.00

September 19 U.S. Dollar Index

Support 96.880 Resistance 97.120

September 19Euro Currency

Support 1.12450 Resistance 1.12840

September 19Japanese Yen

Support .92660 Resistance .92980

September 19Canadian Dollar

Support .76400 Resistance .76880

September 19Australian Dollar

Support .7005 Resistance .7041

September 19 Thirty Year Treasury Bonds

Support 153^20 Resistance 154^18

August 19Gold

Support 1400.0 Resistance 1417.0

September 19Copper

Support 2.6800 Resistance 2.7100

August 19 Crude Oil

Support 57.30 Resistance 58.88

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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