Dow recovered 31, decliners barley ahead of advancers & NAZ bounced back 12. The MLP index inched higher above 260 & the REIT index added 1 to 351. Junk bond funds did little & Treasuries retreated. Oil rose in the 68s & gold dropped another 9 to 1259.
AMJ (Alerian MLP Index tracking fund)
Stocks try to shake off trade threats
Peter Navarro, one of Pres's top trade advisors, said the market was overreacting to fears the administration would restrict foreign investment as part of its trade actions against China & other countries. Navarro said that the administration currently does not have any specific countries targeted. His comments came after news reports that stocks reeling over the prospect that the US could prevent companies that had at least 25% Chinese ownership from buying businesses that possessed "industrially significant technology." "There's no plans to impose investment restrictions on any countries that are interfering in any way with our country. This is not the plan," he said. Navarro's statement seemed to counteract much of the talk that the US was ready to take another step in its trade regime & his comments brought stocks well off their lows for the day. He insisted that markets were taking the wrong message from the reports, saying that investors instead should be focused on White House efforts to protect American exports & on the general progress in the economy. "I would say more broadly I think today's market reaction is a very large overreaction," Navarro said. "What we have here with Trump trade policy is a tremendous success for this country and this market. It's very bullish." Earlier in the day, Treasury Secretary Steve Mnuchin put out a tweet that indicated the administration won't focus its restriction efforts solely on China but on all countries. That sent the market to its lows of the day, a nearly 500 drop in the Dow on a day when volatility spiked. Navarro sought to tamp down the implication that Trump was looking for widespread restrictions. "The only thing that's going to happen in the near term is on Friday the Treasury secretary is going to report to the president on the issue related to China. That's all that's going to happen," he said. "With respect to other countries, there's absolutely nothing on the table." However, White House press secretary Sarah Huckabee Sanders later seemed to contradict Navarro, saying that other countries are being eyed. "As the secretary said, a statement will go out that targets all countries that are trying to steal our technology," Sanders told reporters. "We expect that to be out soon. We'll keep you posted."
Trade advisor Navarro says no plans for investment restrictions on China, other countries
Stocks are making an attempt to recover from a couple of weeks of selling, shown below. The buying today is not convincing & markets may be heading south later. Confusion about trade policy & what this means should be tested by the Dow.
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 68.69 | +0.61 | +0.9% |
| GC=F | Gold | 1,261.20 | -7.70 | -0.6% |
Equities tried to snap back after posting sharp losses to start the week. The Dow, NAZ & the S&P 500 were little changed in early trading. Overseas
China's Shanghai Composite finished the day down 0.5%, pushing the
index into a bear market, down 20.1% from its all-time high on Jan
24. Stocks sold off yesterday in reaction to the latest developments in a tit-for-tat trade dispute between the US & China. The Dow fell 328 (1.3%) to 24,252 & the S&P 500 slipped 37 (1.4%) to 2717 while NAZ was down 160 (2.1%) at 7532. The market came under
pressure following news reports that Pres Trump was
preparing a plan that would curb technology exports to China & bar
many Chinese companies from investing in US tech firms. Tech-heavy
NAZ posted its worst day in 3 months. In
a tweet, Treasury Secretary Steve Mnuchin disputed the reports,
calling them “false, fake news.” Mnuchin said the proposed investment
restrictions would apply to “all countries,” not just China, trying to
steal US technology. In today's market news, the Case-Shiller report on home prices national index for Apr rose a
seasonally adjusted 0.3% & was up 6.4% for the year in Apr. The
20-city index rose a seasonally adjusted 0.2%, rising 6.6% compared to a
year ago. The latest reading on consumer
confidence was also out. The Jun confidence came in at 126.4, versus the
estimate for 128. In
commodities, gold futures slid to a 6-month low as the $
climbed (gold is priced in $s), therefore, when the $
climbs it reduces demand for the commodity by holders of intl
currencies.
Stocks try to shake off trade threats
Despite Pres's tit-for-tat trade barbs,
America's CEOs are not wasting anytime in taking advantage of his tax
reform plan. Over $300B was repatriated to the US in Q1, according to the Bureau of Economic Analysis (BEA), the most
on record. “U.S. firms that used to build their
factories overseas in order to avoid U.S. taxes, they stopped in their
tracks because of the tax bill, they are bringing all the money home,”
said Kevin Hassett, chair of the Council of Economic
Advisers. The BEA notes the main driver of the repatriation
surge is that companies are no longer taxed on foreign earnings when
returning the funds to the US. “We fixed that really, really stupid
thing” said Hassett. By comparison just $38B was repatriated
during the same period a year ago. While
the BEA keeps the names & sums of corps repatriating
confidential, the latest data appear to show CEOs are likely sticking to
their pledge to bring more money earned overseas back to the US
promised shortly after the tax plan was signed by Pres Trump in
late Dec 2017. While it is not crystal clear how the lion's share of funds returning to
the US will be used, pro-growth economists hope it will be used for
hiring, boosting wages & other moves that will benefit the American
worker & eventually trickle down to the broader economy. This is why
many economists are boosting their GDP forecasts of 3-4%. Now, the last time repatriation funds saw a notable spike was in 2005,
following passage the year before of the American Jobs Creation Act,
which offered a tax holiday, among other tax benefits, under Pres Bush.
US companies repatriate record amount, since tax reform
Peter Navarro, one of Pres's top trade advisors, said the market was overreacting to fears the administration would restrict foreign investment as part of its trade actions against China & other countries. Navarro said that the administration currently does not have any specific countries targeted. His comments came after news reports that stocks reeling over the prospect that the US could prevent companies that had at least 25% Chinese ownership from buying businesses that possessed "industrially significant technology." "There's no plans to impose investment restrictions on any countries that are interfering in any way with our country. This is not the plan," he said. Navarro's statement seemed to counteract much of the talk that the US was ready to take another step in its trade regime & his comments brought stocks well off their lows for the day. He insisted that markets were taking the wrong message from the reports, saying that investors instead should be focused on White House efforts to protect American exports & on the general progress in the economy. "I would say more broadly I think today's market reaction is a very large overreaction," Navarro said. "What we have here with Trump trade policy is a tremendous success for this country and this market. It's very bullish." Earlier in the day, Treasury Secretary Steve Mnuchin put out a tweet that indicated the administration won't focus its restriction efforts solely on China but on all countries. That sent the market to its lows of the day, a nearly 500 drop in the Dow on a day when volatility spiked. Navarro sought to tamp down the implication that Trump was looking for widespread restrictions. "The only thing that's going to happen in the near term is on Friday the Treasury secretary is going to report to the president on the issue related to China. That's all that's going to happen," he said. "With respect to other countries, there's absolutely nothing on the table." However, White House press secretary Sarah Huckabee Sanders later seemed to contradict Navarro, saying that other countries are being eyed. "As the secretary said, a statement will go out that targets all countries that are trying to steal our technology," Sanders told reporters. "We expect that to be out soon. We'll keep you posted."
Trade advisor Navarro says no plans for investment restrictions on China, other countries
Stocks are making an attempt to recover from a couple of weeks of selling, shown below. The buying today is not convincing & markets may be heading south later. Confusion about trade policy & what this means should be tested by the Dow.
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