Dow tumbled 342, decliners over advancers 3-1 & NAZ gave back 88. The MLP index was fractionally lower to the 255s & the REIT index lost 1 to 331. Junk bond funds were mixed & Treasuries found buyers today. Oil fell in the 67s & gold added 8 to 1313 while stocks were being sold.
AMJ (Alerian MLP Index tracking fund)
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Stocks lower on trade concerns, Tesla leads tech sector lower
US trade deficit drops as exports hit record high
The Institute for Supply Management said its manufacturing index fell to a 4-month in Apr to a reading of 56.8%, down from 58.8% in Mar. The index has fallen 3 months in a row after hitting a cycle high in Jan. Any reading above 50% indicates improving conditions. The forecast called for a reading of 58%.
The latest earnings have been uninspiring & Mnuchin is beginning important trade talks in China. Traders are nervous & have been selling stocks. The longer term chart for the Dow below is dreary. YTD The Dow is down more than 1.1K.
Dow Jones Industrials
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| Crude Oil | 67.49 | -0.44 | -0.7% |
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| Gold | 1,316.40 | +10.80 | +0.8% |
Stocks declined, as
Treasury Sec Steve Mnuchin arrives in Beijing for key trade
talks. According to Chinese state media, the country will stand up to
US bullying if needed while also saying it is better to settle tariff
disputes out around the negotiating table. Investors also digested the latest economic data & corp earnings reports. Stocks fell yesterday after the Federal Reserve
said at the conclusion of its 2-day meeting that inflation was
approaching the Fed's 2% target, adding to concern that the central bank
will put the brakes on economic growth with an interest rate hike. Today,
there is a full plate of economic data. Data releases included US
trade deficit, which dropped as exports hit a record high, while US
worker productivity increased modestly in Q1. Commodities were mixed with gold higher & oil lower.
Stocks lower on trade concerns, Tesla leads tech sector lower
The US trade deficit narrowed sharply in Mar
as exports increased to a record high amid a surge in deliveries of
commercial aircraft & soybeans. The Commerce
Dept said the trade gap dropped 15.2% to $49B, the lowest level since Sep. Data for Feb was revised
slightly to show the trade gap widening to $57.7B, which was the
highest level since 2008 (Lehman collapse), instead of the previously reported
$57.6B. The Mar decline ended 6
straight monthly increases in the trade deficit. Economists had forecast the trade gap narrowing to $50B. The
politically sensitive goods trade deficit with China dropped 11.6% to $25.9B, which will probably do little to ease tensions
between the 2 countries. Pres Trump has threatened tariffs on
up to $150B worth of Chinese goods to punish Beijing over its
joint-venture requirements & other policies DC says force
American companies to surrender their intellectual property to
state-backed Chinese competitors. China, which
denies it coerces such technology transfers, has threatened retaliation
in equal measure, including tariffs on US soybeans & aircraft. Trump,
who claims the US is being taken advantage of by its trading
partners, has already imposed broad tariffs on imported solar panels & large washing machines. He recently slapped import duties
on steel & aluminum. The
deficit with Mexico vaulted 32.8% to a record $8.1B in
Mar. The US had a $0.3B surplus with Canada in Mar. When
adjusted for inflation, the trade deficit dropped to $62.1B from
$69.0B in Feb. The gov reported last week that trade
contributed 0.20 percentage point to the Q1 2.3%
annualized growth pace. In Mar, exports of
goods & services increased 2.0% to an all-time high of $208.5B, lifted by a $1.9B increase in shipments of commercial
aircraft. There were also increases in exports of soybeans, corn &
crude oil. Real goods exports were the highest on record. Exports to China jumped 26.3% in Mar. Imports
of goods & services fell 1.8% to $257.5B, in part as
the boost from royalties & broadcast license fees related to the
Winter Olympics faded. Imports of capital goods fell by $1.5B,
weighed down by declines in imports of computer accessories,
telecommunications equipment & semiconductors. Imports
of consumer goods decreased by $0.9B. Crude oil imports dropped
by $0.5B in Mar. Imports from China fell 2.1% in Mar.
US trade deficit drops as exports hit record high
Steve Mnuchin arrived in
Beijing for key trade talks, with Chinese state media saying
China will stand up to US bullying if needed but that it was still
better to hash things out around the negotiating table. A
breakthrough deal to fundamentally change China's economic policies is
viewed as highly unlikely during the two-day visit, though a package of
short-term Chinese measures could delay a US decision to impose
tariffs on around $50B worth of Chinese exports. The
discussions, led by Mnuchin & Chinese Vice Premier Liu He, are
expected to cover a wide range of US complaints about China trade
practices, from allegations of forced technology transfers to state
subsidies for technology development. "Thrilled
to be here. Thank you," Mnuchin told reporters upon arriving. The US Embassy said the delegation
planned to leave tomorrow evening. They would meet the Chinese on both
days, in addition to US Ambassador Terry Branstad. In
an editorial, the official China Daily said Beijing wanted the talks to
produce "feasible solutions to put an end to the ongoing feud" & that
they could go well if the US delegation genuinely wants to listen as
well as talk. China "will stand up to the US
bullying as necessary. And as a champion of globalization, free trade
&and multilateralism, it will have strong support from the intl
community," the paper added. "The
U.S. wants greater access to China's market, but it should not use
trade actions as a battering ram to force China to open its doors. It is
already in the process of opening them wider," the paper said. In doing so, China expected DC to reciprocate & open its market to Chinese investments & competition. Widely-read
Chinese tabloid the Global Times, published by the ruling Communist
Party's People's Daily, said it hoped the talks were the start of a
resolution to the dispute. "Washington and
Beijing should be clear: neither side can scare the other down.
Negotiations are the best way to resolve the problem." The
first round of threatened tariffs under the US gov "Section
301" intellectual property probe focused heavily on technology products
benefiting from the "Made in China 2025" program to upgrade China's
domestic manufacturing base with more advanced products. US tariffs could go into effect in Jun following the completion of a 60-day consultation period.
Treasury Secretary arrives in Beijing for trade talks
The Institute for Supply Management said its manufacturing index fell to a 4-month in Apr to a reading of 56.8%, down from 58.8% in Mar. The index has fallen 3 months in a row after hitting a cycle high in Jan. Any reading above 50% indicates improving conditions. The forecast called for a reading of 58%.
ISM nonmanufacturing index slows to four-month low in April
The latest earnings have been uninspiring & Mnuchin is beginning important trade talks in China. Traders are nervous & have been selling stocks. The longer term chart for the Dow below is dreary. YTD The Dow is down more than 1.1K.
Dow Jones Industrials
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