Dow was off 42, advancers over decliners about 2-1 & NAZ advanced 55 to another record. The MLP index added 2+ to the 266s & the REIT index rose 3+ to the 346s. Junk bond funds did little & Treasuries were sold, taking the yield on the 10 year Treasury up 3 basis points to 2.93%. Oil went up to almost 66 (more below) & gold dropped 7 to 1271.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.8116015171332475)
Trump says he's going to sign a measure to keep migrant families together
Senate Reps & Dems both criticized Commerce Secretary Wilbur Ross over what they called a confusing & damaging Trump administration process of imposing tariffs. Appearing before the Senate Finance Committee, Ross defended the White House's measures targeting steel & aluminum imports due to what it deems national security concerns. In a rare move, the policy has united most lawmakers against the pres. Senators from both parties drilled into Ross over the tariffs on metals & separate actions targeting Chinese imports. Lawmakers broadly questioned the administration's trade actions, which have prompted retaliation from major trading partners such as China, the EU & Canada. Many raised concerns about costs passed on to manufacturers & consumers by higher-priced metals. The hearing comes as duties imposed by DC & Beijing have raised fears about potential economic harm and contributed to stock markets broadly falling early this week. The actions have strained relations between Pres Trump & world leaders. Ross defended the administration's actions, saying he believes they will deter allegedly unfair trade practices that Trump pledged to end. He also brushed off concerns about a sloppy process of implementing the metals tariffs & hearing requests to exclude certain products from the measures. Lawmakers raised fears about the Commerce Dept picking winners & losers in the economy. "This administration is standing up for American families, American businesses and American workers by taking action to reduce imports that threaten our national security," the Commerce secretary said. The White House also has made "no decision" on whether to recommend tariffs on automobiles & auto parts on national security grounds, Ross added. Several senators urged him not to impose the measures, arguing the actions would pass on even more costs to consumers. Many senators said they agreed with the Trump administration's moves to crack down on alleged Chinese theft of intellectual property or modernize the North American Free Trade Agreement. However, several lawmakers questioned why steel from ally Canada is a national security threat.
Republicans and Democrats both hammer Commerce's Ross over messy Trump tariff process
China's willingness to boycott imported goods in order to inflict economic pain on its adversaries is often referred to as "boycott diplomacy." It is a strategy that China has deployed on a number of countries. At the height of the South China Sea conflict in 2016, China administered an unofficial boycott of mangoes & bananas from the Philippines. The region is still in dispute. Years before that, China boycotted salmon from Norway during a hotly contested human rights issue, & Norway eventually relented. 5 years back, the world's 2nd largest economy also boycotted Japanese cars & minerals over a territorial dispute in the East China Sea. Perhaps most concerning was last year, when China launched an unofficial, wide-ranging boycott of South Korea goods, from entertainment 7 cars to makeup, in response to the deployment of the THAAD anti-missile system. The boycott hit hard. South Korean carmakers Kia & Hyundai reported a decline in sales & official figures from South Korea showed a decline in tourism attributed to fewer Chinese visitors. The fear is that the next country to experience China's boycott diplomacy will be the US.
China's boycott of US goods remains a real threat
Chinese acquisitions & investments in the US fell 92% to just $1.8B in the first 5 months of this year, consulting and research firm Rhodium Group said. Counting divestitures, net Chinese deal flow to the US during that time was a negative $7.8B, the report said. The decline follows a sharp drop in H2 as pressure from both Beijing & the Trump administration curbed a recent surge in cross-border investment. Completed Chinese deals in the US hit a record $46B in 2016 & dropped to $29B in 2017. In a search for investment opportunities, Chinese companies went on an overseas buying spree in 2015 & 2016. But now, China wants to limit capital flight & excessive leverage. The US is worried about intellectual property protection & has increased scrutiny of deals on the basis of national security. The Trump administration has also threatened restrictions on investment based on a "Section 301" investigation, the same study that led to the latest tariff announcements. As a result, acquisitions worth more than $2B in the first 5 months of this year have fallen apart.
Chinese investment in the US drops 90% amid political pressure
US home sales unexpectedly fell in May as an acute shortage of properties on the market pushed house prices to a record high. The National Association of Realtors said that existing home sales slipped 0.4% to a seasonally adjusted annual rate of 5.43M units last month, the 2nd straight monthly decline in sales. The forecast called for existing home sales rising 1.5% to a rate of 5.52M units in May. Existing home sales (90% of home sales) dropped 3.0% on a year-on-year basis in May. They have declined on that basis for 3 straight months. Home sales have largely treaded water this year as strong demand depletes the supply of properties on the market, causing house prices to rise faster than wages. Supply has been especially tight at the lower end of the market, which accounts for a large portion of the housing market. With mortgage rates rising back to 7 year highs, purchasing a home could become even more expensive for first-time buyers. Housing demand is being driven by the lowest unemployment rate in 18 years. The 30-year fixed mortgage rate rose 8 basis points to an average of 4.62% last week, according to Freddie Mac. Mortgage rates are likely to rise further after the Federal Reserve increased interest rates last week for a 2nd time this year & forecast 2 more rate hikes before the end of 2018. There were 1.85M previously-owned homes on the market in May. While that was up 2.8% from Apr, housing inventory was down 6.1% from a year ago. Supply has declined for 36 straight months on a year-on-year basis. At May's sales pace, it would take 4.1 months to exhaust the current inventory, up from 4.0 months in Apr. A 6-7 month supply is viewed as a healthy balance between supply & demand. The median house price increased 4.9% from a year ago to an all-time high of $264K in May, the 75th consecutive month of year-on-year price gains.
US existing home sales fall for second straight month
Prices for US benchmark oil futures settled with a gain, at a nearly one-week high, after US gov data revealed the biggest weekly decline in US crude supplies since Jan. Global benchmark Brent crude prices, however, finished lower as traders monitored comments from major oil producers gathering for the much-anticipated OPEC meeting at the end of the week. Jul West Texas Intermediate crude which expired at the end of the trading session, added $1.15 (1.8%) to settle at $66.22 a barrel, the highest finish for the contract since Jun 14. Aug WTI crude (now the front-month contract) tacked on 81¢ (nearly 1.3%) to $65.71. Aug Brent oil, the intl benchmark, lost 34¢ (nearly 0.5%) to finish at $74.74 a barrel. The Energy Information Administration reported that crude supplies dropped 5.9M barrels for the latest week. The forecast called for a fall of 3.7M barrels, while the American Petroleum Institute on Tues reported a decline of 3M barrels, according to sources. Meanwhile, Saudi Arabia, fellow members of OPEC, & a handful of non-OPEC countries including Russia need to agree on a sustainable production number when they meet at the end of the week.
Tech shares are still attractive to buyers, even with all the confusion over higher tariffs. The NAZ is up an amazing 13% YTD while the Dow is still in the red. That is a significant disconnect which can not last. The drama in DC is extremely high & has the potential to affect the stock market. Meanwhile the Dow is plodding along, unable to advance while higher tariff issues dominate investor thinking.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Pres Trump said he plans to sign an executive order designed to keep
families together during detention on the US-Mexico border. "I'll be signing something in a little
while that's going to do that," he told reporters, saying he wanted families to be kept together. "I'll be
doing something that's somewhat pre-emptive and ultimately will be
matched by legislation I'm sure." Trump added: "We're
keeping families together, but we have to keep our borders strong. We
will be overrun with crime and with people that should not be in our
country." The order is expected to allow
families to be housed together even while adults in the family are being
detained or prosecuted for crossing the US border illegally or for
seeking asylum at the border outside of a designated border entry point. Speaking at the start of a meeting with members of Congress, Trump
said he faced a dilemma as criticism of his administration's policy has
grown louder in the past week. "The dilemma is if you're
weak, ... the country is going to be overwhelmed with [undocumented
immigrants]. ... If you're strong, then you don't have any heart.
Perhaps I'd like to be strong," the pres said. A document was being drafted by Homeland Security Secretary Kirstjen Nielsen in collaboration with White House lawyers. Nielsen has been the
administration's most public face in defending the highly controversial
policy, put in place this spring. The Defense Dept is
expected to assist DHS & the Health & Human Services Department,
which are being stretched to the limit by the demands of housing the
surging numbers of individuals who are being taken into custody. At least 2K children
have been separated from their parents under the Trump administration's
new "zero tolerance" policy, under which every adult detained at the
border is immediately taken into custody for prosecution.
Trump says he's going to sign a measure to keep migrant families together
Senate Reps & Dems both criticized Commerce Secretary Wilbur Ross over what they called a confusing & damaging Trump administration process of imposing tariffs. Appearing before the Senate Finance Committee, Ross defended the White House's measures targeting steel & aluminum imports due to what it deems national security concerns. In a rare move, the policy has united most lawmakers against the pres. Senators from both parties drilled into Ross over the tariffs on metals & separate actions targeting Chinese imports. Lawmakers broadly questioned the administration's trade actions, which have prompted retaliation from major trading partners such as China, the EU & Canada. Many raised concerns about costs passed on to manufacturers & consumers by higher-priced metals. The hearing comes as duties imposed by DC & Beijing have raised fears about potential economic harm and contributed to stock markets broadly falling early this week. The actions have strained relations between Pres Trump & world leaders. Ross defended the administration's actions, saying he believes they will deter allegedly unfair trade practices that Trump pledged to end. He also brushed off concerns about a sloppy process of implementing the metals tariffs & hearing requests to exclude certain products from the measures. Lawmakers raised fears about the Commerce Dept picking winners & losers in the economy. "This administration is standing up for American families, American businesses and American workers by taking action to reduce imports that threaten our national security," the Commerce secretary said. The White House also has made "no decision" on whether to recommend tariffs on automobiles & auto parts on national security grounds, Ross added. Several senators urged him not to impose the measures, arguing the actions would pass on even more costs to consumers. Many senators said they agreed with the Trump administration's moves to crack down on alleged Chinese theft of intellectual property or modernize the North American Free Trade Agreement. However, several lawmakers questioned why steel from ally Canada is a national security threat.
Republicans and Democrats both hammer Commerce's Ross over messy Trump tariff process
China's willingness to boycott imported goods in order to inflict economic pain on its adversaries is often referred to as "boycott diplomacy." It is a strategy that China has deployed on a number of countries. At the height of the South China Sea conflict in 2016, China administered an unofficial boycott of mangoes & bananas from the Philippines. The region is still in dispute. Years before that, China boycotted salmon from Norway during a hotly contested human rights issue, & Norway eventually relented. 5 years back, the world's 2nd largest economy also boycotted Japanese cars & minerals over a territorial dispute in the East China Sea. Perhaps most concerning was last year, when China launched an unofficial, wide-ranging boycott of South Korea goods, from entertainment 7 cars to makeup, in response to the deployment of the THAAD anti-missile system. The boycott hit hard. South Korean carmakers Kia & Hyundai reported a decline in sales & official figures from South Korea showed a decline in tourism attributed to fewer Chinese visitors. The fear is that the next country to experience China's boycott diplomacy will be the US.
China's boycott of US goods remains a real threat
Chinese acquisitions & investments in the US fell 92% to just $1.8B in the first 5 months of this year, consulting and research firm Rhodium Group said. Counting divestitures, net Chinese deal flow to the US during that time was a negative $7.8B, the report said. The decline follows a sharp drop in H2 as pressure from both Beijing & the Trump administration curbed a recent surge in cross-border investment. Completed Chinese deals in the US hit a record $46B in 2016 & dropped to $29B in 2017. In a search for investment opportunities, Chinese companies went on an overseas buying spree in 2015 & 2016. But now, China wants to limit capital flight & excessive leverage. The US is worried about intellectual property protection & has increased scrutiny of deals on the basis of national security. The Trump administration has also threatened restrictions on investment based on a "Section 301" investigation, the same study that led to the latest tariff announcements. As a result, acquisitions worth more than $2B in the first 5 months of this year have fallen apart.
Chinese investment in the US drops 90% amid political pressure
US home sales unexpectedly fell in May as an acute shortage of properties on the market pushed house prices to a record high. The National Association of Realtors said that existing home sales slipped 0.4% to a seasonally adjusted annual rate of 5.43M units last month, the 2nd straight monthly decline in sales. The forecast called for existing home sales rising 1.5% to a rate of 5.52M units in May. Existing home sales (90% of home sales) dropped 3.0% on a year-on-year basis in May. They have declined on that basis for 3 straight months. Home sales have largely treaded water this year as strong demand depletes the supply of properties on the market, causing house prices to rise faster than wages. Supply has been especially tight at the lower end of the market, which accounts for a large portion of the housing market. With mortgage rates rising back to 7 year highs, purchasing a home could become even more expensive for first-time buyers. Housing demand is being driven by the lowest unemployment rate in 18 years. The 30-year fixed mortgage rate rose 8 basis points to an average of 4.62% last week, according to Freddie Mac. Mortgage rates are likely to rise further after the Federal Reserve increased interest rates last week for a 2nd time this year & forecast 2 more rate hikes before the end of 2018. There were 1.85M previously-owned homes on the market in May. While that was up 2.8% from Apr, housing inventory was down 6.1% from a year ago. Supply has declined for 36 straight months on a year-on-year basis. At May's sales pace, it would take 4.1 months to exhaust the current inventory, up from 4.0 months in Apr. A 6-7 month supply is viewed as a healthy balance between supply & demand. The median house price increased 4.9% from a year ago to an all-time high of $264K in May, the 75th consecutive month of year-on-year price gains.
US existing home sales fall for second straight month
Prices for US benchmark oil futures settled with a gain, at a nearly one-week high, after US gov data revealed the biggest weekly decline in US crude supplies since Jan. Global benchmark Brent crude prices, however, finished lower as traders monitored comments from major oil producers gathering for the much-anticipated OPEC meeting at the end of the week. Jul West Texas Intermediate crude which expired at the end of the trading session, added $1.15 (1.8%) to settle at $66.22 a barrel, the highest finish for the contract since Jun 14. Aug WTI crude (now the front-month contract) tacked on 81¢ (nearly 1.3%) to $65.71. Aug Brent oil, the intl benchmark, lost 34¢ (nearly 0.5%) to finish at $74.74 a barrel. The Energy Information Administration reported that crude supplies dropped 5.9M barrels for the latest week. The forecast called for a fall of 3.7M barrels, while the American Petroleum Institute on Tues reported a decline of 3M barrels, according to sources. Meanwhile, Saudi Arabia, fellow members of OPEC, & a handful of non-OPEC countries including Russia need to agree on a sustainable production number when they meet at the end of the week.
U.S. oil prices end higher after biggest weekly drop in domestic crude supplies since January
Tech shares are still attractive to buyers, even with all the confusion over higher tariffs. The NAZ is up an amazing 13% YTD while the Dow is still in the red. That is a significant disconnect which can not last. The drama in DC is extremely high & has the potential to affect the stock market. Meanwhile the Dow is plodding along, unable to advance while higher tariff issues dominate investor thinking.
Dow Jones Industrials
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