U.S. equity-index futures turned lower with European stocks after China vented its anger

Highlights:

Market Update: Stocks finished the day down as the Vanguard Total World Stock ETF (VT) shed -0.32%. Bonds and gold also had tough days, as long-term Treasuries (TLT) fell -083% and gold closed lower by -0.85%. The U.S. dollar finished higher by 0.18%.

Volatility: The VIX closed the day higher by 4.81% yesterday and finished above 17.86. The VIX remains above its 200-day moving average and continues to make a series of higher lows and higher highs, signifying a positive trend. Market bulls would welcome a breakdown in volatility to new lows (especially under 12 support). If trade talks break down later this week, we would not be surprised to see a breakout to the upside by volatility. Impeachment investigations and poor economic data are setting the stage for heightened market volatility. The Trump administration needs a trade deal, no matter how inconsequential over the long-term.

U.S. Dollar: The U.S. dollar was up yesterday, hammering Gold. The dollar remains in a positive trend relative to other major currencies. This is deflationary in nature. A breakdown in the dollar would suggest higher prices for emerging market stocks and potential inflationary pressures. Continued upside warrants the opposite.

Gold: Gold is making a series of lower highs and lower lows on the short-term. Is this a "mini" correction prior to a breakout to the upside? We are not sure, the long-term trend remains in favor of gold as it is above its upward sloping 200-day moving average.

Copper vs. Gold: Copper rallied over 1% against gold yesterday and has made a higher low. The ratio remains below its 200-day moving average and in a negative trend. Copper is really oversold relative to gold, however, and that could signal a rally in risk assets if a rebound materializes. We will recommend staying with the defensive trend despite expecting a rebound in this ratio.

Chart of the Day: Are retail sales about to collapse? The Pervalle Global Retail Sales leading indicator is suggestive of a sudden decrease in U.S. retail sales that could shift sentiment abruptly to the negative. The consumer has been the one last hope for those clinging to a stable economy in the U.S. If this relationship maintains its historical correlation, we would expect that hope to diminish.

Futures Summary:

News from Bloomberg:

China will hit back after the U.S. placed eight of the country's tech giants on a blacklist over alleged human rights violations against Muslim minorities. Foreign ministry spokesman Geng Shuang said China will safeguard its interests and told reporters to "stay tuned." The U.S. list included video surveillance companies and AI startups. Here's a look at how it threatens to derail a $1 billion Chinese tech IPO.

Chinese state TV halted NBA broadcasts after the league's commissioner defended the Houston Rockets' GM, who tweeted support for Hong Kong's protesters. What was supposed to be a high-profile promotional week in the country has become a PR disaster. The NBA drew 800 million total viewers in China last year, almost 2.5 times the entire U.S. population. We take a look at how a single, swiftly deleted tweet put the NBA's multibillion-dollar opportunity in China in jeopardy.

President Trump didn't endorse a Turkish incursion into Syria, a senior official said, deepening confusion around his policy after an uproar from Republicans that he planned to abandon Kurdish allies. The official said Trump cautioned President Erdogan that he'll bear responsibility for Islamic State prisoners in the region, as well as any resurgence of violence if the militants are freed.

A Brexit deal with the EU is essentially impossible, Prime Minister Boris Johnson told German Chancellor Angela Merkel. His comment came on a phone call, during which she said a deal was only possible if Northern Ireland stayed in the Customs Union. It came after one of Johnson's officials said in a text message that the government is preparing for talks to collapse, the Spectator reported.

U.S. equity-index futures turned lower with European stocks after China vented its anger. Haven assets also staged a reversal as investors fled to Treasuries, gold and the yen. Samsung's strong earnings drove a rally for tech shares in Asia. Oil fell with most industrial metals. The pound extended losses after Johnson's comments to Merkel.