The dollar remains in a positive trend

Highlights: 

Market Update:  The S&P 500 ETF (IVV) finished the day down -0.18%.  West Texas Intermediate Crude oil finished the day up 1.04%.  International equities finished the day higher, as did bonds and gold.  The U.S. dollar dropped -0.29%.

Economic Data:  U.S. retail sales fell -0.32% month-over-month.  The consumer has been resilient in the face of global growth slowing.  Is this a sign that retail sales are following the manufacturing sector and heading down?

Emerging Markets: Emerging markets (EEM) closed higher by 0.29% yesterday, despite the S&P 500 finishing lower.  The recent strength in EEM was enough to close back above its 200-day moving average.  If EEM could breakout to the upside, this could imply a bottom is in for the global economy (at least temporarily).  The ratio of emerging markets to U.S. stocks (EEM/SPY) remains in a downtrend and below a falling 200-day moving average.  We would expect this ratio to breakout to the upside on accelerating economic growth.

 

Small Capitalization stocks:  Small caps moved higher yesterday by 0.26% (IJR).  Relative to the S&P 500 small caps gained 0.44% (IJR/IVV).  IJR is back above its 200-day moving average.  Small caps remain in a negative trend relative to large caps (IJR/IVV).  We would expect this ratio to move higher if economic growth starts to accelerate.

Crude Oil: Oil is near a critical support level now.  A breakdown below support could imply a revisit of the December low last year.  Crude oil remains below its 200-day moving average and well below the 2018 peak.

U.S. Dollar: The dollar dropped yesterday, helping international equities, crude oil, and gold all move higher.  The dollar remains in a positive trend, above a rising 200-day moving average.  Continued upside could result in further deflationary pressures that may result in lower commodity and international stock prices.

Chart of the Day: The Cass Freight Index is now down -3.4% year-over-year.  This is signaling an economic contraction.

 

Futures Summary:

 

News from Bloomberg:

A Brexit deal has been agreed and the pound is flying. But hanging over it all is the prospect of a road-block from Northern Ireland's DUP, who are still saying there's no change in their position. European Commission President Jean-Claude Juncker said it was "fair and balanced" and it'll go before British lawmakers on Saturday. Follow the developments with our Brexit Update. Will Parliament back the deal?

He said, she said. President Trump was accused of having a meltdown by Nancy Pelosi in a meeting about Syria. But the president tweeted Pelosi blew up and House Republican Leader Kevin McCarthy said she stormed out. A letter from Trump to Turkey's President Erdogan obtained by Fox ruffled friends and foes. Trump warned him not to be a "tough guy" or a fool. He later said it was proof he hadn't given the go-ahead to the Syria incursion.

Impeachment latest: Wildcard Gordon Sondland testifies to House investigators today after being blocked last week. Trump's allies hope the ambassador to the EU will counter a slew of damaging revelations. But other witnesses have testified that Sondland was at the center of Rudy Giuliani's back-channel efforts to pressure Ukraine into investigations on the Bidens. 

House Oversight Committee Chairman Elijah Cummings has died. The long time civil rights activist and Congressman from Baltimore was 68. Cummings was a key figure in the Democrats' impeachment inquiry and a fierce critic of Trump. Trump had earlier criticized the Democrat's district as a "rodent-infested mess" where "no human being would want to live."
U.S. equity-index futures fluctuated with European stocks while shares in Asia were mixed. Treasuries and the dollar fell. Oil declined and gold edged down. The pound rose as much as 1.2%.