Philadelphia Fed Index Improves

January 17, 2019

STOCK INDEX FUTURES

U.S stock index futures are lower due to weak earnings from a large U.S. bank, concerns over Chinas economic outlook and possible U.S. tariffs on European cars.

There was news that Chinas Vice Premier will visit the U.S. on January 30-31, which appeared to lessen the selling pressure.

Initial jobless claims fell 3,000 to 213,000 in the week ended January 12 when economists expected 220,000 new claims last week.

The Philadelphia Federal Reserve January business index was 17.0 when the median estimate was 8.0. The December figure was 9.1.

S&P 500 companies are expected to report a 14% increase in fourth quarter earnings, which compares to the 20.1% growth that was forecast in October, according to Refinitiv.

It may take a while, but downward pressure on interest rates globally, but not from the Fed in the short term, will ultimately rescue this market.

CURRENCY FUTURES

The U.S. dollar firmed and the euro currency declined in spite of interest rate differential expectations that are turning slightly against the greenback.

The euro currency is near a two-week low against the dollar as a result of weak euro zone economic data.

The euro area annual inflation rate was 1.6% in December 2018, which is down from 1.9% in November.

The British pound is higher as British policymakers seek a consensus on how to exit the European Union.

The British parliament will debate and vote on Prime Minister Theresa Mays new Brexit plan on January 29.

The Canadian dollar is lower after a report showed employment inCanadadecreased by 13,000 jobs from November to December, according to the DecemberADPCanada National Employment Report.

INTEREST RATE MARKET FUTURES

Federal Reserve Board of Governors Vice Chairman for SupervisionRandal Quarles will speak at 9:45 central time.

Financial futures markets are predicting a 75% probability of the fed funds rate remaining unchanged at the current level of 2.25%-2.50% this year.

There is a 15% chance of an increase in the fed funds rate by 25 basis points and there is a 10% probability of a 25 basis point rate cut in 2019.

With the improving probability of a U.S.-China trade deal coming sooner rather than later, in my opinion, now is a good time to stand aside in the interest rate futures markets.

However, the long term trend for gold and silver still appears to be higher.

SUPPORT AND RESISTANCE

March 19S&P 500

Support 2593.00 Resistance 2622.00

March 19 U.S. Dollar Index

Support 95.530 Resistance 95.950

March 19Euro Currency

Support 1.14210 Resistance 1.14750

March 19Japanese Yen

Support .92010 Resistance .92550

March 19Canadian Dollar

Support .75110 Resistance .75640

March 19Australian Dollar

Support .7145 Resistance .7193

March 19 Thirty Year Treasury Bonds

Support 145^0 Resistance 145^26

February 19Gold

Support 1285.0Resistance 1300.0

March 19Copper

Support 2.6550 Resistance 2.6850

March 19 Crude Oil

Support 51.33 Resistance 52.75

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