Market Morning: Pre-holiday Favors Bulls, Oil Relentless, China Grumpy, Turkey Hyperinflation

Expect Low Volume, Higher Volatility On Shortened Trading Day

Today could end up being a setup for technical traders. With volume expected to be light due to Wall Street’s early closure on the eve of July 4th and futures higher this morning, it could be an ideal day for bulls to push the S&P 500 (NYSEARCA:SPY) decisively above the 50 day moving average, currently sitting at 2,718.60. S&P futures are now trading 20 points above that at 2,738. Holding above the 50DMA could give bulls the upper hand going into the end of the week, especially as the Federal Reserve is set to release minutes for the previous Federal Open Market Committee meeting on Thursday, so traders can dissect every word and punctuation mark to try to divine the Fed’s intentions regarding the interest rate hike path going forward, regardless of whether the Fed actually knows itself.

SEE: Bitcoin News Cryptocurrency Daily Roundup July 2

Oil Finds Another Excuse to Rise, This Time Canada and Lybia

Lybia has declared force majeure on some of its crude oil exports amounting to 850,000 bbl/d yesterday, meaning it is essentially defaulting on those contracts. As Market Exclusive reported back on June 19, a massive fire erupted last month at one of the country’s biggest oil ports, putting up to 1 million bbl/d in danger, and now the crude chickens have come home to roost. As for Canada, a fluke power outage in Alberta has cut off production for an additional 360,000 bbl/d for at least the rest of July, bringing the total global deficit due to these events to 1.21 million barrels per day. On the flipside, Glencore (OTCMKTS:GLNCF) has received a subpoena by the Justice Department regarding money laundering regulations that the US government suspects Glencore may have violated, sending shares down nearly 3% yesterday despite oil reaching new highs. Share are down another 9.2% this morning in London prior to US market open. Glencore is still up over 300% since bottoming out in January 2016 during calls for its bankruptcy as oil fell through $30 a barrel.

Related Tickers: (NYSEARCA:USO)

President Trump Threatens $500B in Tariffs on China if No Deal Reached

Reiterating his determination to decrease the supply of goods coming into the US from China over supposed national security threats, President Trump stressed that he wants a “fair deal” with China, but isn’t afraid to impose tariffs on half a trillion dollars worth of Chinese products if a deal is not reached “soon”. The tit-for-tariff began when Trump imposed a 25% tariff on $50 billion worth in Chinese imports, to which the Chinese responded with threats of tariffs of their own, to which Trump responded that if the Chinese tariffs are actually imposed, he would impose tariffs on an $200 billion worth of imported goods. Now both governments are feuding with each other, and Chinese capital markets are in a bear market. China seems to be venting some of its frustrations with the Trump Administration by advising Chinese nationals traveling in the United States that robberies are frequent and to watch out for “natural disasters” and high medical bills, which could happen at any time.

Related Tickers: (NYSEARCA:FXI) (NYSEARCA:ASHR)

North Korean Peace Prospects Starting to Unravel?

According to Reuters, US Secretary of State Mike Pompeo will be heading to North Korea on Thursday to discuss denuclearization amid rumors that the country is actually expanding its nuclear capabilities. He will stay for two days, and from there will head to Tokyo to discuss the same. Despite doubts being raised, White House Press Secretary Sarah Sanders described meetings between US and North Korean Ambassadors to the Philippines as positive. This comes amid reports by NBC News and the Washington Post that North Korea has been expanding its nuclear facilities while committing to abolish them at the same time. Bloomberg reports that President Trump is considering meeting with North Korean leader Kim Jong Un in New York in September, though plans are not final.

Turkey Nears Hyperinflation For Second Time This Century

The Turkish Lira continues to fall against the US dollar, down another 1% today as inflation data from its central bank shows that the inflation rate in the country has broken though 15%. This is the highest level recorded since the currency hyperinflated at nearly 70% annualized in 2002. In a sign of stagflation in the emerging market economy, Turkish stocks are at 10 year lows, as reflected in iShares MSCI Turkey ETF (NASDAQ:TUR).

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