Dow rose 109, advancers barely over decliners & NAZ slid back 4 from its record close yesterday. The MLP index fluctuated in the 271 & the REIT index was off fractionally to the 343s. Junk bond funds inched higher & Treasuries declined in trading. Oil was off pennies in the 65s & gold added 1+ to 1303.
AMJ (Alerian MLP Index tracking fund)
The US trade deficit fell to a 7-month low in Apr as exports rose to a record high, lifted by an increase in shipments of industrial materials & soybeans. The Commerce Dept said the trade gap dropped 2.1% to $46.2B, the smallest since Sep. Data for Mar was revised to show the trade deficit falling to $47.2B, instead of the previously reported $49.0B. The gov also revised trade data going back to 2010. The forecast was for the trade deficit to remain unchanged at $49B in Apr. When adjusted for inflation, the trade gap narrowed to $77.5B from $78.2B in Mar. The real trade deficit is below its $82.5B average in Q1. If the trend in the real trade deficit is maintained, trade could contribute to GDP in Q2 after having a neutral impact in Q1. Strong data ranging from manufacturing to consumer spending & the labor market have led the Federal Reserve Bank of Atlanta to estimate that economic growth in Q2 will top a 4.0% annualized rate. The economy grew at a 2.2% pace in Q1. But a protectionist trade policy being pursued by Pres Trump poses a threat to the otherwise rosy economic outlook. Trump in Mar announced tariffs for steel & aluminum imports to protect domestic industries from what he says is unfair competition from foreign producers.
US trade deficit falls to 7-month low
The tech bulls have hit the pause button after NAZ has been strong in the last 2 months. Trade negotiations & reactions to higher tariffs are in the background & everybody is trying to figure out what these changes will mean for the US & global economies. Even including today's advance by the Dow, it's still looking up at the 25K ceiling, &, a little lower from where it was 3 months ago.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 65.30 | -0.22 | -0.3% |
| GC=F | Gold | 1,304.80 | +2.60 | +0.2% |
The EU announced it would impose retaliatory tariffs on the US beginning in Jul, in response to Pres Trump's duties on steel & aluminum imports from Europe. “This
is a measured and proportionate response to the unilateral and illegal
decision taken by the United States to impose tariffs on European steel
and aluminum exports,” Cecilia Malmström, the European commissioner for
trade, said. The EU said it will impose the "rebalancing" tariffs on about $3.3B (€2.8B) worth of US steel, bourbon,
agricultural products including sweetcorn, orange juice, cranberries & certain clothing made of cotton. The
world's largest trading bloc notified the World Trade Organization (WTO)
of the plan, & will impose additional duties of about $4.2B
(€3.6B) in 3 years' time if the case is ongoing, or
after the WTO rules in favor of the EU. “The EU's reaction is fully in line with
international trade law,” Malmström said. “We regret that the United
States left us with no other option than to safeguard EU interests.” Pres Trump last week imposed 25% tariffs on steel & 10%
duties on aluminum imported from the EU (in addition to Mexico &
Canada), removing an earlier 2-month exemption, citing national
security concerns. “We take the view that
without a strong economy, you can’t have strong national security,”
Commerce Sec Wilbur Ross said last
week. The move was scrutinized by leaders in
the EU & lawmakers stateside, including from Trump's party. Sen.Ben Sasse called the decision “dumb,” adding “you don’t treat
allies the same way you treat opponents.”
EU to impose retaliatory tariffs on US starting in July
The US trade deficit fell to a 7-month low in Apr as exports rose to a record high, lifted by an increase in shipments of industrial materials & soybeans. The Commerce Dept said the trade gap dropped 2.1% to $46.2B, the smallest since Sep. Data for Mar was revised to show the trade deficit falling to $47.2B, instead of the previously reported $49.0B. The gov also revised trade data going back to 2010. The forecast was for the trade deficit to remain unchanged at $49B in Apr. When adjusted for inflation, the trade gap narrowed to $77.5B from $78.2B in Mar. The real trade deficit is below its $82.5B average in Q1. If the trend in the real trade deficit is maintained, trade could contribute to GDP in Q2 after having a neutral impact in Q1. Strong data ranging from manufacturing to consumer spending & the labor market have led the Federal Reserve Bank of Atlanta to estimate that economic growth in Q2 will top a 4.0% annualized rate. The economy grew at a 2.2% pace in Q1. But a protectionist trade policy being pursued by Pres Trump poses a threat to the otherwise rosy economic outlook. Trump in Mar announced tariffs for steel & aluminum imports to protect domestic industries from what he says is unfair competition from foreign producers.
US trade deficit falls to 7-month low
ZTE has signed an agreement in principle that
would lift a Commerce Dept ban on buying from US
suppliers, allowing China's #2 telecommunications equipment maker to
get back into business, according to sources. ZTE ceased
major operations since the 7-year ban was imposed on the company in
Apr for breaking a 2017 agreement reached after it was caught
illegally shipping goods to Iran & North Korea. A Commerce Dept spokesman said that "no definitive agreement has been signed by both parties." The preliminary deal includes a $1B fine
against ZTE plus $400M in escrow to cover any future violations, adding that the terms were in line with US demands on Fri. The
Commerce Dept plans to amend its 2017 settlement agreement &
count the $361M ZTE paid as a part of that, allowing the US to claim a total penalty of as much as $1.7B. Over the weekend, ZTE signed the
agreement drawn up by the US, sources said, but the
amended settlement has not been signed. ZTE's survival has been a topic of discussion in high-level US-China trade talks. Pres Trump planned to meet with his trade advisers yesterday to discuss China's offer to import an extra $70B of
American goods over a year as a way to defuse a potential trade war
between the 2 economies. Trump
tweeted last month that he told Commerce officials to find a way
for ZTE to resume operations, later suggesting penalties of a $1.3B fine & changes to its board & top management. As
part of the deal, ZTE promised to replace its board &
executive team in 30 days. It would also allow unfettered site visits to
verify that US components are being used as claimed by the company, & post calculations of US parts in its products on a public website,
they added. ZTE's
resuscitation with US help has met strong resistance in Congress,
where both Dems & Trump's fellow Reps have accused him of
bowing to pressure from Beijing to help a company that has been labeled a
threat to US national security.
China's ZTE signed preliminary agreement to lift U.S. ban: Sources
The tech bulls have hit the pause button after NAZ has been strong in the last 2 months. Trade negotiations & reactions to higher tariffs are in the background & everybody is trying to figure out what these changes will mean for the US & global economies. Even including today's advance by the Dow, it's still looking up at the 25K ceiling, &, a little lower from where it was 3 months ago.
Dow Jones Industrials
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