Dow tumbled 572, decliners over advancers about 5-1 & NAZ sank 161. The MLP index fell 3+ to the 239s. Junk bond funds declined along with stocks & Treasuries were purchased, taking the yield on the 10 year Treasury down to 2.78%. Oil lost 1+, going below 62, & gold added 8 to 1336.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.4992921165838984)
The selloff in US stocks deepened as the White House's latest trade bluster rattled global financial markets. The S&P 500 plunged more than 2% all 30 members of the Dow retreated as Pres Trump ordered a review of additional tariffs that prompted an aggressive response from China. Fresh attempts by White House officials to tone down the bluster failed to calm nerves, with the Volatility Index back above 21 (about double where it has been during the market rally). Treasury Sec Steve Mnuchin added to the anxiety by saying there's a “level of risk” the spat could worsen. Trump said the market turmoil was short-term "pain", but insisted the outcome would leave the US in a better position. Trumps's top economic adviser said the US & China are holding “back-channel discussions” to resolve an escalating trade dispute that has unsettled global financial markets. China earlier said no talks were ongoing. The trade tensions overshadowed the latest US jobs report, which showed hiring cooled by more than forecast in Mar. The renewed saber rattling provided a bookend to a week that started with equities tumbling amid amplified rhetoric. That gave way to a 3-day rally after White House officials signaled tough talk was part of a negotiating plan.
Dow Plunges More Than 2% on Trade Tension, Disappointing Jobs Report
Mnuchin said there is “a level of risk” that the tariff dispute between the US & China will erupt into a full-scale trade war, though he’s “cautiously optimistic” that the world's 2 largest economies will resolve differences through negotiations. “This has been very well organized. Our strategy is very clear,” Mnuchin said. “I’m cautiously optimistic we’ll be able to work it out.” Mnuchin added “there is a level of risk that we could get into a trade war.” The Treasury secretary said he wasn’t concerned that China would retaliate by making it harder for the US to finance deficits just as the administration's tax cuts increase the federal gov's borrowing needs. China owns almost $1.2T of US gov debt. “I’m not concerned about that,” Mnuchin said. “There are lots of buyers around the world for U.S. debt.” Pres Trump yester instructed the US Trade Representative’s Office to consider tariffs on an additional $100B in Chinese imports, bringing to $150B the range of Chinese products under consideration. China has said it will respond proportionately & has so far proposed duties on $50B in US products, including aircraft & soybeans. “We think that was unfairly targeting our industries,” Mnuchin added. “We will protect our farmers from unfair targeting.” Trump said a few hours ago that the spat with China may hurt the markets in the short term but America will emerge stronger from it. “I’m not saying there won’t be a little pain,” Trump said. “So we might lose a little of it but we’re going to have a much stronger country when we’re finished, and that’s what I’m all about.” Mnuchin said the US doesn't want to be in a trade war with China & is willing to negotiate over tit-for-tat tariff threats between the 2 nations that have escalated this week. “On the one hand, we are willing to continue negotiations. On the other hand the president is absolutely prepared to defend our interests,” Mnuchin said.
Mnuchin Says There’s ‘Level of Risk’ of U.S.-China Trade War
Federal Reserve Chairman Jerome Powell said the outlook for inflation & the US labor market support further gradual interest-rate increases while the lack of a spike in wage gains shows the labor market is “not excessively tight.” “We will continue to aim for 2 percent inflation and for a sustained economic expansion with a strong labor market,” Powell said in his first speech since becoming chairman in Feb. “As long as the economy continues broadly on its current path, further gradual increases in the federal funds rate will best promote these goals,” he added. Powell's comments hewed closely to remarks he made to reporters last month that emphasized the stronger US economic outlook, after the Fed raised interest rates & signaled at least 2 more moves in 2018. The Fed chairman didn't mention China in his speech & said it’s “really too early” to estimate how tariffs will impact the US economy when subsequently asked about the trade dispute. “We did hear from a number of business leaders around the country that changes in trade policy had become a bit of a risk," Powell said in response to a question. "Tariffs can push up on prices." US financial markets have been roiled since his Mar 21 press conference by a simmering trade dispute between the US & China. The S&P 500 Index is down almost 10% from its Jan peak. Still, policy makers forecast solid growth this year aided by tax cuts & job growth remains steady. As Powell spoke, equities slipped to their lows of the day. Powell discussed the labor market & inflation trends in some detail. He said reports from the labor market were mixed with some indicators showing tightness & others showing slack. “The absence of a sharper acceleration in wages suggests that the labor market is not excessively tight,” Powell added. “I will be looking for an additional pickup in wage growth as the labor market strengthens further.”
US consumer debt rose in Feb by the least in 5 months as credit-card balances stalled, indicating Americans' appetite for borrowing waned further after a Q4 shopping spree. Total credit rose $10.6B (est up $15.5B) & follows an upwardly revised $15.6B Jan gain (prev $13.9B). Revolving credit outstanding rose $148M M/M, smallest gain since a drop in 2013, after a $1.45B rise in Jan. Non-revolving debt outstanding climbed $10.5B M/M after $14.1B Jan increase. The slowdown in revolving debt, which includes credit cards, helps explain why consumer-spending gains remained relatively sluggish in the first 2 months of the year. Growth in non- revolving debt, which includes education & auto loans, also eased during Feb. The data is in line with forecasts of slower real household demand in Q1 after a robust 2017. Consumption is nonetheless likely to remain at healthy levels in coming months amid a tight job market, strong confidence & bigger paychecks after the tax cuts. A Labor Dept report earlier today showed wage gains picked up in Mar & the unemployment rate held at the lowest since 2000, while hiring cooled from a robust pace in Feb.
Pres Trump argues that he's getting tough on China's trade practices to keep domestic manufacturers from dying. But American factories are coming back to life on their own. US manufacturers added 22K jobs in Mar, a Labor Dept report showed today, making the 6-month hiring spree the strongest since 1998. A total of 12.6M are employed in the sector, the most since 2008. Steady hiring during this economic expansion has accelerated since Trump's Nov 2016 election as businesses grew increasingly optimistic & global growth improved. Trump's tariffs may threaten that trajectory. His administration proposed tariffs on $50B in Chinese products & is reviewing an additional $100B, on items from steel to factory goods, parts & chemicals -- items U.S. companies need to buy to make things. A separate tax on imported steel & aluminum from some suppliers, which took effect in Mar, means some producers are already paying up. China said it will respond proportionately. If the tough talk turns into more tariffs, US manufacturers will feel the pain. “Tariffs are one proposed response, but they are likely to create new challenges in the form of significant added costs for manufacturers and American consumers,” National Association of Manufacturers President Jay Timmons said earlier this week. “In addition to these challenges, tariffs also run the risk of provoking China to take further destructive actions against American manufacturing workers.” The Mar gains in manufacturing were led by the durable-goods category an indicator of economic confidence.
U.S. Factory Jobs Power Ahead
Once again, what's there to say? Nervousness about interest rate hikes rattle investors & that makes the trade uncertainties even worse. Tech stocks which have been the darlings of many investors are under a cloud about their future with more regulation. These are not good times for the timid. The Dow is back under 24K after the bulls could not make their case for extending the 3 day rally. Stocks should be on defense next week.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The selloff in US stocks deepened as the White House's latest trade bluster rattled global financial markets. The S&P 500 plunged more than 2% all 30 members of the Dow retreated as Pres Trump ordered a review of additional tariffs that prompted an aggressive response from China. Fresh attempts by White House officials to tone down the bluster failed to calm nerves, with the Volatility Index back above 21 (about double where it has been during the market rally). Treasury Sec Steve Mnuchin added to the anxiety by saying there's a “level of risk” the spat could worsen. Trump said the market turmoil was short-term "pain", but insisted the outcome would leave the US in a better position. Trumps's top economic adviser said the US & China are holding “back-channel discussions” to resolve an escalating trade dispute that has unsettled global financial markets. China earlier said no talks were ongoing. The trade tensions overshadowed the latest US jobs report, which showed hiring cooled by more than forecast in Mar. The renewed saber rattling provided a bookend to a week that started with equities tumbling amid amplified rhetoric. That gave way to a 3-day rally after White House officials signaled tough talk was part of a negotiating plan.
Dow Plunges More Than 2% on Trade Tension, Disappointing Jobs Report
Mnuchin said there is “a level of risk” that the tariff dispute between the US & China will erupt into a full-scale trade war, though he’s “cautiously optimistic” that the world's 2 largest economies will resolve differences through negotiations. “This has been very well organized. Our strategy is very clear,” Mnuchin said. “I’m cautiously optimistic we’ll be able to work it out.” Mnuchin added “there is a level of risk that we could get into a trade war.” The Treasury secretary said he wasn’t concerned that China would retaliate by making it harder for the US to finance deficits just as the administration's tax cuts increase the federal gov's borrowing needs. China owns almost $1.2T of US gov debt. “I’m not concerned about that,” Mnuchin said. “There are lots of buyers around the world for U.S. debt.” Pres Trump yester instructed the US Trade Representative’s Office to consider tariffs on an additional $100B in Chinese imports, bringing to $150B the range of Chinese products under consideration. China has said it will respond proportionately & has so far proposed duties on $50B in US products, including aircraft & soybeans. “We think that was unfairly targeting our industries,” Mnuchin added. “We will protect our farmers from unfair targeting.” Trump said a few hours ago that the spat with China may hurt the markets in the short term but America will emerge stronger from it. “I’m not saying there won’t be a little pain,” Trump said. “So we might lose a little of it but we’re going to have a much stronger country when we’re finished, and that’s what I’m all about.” Mnuchin said the US doesn't want to be in a trade war with China & is willing to negotiate over tit-for-tat tariff threats between the 2 nations that have escalated this week. “On the one hand, we are willing to continue negotiations. On the other hand the president is absolutely prepared to defend our interests,” Mnuchin said.
Mnuchin Says There’s ‘Level of Risk’ of U.S.-China Trade War
Federal Reserve Chairman Jerome Powell said the outlook for inflation & the US labor market support further gradual interest-rate increases while the lack of a spike in wage gains shows the labor market is “not excessively tight.” “We will continue to aim for 2 percent inflation and for a sustained economic expansion with a strong labor market,” Powell said in his first speech since becoming chairman in Feb. “As long as the economy continues broadly on its current path, further gradual increases in the federal funds rate will best promote these goals,” he added. Powell's comments hewed closely to remarks he made to reporters last month that emphasized the stronger US economic outlook, after the Fed raised interest rates & signaled at least 2 more moves in 2018. The Fed chairman didn't mention China in his speech & said it’s “really too early” to estimate how tariffs will impact the US economy when subsequently asked about the trade dispute. “We did hear from a number of business leaders around the country that changes in trade policy had become a bit of a risk," Powell said in response to a question. "Tariffs can push up on prices." US financial markets have been roiled since his Mar 21 press conference by a simmering trade dispute between the US & China. The S&P 500 Index is down almost 10% from its Jan peak. Still, policy makers forecast solid growth this year aided by tax cuts & job growth remains steady. As Powell spoke, equities slipped to their lows of the day. Powell discussed the labor market & inflation trends in some detail. He said reports from the labor market were mixed with some indicators showing tightness & others showing slack. “The absence of a sharper acceleration in wages suggests that the labor market is not excessively tight,” Powell added. “I will be looking for an additional pickup in wage growth as the labor market strengthens further.”
US consumer debt rose in Feb by the least in 5 months as credit-card balances stalled, indicating Americans' appetite for borrowing waned further after a Q4 shopping spree. Total credit rose $10.6B (est up $15.5B) & follows an upwardly revised $15.6B Jan gain (prev $13.9B). Revolving credit outstanding rose $148M M/M, smallest gain since a drop in 2013, after a $1.45B rise in Jan. Non-revolving debt outstanding climbed $10.5B M/M after $14.1B Jan increase. The slowdown in revolving debt, which includes credit cards, helps explain why consumer-spending gains remained relatively sluggish in the first 2 months of the year. Growth in non- revolving debt, which includes education & auto loans, also eased during Feb. The data is in line with forecasts of slower real household demand in Q1 after a robust 2017. Consumption is nonetheless likely to remain at healthy levels in coming months amid a tight job market, strong confidence & bigger paychecks after the tax cuts. A Labor Dept report earlier today showed wage gains picked up in Mar & the unemployment rate held at the lowest since 2000, while hiring cooled from a robust pace in Feb.
Consumer Credit in U.S. Rises by Lowest Amount in Five Months
Pres Trump argues that he's getting tough on China's trade practices to keep domestic manufacturers from dying. But American factories are coming back to life on their own. US manufacturers added 22K jobs in Mar, a Labor Dept report showed today, making the 6-month hiring spree the strongest since 1998. A total of 12.6M are employed in the sector, the most since 2008. Steady hiring during this economic expansion has accelerated since Trump's Nov 2016 election as businesses grew increasingly optimistic & global growth improved. Trump's tariffs may threaten that trajectory. His administration proposed tariffs on $50B in Chinese products & is reviewing an additional $100B, on items from steel to factory goods, parts & chemicals -- items U.S. companies need to buy to make things. A separate tax on imported steel & aluminum from some suppliers, which took effect in Mar, means some producers are already paying up. China said it will respond proportionately. If the tough talk turns into more tariffs, US manufacturers will feel the pain. “Tariffs are one proposed response, but they are likely to create new challenges in the form of significant added costs for manufacturers and American consumers,” National Association of Manufacturers President Jay Timmons said earlier this week. “In addition to these challenges, tariffs also run the risk of provoking China to take further destructive actions against American manufacturing workers.” The Mar gains in manufacturing were led by the durable-goods category an indicator of economic confidence.
U.S. Factory Jobs Power Ahead
Once again, what's there to say? Nervousness about interest rate hikes rattle investors & that makes the trade uncertainties even worse. Tech stocks which have been the darlings of many investors are under a cloud about their future with more regulation. These are not good times for the timid. The Dow is back under 24K after the bulls could not make their case for extending the 3 day rally. Stocks should be on defense next week.
Dow Jones Industrials
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