Dow tumbled 275, decliners over advancers 2-1 & NAZ pulled back 68. The MLP index was off 1+ to the 243s & the REIT index dropped 2+ to the 224s. Junk bond funds fluctuated & Treasuries rose, taking the yield on the 10 year Treasury down to 2,83%. Oil was a little lower in the 64s & gold gained 9 to 1330 as stocks declined.
AMJ (Alerian MLP Index tracking fund)
Stocks tumbled & Treasuries rallied as investors shifted focus from the Federal Reserve to the threat of an escalating trade war with China that has the potential to disrupt global growth. Major equity benchmarks opened lower by more than 1%, with technology-heavy gauges falling more than 1.5%. Pres Trump is set to announce about $50B of tariffs against China, sparking speculation that the Asian nation will hit back. The 10-year Treasury yield slid toward 2.8% & gold advanced with the yen as investors sought safe havens & the $ rebounded. The threat that a tit-for-tat trade spat with China will erupt & hamper global growth has investors on edge a day after the Fed sought to reassure markets that it's in no hurry to raise rates even as it lifted growth projections for the world's largest economy. Trump's first trade action directly aimed at China would come as policy makers including IMF Managing Director Christine Lagarde warn of a global trade conflict that could undermine the broadest world recovery in years. West Texas oil fluctuated before falling & the Australian $ slipped after the country's unemployment rate climbed. The British £ initially jumped after the country's central bank voted 7-2 to maintain interest rates, but pared as investors digested comments from policy makers that weren't overtly hawkish.
Stocks Hit by Trade-War Jitters, Bonds Jump
Trump is set to announce about $50B of tariffs against China over intellectual-property violations, opening a new front in an escalating global trade skirmish that is shaking financial markets. The pres is considering targeting more than 100 different types of Chinese goods from shoes to electronics. The value of the tariffs was based on US estimates of economic damage caused by intellectual-property theft by China. Stocks fell sharply in Europe & the US on concerns the American tariffs may provoke a stern Chinese response, with the Dow dropping more than 300 points before recovering. It will be Trump's first trade action directly aimed at China, which he has blamed for the hollowing out of the American manufacturing sector & the loss of US jobs. The decision comes as policy makers including IMF Managing Director Christine Lagarde warn of a global trade conflict that could undermine the broadest world recovery in years. China's Ministry of Commerce cautioned against the US taking measures "detrimental to both sides." The nation strongly opposes such unilateral & protectionist action, & will take "all necessary measures" to firmly defend its interests, the ministry said. "If Trump really signs the order, that is a declaration of trade war with China,” said Wei Jianguo, former vice commerce minister and now an executive deputy director of the China Center for International Economic Exchanges. "China is not afraid, nor will it dodge a trade war," Wei said. "We have plenty of measures to fight back, in areas of automobile imports, soybean, aircraft and chips. On the other hand, Trump should know that this is a very bad idea, and there will be no winner, and there will be no good outcome for both nations."
Trump to Announce $50 Billion in China Tariffs
US filings for unemployment insurance crept higher while the number of Americans on benefit rolls fell to the lowest level since 1973 in another indication of a tight job market, Labor Dept figures showed. Jobless claims increased by 3K to 229K (est 225K) & continuing claims fell by 57K to 1.828M (lowest level since 1973). The 4-week average of initial claims, a less-volatile measure than the weekly figure, rose to 223K from the prior week's 221K. The US labor picture remains solid, with filings for benefits holding well below the 300K level each week that is considered healthy. Federal Reserve policy makers yesterday projected lower unemployment rates in the coming years than in their previous round of forecasts in Dec & new Chairman Jerome Powell said the job market “remains strong.”
The stock averages are heading for a 6 week low, with the Dow 600 below the 25K level it has remained close to for that period. Not much good news out there. Congress should pass a massive spending bill by tomorrow as caution is being thrown to the wind. The darling tech companies have a ton of problems which won't go away soon & trade war concerns are extremely threatening to the US & global economies. More tariffs by the US can get ugly fast. As a result, gold & Treasuries are in demand.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 64.51 | -0.66 | -1.0% |
| GC=F | Gold | 1,328.40 | +6.90 | +0.5% |
Stocks tumbled & Treasuries rallied as investors shifted focus from the Federal Reserve to the threat of an escalating trade war with China that has the potential to disrupt global growth. Major equity benchmarks opened lower by more than 1%, with technology-heavy gauges falling more than 1.5%. Pres Trump is set to announce about $50B of tariffs against China, sparking speculation that the Asian nation will hit back. The 10-year Treasury yield slid toward 2.8% & gold advanced with the yen as investors sought safe havens & the $ rebounded. The threat that a tit-for-tat trade spat with China will erupt & hamper global growth has investors on edge a day after the Fed sought to reassure markets that it's in no hurry to raise rates even as it lifted growth projections for the world's largest economy. Trump's first trade action directly aimed at China would come as policy makers including IMF Managing Director Christine Lagarde warn of a global trade conflict that could undermine the broadest world recovery in years. West Texas oil fluctuated before falling & the Australian $ slipped after the country's unemployment rate climbed. The British £ initially jumped after the country's central bank voted 7-2 to maintain interest rates, but pared as investors digested comments from policy makers that weren't overtly hawkish.
Stocks Hit by Trade-War Jitters, Bonds Jump
Trump is set to announce about $50B of tariffs against China over intellectual-property violations, opening a new front in an escalating global trade skirmish that is shaking financial markets. The pres is considering targeting more than 100 different types of Chinese goods from shoes to electronics. The value of the tariffs was based on US estimates of economic damage caused by intellectual-property theft by China. Stocks fell sharply in Europe & the US on concerns the American tariffs may provoke a stern Chinese response, with the Dow dropping more than 300 points before recovering. It will be Trump's first trade action directly aimed at China, which he has blamed for the hollowing out of the American manufacturing sector & the loss of US jobs. The decision comes as policy makers including IMF Managing Director Christine Lagarde warn of a global trade conflict that could undermine the broadest world recovery in years. China's Ministry of Commerce cautioned against the US taking measures "detrimental to both sides." The nation strongly opposes such unilateral & protectionist action, & will take "all necessary measures" to firmly defend its interests, the ministry said. "If Trump really signs the order, that is a declaration of trade war with China,” said Wei Jianguo, former vice commerce minister and now an executive deputy director of the China Center for International Economic Exchanges. "China is not afraid, nor will it dodge a trade war," Wei said. "We have plenty of measures to fight back, in areas of automobile imports, soybean, aircraft and chips. On the other hand, Trump should know that this is a very bad idea, and there will be no winner, and there will be no good outcome for both nations."
Trump to Announce $50 Billion in China Tariffs
US filings for unemployment insurance crept higher while the number of Americans on benefit rolls fell to the lowest level since 1973 in another indication of a tight job market, Labor Dept figures showed. Jobless claims increased by 3K to 229K (est 225K) & continuing claims fell by 57K to 1.828M (lowest level since 1973). The 4-week average of initial claims, a less-volatile measure than the weekly figure, rose to 223K from the prior week's 221K. The US labor picture remains solid, with filings for benefits holding well below the 300K level each week that is considered healthy. Federal Reserve policy makers yesterday projected lower unemployment rates in the coming years than in their previous round of forecasts in Dec & new Chairman Jerome Powell said the job market “remains strong.”
The stock averages are heading for a 6 week low, with the Dow 600 below the 25K level it has remained close to for that period. Not much good news out there. Congress should pass a massive spending bill by tomorrow as caution is being thrown to the wind. The darling tech companies have a ton of problems which won't go away soon & trade war concerns are extremely threatening to the US & global economies. More tariffs by the US can get ugly fast. As a result, gold & Treasuries are in demand.
Dow Jones Industrials
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