Dow sank 397, decliners over advancers 3-1 & NAZ gave back a very big 101. The MLP index lost 1+ to the 264s & the REIT index was off a tad in the 344s. Junk bond funds were lower & Treasuries rose as stocks were sold, taking the yield on the 10 year Treasury down 5 basis points to 2.88%. Oil dropped 1+ to the 64s & gold fell 4 to 1275.
AMJ (Alerian MLP Index tracking fund)
Pres Trump yesterday said his administration will pursue a new round of tariffs on Chinese goods, responding to retaliatory levies from Beijing. Marking the latest salvo in a tit-for-tat dispute over trade, Trump directed Trade Representative Robert Lighthizer to identify $200B worth of Chinese goods that would be hit with a 10% tariff. Trump said the new tariffs will go into effect “if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced.” The US will prepare tariffs on another $200B in Chinese products, doubling the total amount, if China chooses to respond by raising its own tariffs again. “The trade relationship between the United States and China must be much more equitable,” Trump added. Trump recently approved $50B in tariffs on Chinese imports, arguing that China has stolen US technology & violated intellectual property rights. In retaliation, China proposed its own tariffs targeting $50B in US goods, including pork, beef & cars.
Trump threatens to slap China with $200 billion in new tariffs
China's Commerce Ministry said that it will take counter measures if the US publishes an additional tariffs list. The ministry said China will protect its interests, taking both quantitative & qualitative measures against the move. The fresh threats of additional tariffs violate prior negotiations & consensus reached between the 2 countries, the Chinese Commerce Ministry said. A trade war will hurt companies and people in both countries, it added. "This practice of extreme pressure and blackmail deviates from the consensus reached by both parties on many occasions and is disappointing for the international community," the Commerce Ministry said. "The United States has initiated a trade war that violates market laws and is not in accordance with current global development trends," it continued. Beijing will respond by safeguarding the interests of China & its people & defending free trade, the statement added. No matter how the external environment changes globally, China will push firmly ahead with reform & opening up. China's Foreign Ministry, meanwhile, said the country does not want a trade war, but it's not afraid to engage in one. Beijuing was responding to news that Pres Trump's administration is looking to impose fresh tariffs on products from China. Trump has requested the US Trade Representative to identify $200B worth of Chinese goods for additional tariffs at a rate of 10%. The duties would take effect "if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced," Trump said. That comes after the US on Fri announced that it would impose a 25% tariff on up to $50B of Chinese products. Tariffs on an initial list of goods worth some $34B will kick in on Jul 6.
China says the US 'has initiated a trade war,' and Beijing isn't afraid to fight back
New home construction booms to a near 11-year high in May
The stock market is ugly once again as trade war worries rise. The Dow has pulled back about 750 in the last week & the short term outlook is grim. The trade war situation looks very bad between the US & China. Additionally, trade relations with other allies are making matters worse. The Dow is only 600 above 24K & that resistance level looks vulnerable already.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 65.33 | -0.52 | -0.8% |
| GC=F | Gold | 1,278.50 | -1.60 | -0.1% |
Stocks fell sharply, with traders reacting to Pres threatening new tariffs on Chinese goods yesterday. The
escalating tit-for-tat trade tensions between the world's 2 biggest
economies comes after Trump, last Fri, put tariffs on $50B
worth of Chinese goods, warning that if China retaliated, so would the
US. Stocks taking a big hit today included trade-sensitive industrial & materials stocks. Trading resumed today in China & Hong Kong
following a holiday & the Shanghai Composite finished the
session down 3.8%. Hong Kong's Hang Seng closed down 2.8% to a 4-month low. Elsewhere in Asia, Japan's Nikkei ended the day with a
loss of 1.8%. Stateside traders
digested the latest housing starts numbers. Housing starts climbed to an
11-year high in May, but there was little market reaction with traders
maintaining their focus on the latest trade developments. Commodities
were mostly lower with oil futures hit particularly hard by trade
fears. Meanwhile, OPEC will meet
later this week to discuss increasing oil production.
Stocks slammed by escalating trade conflict
Pres Trump yesterday said his administration will pursue a new round of tariffs on Chinese goods, responding to retaliatory levies from Beijing. Marking the latest salvo in a tit-for-tat dispute over trade, Trump directed Trade Representative Robert Lighthizer to identify $200B worth of Chinese goods that would be hit with a 10% tariff. Trump said the new tariffs will go into effect “if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced.” The US will prepare tariffs on another $200B in Chinese products, doubling the total amount, if China chooses to respond by raising its own tariffs again. “The trade relationship between the United States and China must be much more equitable,” Trump added. Trump recently approved $50B in tariffs on Chinese imports, arguing that China has stolen US technology & violated intellectual property rights. In retaliation, China proposed its own tariffs targeting $50B in US goods, including pork, beef & cars.
Trump threatens to slap China with $200 billion in new tariffs
China's Commerce Ministry said that it will take counter measures if the US publishes an additional tariffs list. The ministry said China will protect its interests, taking both quantitative & qualitative measures against the move. The fresh threats of additional tariffs violate prior negotiations & consensus reached between the 2 countries, the Chinese Commerce Ministry said. A trade war will hurt companies and people in both countries, it added. "This practice of extreme pressure and blackmail deviates from the consensus reached by both parties on many occasions and is disappointing for the international community," the Commerce Ministry said. "The United States has initiated a trade war that violates market laws and is not in accordance with current global development trends," it continued. Beijing will respond by safeguarding the interests of China & its people & defending free trade, the statement added. No matter how the external environment changes globally, China will push firmly ahead with reform & opening up. China's Foreign Ministry, meanwhile, said the country does not want a trade war, but it's not afraid to engage in one. Beijuing was responding to news that Pres Trump's administration is looking to impose fresh tariffs on products from China. Trump has requested the US Trade Representative to identify $200B worth of Chinese goods for additional tariffs at a rate of 10%. The duties would take effect "if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced," Trump said. That comes after the US on Fri announced that it would impose a 25% tariff on up to $50B of Chinese products. Tariffs on an initial list of goods worth some $34B will kick in on Jul 6.
China says the US 'has initiated a trade war,' and Beijing isn't afraid to fight back
US homebuilding surged to near an 11-year high in
May amid an acceleration in both single-family & multi-family home
construction, but a 2nd straight monthly drop in permits suggested
housing market activity will remain moderate. Housing starts jumped 5.0% to a
seasonally adjusted annual rate of 1.350M units last month, the
Commerce Dept said. That was the highest level since
2007. Building permits fell 4.6% to a rate of 1.301M units, the lowest level since
2017. The forecast called for housing starts
rising to a pace of 1.310M units last month & permits
declining to a rate of 1.350M units. Single-family homebuilding,
which accounts for the largest share of the housing market, increased
3.9% to a rate of 936M units last month. Single-family home
construction rose in the Northeast and Midwest, but fell in the South & West. Single-family homebuilding has lost momentum since hitting a
pace of 948K units last Nov, which was the strongest in more
than 10 years. Permits to build single-family homes fell 2.2% in May to a pace of 844K units, also the lowest level since
Sep 2017. With permits lagging starts, single-family homebuilding
could slow in the months ahead. A survey yesterday showed
confidence among single-family homebuilders dipped in Jun, with
builders "increasingly concerned that tariffs placed on Canadian lumber
and other imported products are hurting housing affordability."
According to the survey, the expensive lumber had "added nearly $9,000
to the price of a new single-family home since January 2017." The Trump administration
in Apr 2017 imposed anti-subsidy duties on imports of Canadian
softwood lumber. More expensive lumber together with a lack of land &
labor have worsened an acute shortage of homes for sale, hobbling the
housing market. Residential investment
contracted in Q1. The housing market continues to lag
overall economic growth, which appears to be accelerating in Q2 after hitting a speed bump at the start of the year. Starts for the volatile
multi-family housing segment rebounded 7.5% to a rate of 414K
units in May. Permits for the construction of multi-family homes fell
8.8% to a pace of 457K units.
New home construction booms to a near 11-year high in May
The stock market is ugly once again as trade war worries rise. The Dow has pulled back about 750 in the last week & the short term outlook is grim. The trade war situation looks very bad between the US & China. Additionally, trade relations with other allies are making matters worse. The Dow is only 600 above 24K & that resistance level looks vulnerable already.
Dow Jones Industrials
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