Dow sank 344 (closing near the lows), decliners over advancers more than 2-1 & NAZ plunged 211 (one of its biggest point drops in history). The MLP index fell 3+ to the 236s & the REIT index gained 4 to the 321s. Junk bond funds fluctuated & Treasuries were strong, taking the yield on the 10 year Treasury below 2.8%. Oil lost 1+ to the 64s & gold pulled back 10 to 1344.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.39223650816892786)
Technology shares dragged US equity benchmarks lower in a whipsaw session as investors continue to assess the threat of a trade spat with China. Treasuries rose with the $. Trade angst weighed on chipmakers & software companies, with the NAZ indices falling after a report the Trump administration is considering a crackdown on Chinese investments in technologies the US considers sensitive. General Electric (GE), a Dow stock, rose the most in 2 years on speculation that Warren Buffett will buy a stake in the troubled conglomerate. European shares climbed the most in 6 weeks. Yields on 10-year notes dipped below 2.8%.
Pres Trump secured his first trade deal with South Korea in the wake of his controversial steel & aluminum tariffs, an agreement touted by Commerce Sec Wilbur Ross as proof that a trade war could be avoided. The US & Seoul revised a previous trade pact to grant American automakers improved market access & to limit Korean steel exports to the US. In return, South Korea will receive exemptions from the hefty tariffs on steel & aluminum that Trump announced last month. Trump has argued that tariffs would protect US companies & allow for the creation of new manufacturing plants, one of his main promises during the 2016 presidential campaign. “The real key is it’s a peaceful deal, it’s a negotiated deal, it works for both sides,” Ross said. “It accomplishes our purpose about reducing the steel and aluminum exports to us, 30% is a big reduction. And it’s about what we would have accomplished with the tariffs, had the tariffs instead gone on.” The deal could also serve as a template for other countries affected by the tariffs. Currently, the US is negotiating with the EU in hopes of striking a new trade agreement, Ross said, although he noted that the situation of every country is a “little bit different.” But, despite the constructive dialogue, the US still has a long way to go before it reaches an agreement with the EU, he said. Critics have also warned that tariffs will raise the cost of steel & aluminum, making products such as automobiles & canned beer more expensive. But Ross, a proponent of the import tax, argued the tariffs are necessary to protect US jobs & national security, adding that costs would only increase marginally. “I think the real template is, we’re ending up with reasonable negotiated deals, not warfare,” he added. “We’re prepared to go and do an extreme action as needed, but hopefully people will be logical and negotiated deals.”
US house prices rose in Jan by 6.2%, with prices in western states leading the way, according to the S&P/Case-Shiller national house price index. The Jan gain was slightly less than Dec's 6.3% increase. On a seasonally adjusted basis the 20-city index rose 0.8%, beating the estimate for a 0.7% rise & above Dec's 0.7% advance. Year-over-year the 20-city index jumped 6.4% in Jan, beating the estimate of 6.2% & up from 6.3% the previous month. "“Two factors supporting price increases are the low inventory of homes for sale and the low vacancy rate among owner-occupied housing," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. "The current months-supply -- how many months at the current sales rate would be needed to absorb homes currently for sale -- is 3.4; the average since 2000 is 6.0 months, and the high in July 2010 was 11.9. Currently, the homeowner vacancy rate is 1.6% compared to an average of 2.1% since 2000; it peaked in 2010 at 2.7%. Despite limited supplies, rising prices, and higher mortgage rates, affordability is not a concern." Since the bottom in 2012 the national home price index has climbed at a 4.7% inflation-adjusted annual rate, twice the economic rate of growth as measured by GDP, said Blitzer.
The Trump administration reportedly is contemplating using an existing law related to a national emergencies to restrict Chinese investment in sensitive technologies. The news comes on the heels of Pres Trump's decision to impose tariffs on up to $60B in imports of Chinese goods in retaliatioin for what the administration said is China's theft of American intellectual property. According to leakers, the Treasury Dept is developing plans to identify the technology sectors that Chinese companies would be barred from investing in. Those sectors could include semiconductors & 5G wireless communications. Yesterday, the White House said he talked to German Chancellor Angela Merkel & French Pres Emmanuel Macron about addressing China's "unfair" economic & trade practices, including intellectual-property theft. The White House is considering using the Intl Emergency Economic Powers Act to ban Chinese investment in some tech sectors. The 41-year-old law allows the pres to declare a national emergency in the face of an "unusual and extraordinary threat." Trump has previously taken action, without invoking that law, to block takeovers of American companies involved in semiconductors & 5G wireless on national security grounds related to China. Both cases were very unusual, as presidents in the past 3 decades have blocked the sale of US companies just a handful of times.
US reportedly considers using existing emergency law to bar Chinese investment in 'sensitive' tech
Fed's Mester says tariffs add 'uncertainty' to an otherwise strong economic growth picture
In the last 3 hours of trading selling was strong, especially for tech shares. After being in the black, Dow plunged 550 in the last 3 hours, making for one ugly day. The days of a roaring bull market are gone. Changing trade rules & issues are controlling market movements. Even the chaos in DC is getting less attention (although those guys are on vacation as if they needed one). The Dow has returned to where it was in those early days of Feb. Trade uncertainties are running high, something the stock market does not like to see!! For what its worth, there was a little bargain hunting buying into the close. With FB under increased scrutiny, tech shares (formerly market leaders) will see more selling pressure.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Technology shares dragged US equity benchmarks lower in a whipsaw session as investors continue to assess the threat of a trade spat with China. Treasuries rose with the $. Trade angst weighed on chipmakers & software companies, with the NAZ indices falling after a report the Trump administration is considering a crackdown on Chinese investments in technologies the US considers sensitive. General Electric (GE), a Dow stock, rose the most in 2 years on speculation that Warren Buffett will buy a stake in the troubled conglomerate. European shares climbed the most in 6 weeks. Yields on 10-year notes dipped below 2.8%.
Tech Selloff Drags U.S. Stocks Lower; Dollar Gains: Markets Wrap
Pres Trump secured his first trade deal with South Korea in the wake of his controversial steel & aluminum tariffs, an agreement touted by Commerce Sec Wilbur Ross as proof that a trade war could be avoided. The US & Seoul revised a previous trade pact to grant American automakers improved market access & to limit Korean steel exports to the US. In return, South Korea will receive exemptions from the hefty tariffs on steel & aluminum that Trump announced last month. Trump has argued that tariffs would protect US companies & allow for the creation of new manufacturing plants, one of his main promises during the 2016 presidential campaign. “The real key is it’s a peaceful deal, it’s a negotiated deal, it works for both sides,” Ross said. “It accomplishes our purpose about reducing the steel and aluminum exports to us, 30% is a big reduction. And it’s about what we would have accomplished with the tariffs, had the tariffs instead gone on.” The deal could also serve as a template for other countries affected by the tariffs. Currently, the US is negotiating with the EU in hopes of striking a new trade agreement, Ross said, although he noted that the situation of every country is a “little bit different.” But, despite the constructive dialogue, the US still has a long way to go before it reaches an agreement with the EU, he said. Critics have also warned that tariffs will raise the cost of steel & aluminum, making products such as automobiles & canned beer more expensive. But Ross, a proponent of the import tax, argued the tariffs are necessary to protect US jobs & national security, adding that costs would only increase marginally. “I think the real template is, we’re ending up with reasonable negotiated deals, not warfare,” he added. “We’re prepared to go and do an extreme action as needed, but hopefully people will be logical and negotiated deals.”
US-South Korea trade deal proof that trade war can be avoided: Wilbur Ross
US house prices rose in Jan by 6.2%, with prices in western states leading the way, according to the S&P/Case-Shiller national house price index. The Jan gain was slightly less than Dec's 6.3% increase. On a seasonally adjusted basis the 20-city index rose 0.8%, beating the estimate for a 0.7% rise & above Dec's 0.7% advance. Year-over-year the 20-city index jumped 6.4% in Jan, beating the estimate of 6.2% & up from 6.3% the previous month. "“Two factors supporting price increases are the low inventory of homes for sale and the low vacancy rate among owner-occupied housing," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. "The current months-supply -- how many months at the current sales rate would be needed to absorb homes currently for sale -- is 3.4; the average since 2000 is 6.0 months, and the high in July 2010 was 11.9. Currently, the homeowner vacancy rate is 1.6% compared to an average of 2.1% since 2000; it peaked in 2010 at 2.7%. Despite limited supplies, rising prices, and higher mortgage rates, affordability is not a concern." Since the bottom in 2012 the national home price index has climbed at a 4.7% inflation-adjusted annual rate, twice the economic rate of growth as measured by GDP, said Blitzer.
US house prices surge in January, as western states lead growth
The Trump administration reportedly is contemplating using an existing law related to a national emergencies to restrict Chinese investment in sensitive technologies. The news comes on the heels of Pres Trump's decision to impose tariffs on up to $60B in imports of Chinese goods in retaliatioin for what the administration said is China's theft of American intellectual property. According to leakers, the Treasury Dept is developing plans to identify the technology sectors that Chinese companies would be barred from investing in. Those sectors could include semiconductors & 5G wireless communications. Yesterday, the White House said he talked to German Chancellor Angela Merkel & French Pres Emmanuel Macron about addressing China's "unfair" economic & trade practices, including intellectual-property theft. The White House is considering using the Intl Emergency Economic Powers Act to ban Chinese investment in some tech sectors. The 41-year-old law allows the pres to declare a national emergency in the face of an "unusual and extraordinary threat." Trump has previously taken action, without invoking that law, to block takeovers of American companies involved in semiconductors & 5G wireless on national security grounds related to China. Both cases were very unusual, as presidents in the past 3 decades have blocked the sale of US companies just a handful of times.
US reportedly considers using existing emergency law to bar Chinese investment in 'sensitive' tech
The threat of a trade war poses risks to what is an otherwise robust growth picture, Cleveland Fed Pres Loretta Mester said. Despite the "uncertainty" risks from White House tariffs on steel & aluminum, & punitive measures taken against China, Mester said she remains optimistic about the economy. "This uncertainty may not
be resolved quickly," Mester said. "Assessing the impact on the U.S. macroeconomy will ultimately
depend on how other countries react, including whether they impose their
own tariffs or other trade barriers in response." Indeed, Pres Trump's
tariffs have injected uncertainty not only in the global trade picture
but also financial markets & stocks have been volatile lately. That, however, comes amid what Mester described as a strong global backdrop. "For the first time in
many years, economic activity around the world is picking up and
forecasts for global growth are being revised up," she said. "This
should have a positive feedback effect on the U.S. economy via exports." In addition, aggressive
fiscal policy in the form of tax cuts & increased spending likely will
head 0.5 percentage points annually to growth over the next several
years, she added. The FOMC, which sets monetary policy for the central bank, last week approved a qtr-point interest rate hike, citing good prospects for growth. Mester said she agreed with the decision, though she did not commit to a path ahead. "It seems appropriate to
remove some of the monetary policy accommodation to ensure we avoid a
build-up in risks to macroeconomic stability that could arise if the
economy were allowed to overheat," she said. The Fed's target rate is
now 1.5-1.75%. The FOMC is expected to
approve at least 2 more rate hikes in 2018.
Fed's Mester says tariffs add 'uncertainty' to an otherwise strong economic growth picture
In the last 3 hours of trading selling was strong, especially for tech shares. After being in the black, Dow plunged 550 in the last 3 hours, making for one ugly day. The days of a roaring bull market are gone. Changing trade rules & issues are controlling market movements. Even the chaos in DC is getting less attention (although those guys are on vacation as if they needed one). The Dow has returned to where it was in those early days of Feb. Trade uncertainties are running high, something the stock market does not like to see!! For what its worth, there was a little bargain hunting buying into the close. With FB under increased scrutiny, tech shares (formerly market leaders) will see more selling pressure.
Dow Jones Industrials
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