Dow dropped 54, advancers slightly ahead of decliners & NAZ gave back 15. The MLP index added 3+ to the 268s & the REIT index slid to the 328s. Junk bond funds dipped & Treasuries were sold, taking the yield on the 10 year Treasury up to 3.11%. Oil inched up in the 71s & gold was off 2 to 1289.
AMJ (Alerian MLP index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.84241416032558)
Larry Kudlow: We’re asking China to change its approach
Oil hovers near 4-1/2 year high on tightening supplies
The UN is forecasting that the global economy will expand by more than 3% this year & next year, but it warns that increasing risks could trigger "a shock to investment and trade" & a sharp drop to 1.8% growth in 2019. The UN mid-year report on the World Economic Situation & Prospects says growth in the world economy is surpassing expectations, reflecting further growth in developed countries & broadly favorable investment conditions. However, the report said, "downside risks" have increased including "a rise in the probability of trade conflicts between major economies." A UN official cited the Trump administration's imposition of tariffs in Jan & proposed new tariffs against China, but also the renegotiation of the US trade agreement with Mexico & Canada.
Canadian Prime Minister Trudeau said he felt "positive" about talks to rework the NAFTA trade pact, while a top Mexican official held out hope a deal could be hammered out by the end of May. US officials say the talks need to wrap up very soon to give the current Congress time to vote on a final text for a revamped North American Free Trade Agreement. "We've worked with them (the Americans) on a whole bunch of issues, including this morning in Washington where we have some of our top folks continuing the conversations. To be honest, we are down to a point where there is a good deal on the table," Trudeau said. "It's right down to the last conversations ... I'm feeling positive about this, but it won't be done until it's done and people are working very, very hard on it right now," he added. Mexico's Economy Minister Guajardo said a deal could be reached by the end of May, but added that if no agreement is reached the talks could extend beyond the Jul 1 Mexican presidential election. "If the conditions are defined by next week, nothing stands in the way of closing a deal by the end of May," Guajardo said. He added that his technical negotiating team is in DC but there is no date set for the next NAFTA ministerial meeting with the US & Canada. House Speaker Paul Ryan had said that the Rep-controlled Congress would need to be notified of a new deal by Thurs to give lawmakers a chance to approve it before a newly elected Congress takes over in Jan.
Canada 'positive' on NAFTA, Mexico says deal possible by end of May
A composite index of leading economic indicators gained for the 6th straight month in Apr. The Conference Board's Leading Economic Index gained 0.4% to 109.4, matching expectations. "In April, stock prices and housing permits were the only negative contributors, whereas the labor market components, which made negative contributions in March, improved," said Director of Business Cycles & Growth Research at The Conference Board Ataman Ozyildirim. The measure, which measures 10 key metrics of economic movement, jumped 0.3% to 109 in Mar, which followed a gain of 0.7% in Feb. The index is used to forecast global economic trends & take checks on the US economy. The Conference Board, a business research association, determines a composite value based on 10 key metrics, including manufacturers' new orders, stock prices & average weekly unemployment claims, to create the composite value. "April's increase and continued uptrend in the U.S. LEI suggest solid growth should continue in the second half of 2018," Ozyildirim said. "However, the LEI's six-month growth rate has recently moderated somewhat, suggesting growth is unlikely to strongly accelerate."
Leading indicators up for sixth straight month
There is a lot going on for stocks to digest & much of it is centered around trade talks. China, Iran, NAFTA, whatever. There is a lot going on. In fluid situations it's difficult to figure out what anything means. Meanwhile Treasury yields keep climbing, as expected. And rising oil prices are increasing prices at gas pumps. The Dow continues its sideways trend which looks like it could continue for some time.
Dow Jones Industrials
AMJ (Alerian MLP index tracking fund)
Chinese officials who arrived in DC for trade talks with will likely present a proposal for
the US trade delegation on Wed, possibly extending the
negotiating process, according to Larry Kudlow, chief economic adviser
to Pres Trump. “We expect they may have a
proposal for us, which would extend the conversation and permit
additional negotiations,” he said. “In other words, I’m kind of positive on this
story.” Trump has been insistent about
reducing the trade deficit between the 2 countries by $200B
from the current $370B. The White House has blamed the deficit
for the loss of Ms of US jobs, which it says are then added to
the Chinese economy. Led by Treasury Sec Steve Mnuchin, the US negotiating team
plans to ask the Chinese to change their trade approach in a number of
areas, including opening their markets, lowing their trade & non-trade
barriers & allowing additional American exports, Kudlow said. But when the US delegation met with officials in
Beijing last week, no deal was reached in large part because China
refused a demand to cut the trade deficit by $200B within the
next 2 years. “We have an opportunity here
to bring some significant changes to China-American trade policy,”
Kudlow said. “Changes, by the way, [that] will make for fairer and more
legal trading practices.” Trump will be
meeting with China's Vice Premier Liu He at the White House Thurs, Kudlow said, adding there’s “great interest” in furthering
the potential deal and negotiations.
Larry Kudlow: We’re asking China to change its approach
Oil prices continue to rally as supply tightens & demand remains strong, with both US crude & the intl
benchmark, Brent crude, climbing to their highest prices since Nov
2014. US crude oil edged above $72 a barrel today while Brent crude was trading near $80 a barrel. As
oil prices rise, American drivers are paying more at the pump. The
national average for gas prices was $2.90 per gallon yesterday.
This comes just as the traditional peak driving season, which runs from
the Memorial Day weekend thru the Labor Day weekend is about to kick
off. The highest recorded gas price was $4.11. While
oil prices are rising, the International Energy Agency (IEA) said yesterday that it had lowered its global oil demand growth forecast for
2018 to 1.4M barrels per day (bpd) from 1.5M bpd. The
organization added that although supplies currently stand
at 98M bpd due to supply cuts led by OPEC, that strong non-OPEC growth in oil
will lead the market to grow 1.87M bpd next year.
Oil hovers near 4-1/2 year high on tightening supplies
The world's largest container shipping company
Moller-Maersk, is the latest corp to announce it is
preparing to cease operations in Iran after Pres Trump withdrew
from the nuclear deal last week & vowed to reinstate “powerful
sanctions.” Maersk, based in
Copenhagen, said that the firm
was closing down its business in Iran, though it hadn't pinned down the
exact timeframe. The company said a jump in oil prices following the
US exit was not helping its business. The
EU hopes to nuclear deal intact, but moves from companies,
like Maersk, suggest a lack of confidence & a fear of US reprisal. French
energy group Total announced on yesterday that it would abdicate a
$2B project in the South Pars gas field before Nov 4 unless it’s
granted a waiver from the US protecting it against sanctions. Earlier in the week, the chief exec of
Munich-based Siemens said that his company could not do any new
business in Iran because it faced the possibility of retaliatory
sanctions from the US. Switzerland-based MSC,
the world's 2nd-largest shipping group, said yesterday it would no
longer accept bookings for shipments to & from Iran. German
insurer Allianz warned this week it was identifying its Iran-related
businesses & preparing to “wind-down plans for relevant business to
ensure appropriate termination within the defined periods,” a
spokesperson said. Last
week, Trump announced his decision to withdraw from the Iran nuclear
deal & vowed to reinstate the “highest level” of sanctions on the
Iranian regime. Trump also suggested that other nations that continue to
deal with Iran could also be sanctioned by the US.
Trump’s Iran deal withdrawal sparks corporate exodus
The UN is forecasting that the global economy will expand by more than 3% this year & next year, but it warns that increasing risks could trigger "a shock to investment and trade" & a sharp drop to 1.8% growth in 2019. The UN mid-year report on the World Economic Situation & Prospects says growth in the world economy is surpassing expectations, reflecting further growth in developed countries & broadly favorable investment conditions. However, the report said, "downside risks" have increased including "a rise in the probability of trade conflicts between major economies." A UN official cited the Trump administration's imposition of tariffs in Jan & proposed new tariffs against China, but also the renegotiation of the US trade agreement with Mexico & Canada.
UN forecasting global economy will expand by over 3 percent
Pres Trump is expected to meet with a top Chinese official who is in DC for trade talks with US. officials. White House economic adviser Larry Kudlow said the meeting would take place Thurs. Treasury
Sec Steve Mnuchin is leading talks with Chinese Vice Premier Liu
He aimed at avoiding a trade war between the world's 2 biggest
economies. Commerce Secretary Wilbur Ross, US
Trade Representative Robert Lighthizer, Kudlow & trade advisers Peter
Navarro & Everett Eissenstat will also participate. The Trump administration has proposed tariffs on
up to $150B in Chinese products to punish Beijing for forcing
American companies to turn over technology in exchange for access to the
Chinese market. China has counterpunched by targeting $50B in
US products. Neither country has imposed the tariffs.
Trump to meet with Chinese official to discuss trade
Long-term US mortgage rates jumped this week, marking their highest levels in 7 years amid the peak home buying season. The
benchmark 30-year rate pushed toward the significant 5% level.
Mortgage buyer Freddie Mac said the average rate on 30-year,
fixed-rate mortgages was 4.61%, up from 4.55% last week.
The new average rate was the highest since 2011. By contrast,
the 30-year rate averaged 4.02% a year ago. The average rate on 15-year, fixed-rate loans climbed to 4.08% from 4.01% last week. The
latest indications of a strong economy & rising commodity prices,
gasoline is at a 4-year high, lifted yields on bonds & mortgage
rates followed suit. US
retail sales rose at a solid pace in Apr, a sign that consumers may be rebounding from weak
spending earlier this year & driving stronger economic growth.
Consumer spending has rebounded in the past 2 months after a weak
Jan & Feb, a trend that could accelerate growth in Q2. Despite higher borrowing
costs & home prices, demand for home purchases has grown so far in the
spring buying season, as the economic outlook has continued to improve & bolstered consumer confidence. Still,
"inflationary pressures and the prospect of (mortgage) rates approaching
5 percent could begin to hit the psyche of some prospective buyers,"
said Freddie Mac.
US average mortgage rates at 7-year highs; 30-year 4.61 pct.
China said it doesn't want to see
increased trade tensions with the US as the 2 countries hold talks
in DC this week, but it's prepared for any outcome & will
defend its own interests. The comments by a
Chinese Commerce Ministry spokesman came after Pres Trump
tweeted that there has been "no folding" in the discussions. Spokesman
Gao Feng also said that China hopes the US will take
"concrete action" to resolve a case involving Chinese tech company ZTE,
which DC hit with a crippling ban on buying from US suppliers
after it violated US sanctions. Steve Mnuchin & Chinese Vice Premier Liu He are leading
talks in DC & tomorrow aimed at averting a trade war
between the 2 economies. "We
do not want to see the escalation of the trade frictions between China
and the U.S.," Gao said at a weekly briefing. "Of course, we are also
prepared for all possibilities." ZTE's 7-year US business
ban, ordered last month, led the company to say it was ceasing
operations because it cannot get the parts it needs for manufacturing
telecommunications equipment & smart phones. Earlier this week, Trump
surprised many by hinting in a tweet that he wanted to find a way to
keep the company afloat. The 2 countries are
reportedly attempting a swap: Relief for ZTE in return for Beijing
dropping plans to impose tariffs on US farm products. "We will resolutely defend our own interests and will not trade our core interests," Gao said, when asked about the reports. Trump tweeted on yesterday, "Nothing has happened with ZTE except as it pertains to the larger trade deal."
China vows to defend its own interests in US trade talks
Canadian Prime Minister Trudeau said he felt "positive" about talks to rework the NAFTA trade pact, while a top Mexican official held out hope a deal could be hammered out by the end of May. US officials say the talks need to wrap up very soon to give the current Congress time to vote on a final text for a revamped North American Free Trade Agreement. "We've worked with them (the Americans) on a whole bunch of issues, including this morning in Washington where we have some of our top folks continuing the conversations. To be honest, we are down to a point where there is a good deal on the table," Trudeau said. "It's right down to the last conversations ... I'm feeling positive about this, but it won't be done until it's done and people are working very, very hard on it right now," he added. Mexico's Economy Minister Guajardo said a deal could be reached by the end of May, but added that if no agreement is reached the talks could extend beyond the Jul 1 Mexican presidential election. "If the conditions are defined by next week, nothing stands in the way of closing a deal by the end of May," Guajardo said. He added that his technical negotiating team is in DC but there is no date set for the next NAFTA ministerial meeting with the US & Canada. House Speaker Paul Ryan had said that the Rep-controlled Congress would need to be notified of a new deal by Thurs to give lawmakers a chance to approve it before a newly elected Congress takes over in Jan.
Canada 'positive' on NAFTA, Mexico says deal possible by end of May
A composite index of leading economic indicators gained for the 6th straight month in Apr. The Conference Board's Leading Economic Index gained 0.4% to 109.4, matching expectations. "In April, stock prices and housing permits were the only negative contributors, whereas the labor market components, which made negative contributions in March, improved," said Director of Business Cycles & Growth Research at The Conference Board Ataman Ozyildirim. The measure, which measures 10 key metrics of economic movement, jumped 0.3% to 109 in Mar, which followed a gain of 0.7% in Feb. The index is used to forecast global economic trends & take checks on the US economy. The Conference Board, a business research association, determines a composite value based on 10 key metrics, including manufacturers' new orders, stock prices & average weekly unemployment claims, to create the composite value. "April's increase and continued uptrend in the U.S. LEI suggest solid growth should continue in the second half of 2018," Ozyildirim said. "However, the LEI's six-month growth rate has recently moderated somewhat, suggesting growth is unlikely to strongly accelerate."
Leading indicators up for sixth straight month
There is a lot going on for stocks to digest & much of it is centered around trade talks. China, Iran, NAFTA, whatever. There is a lot going on. In fluid situations it's difficult to figure out what anything means. Meanwhile Treasury yields keep climbing, as expected. And rising oil prices are increasing prices at gas pumps. The Dow continues its sideways trend which looks like it could continue for some time.
Dow Jones Industrials
No comments:
Post a Comment