Dow climbed 79, advancers over decliners about 5-4 & NAZ was off chump change (inches from yesterday's record). The MLP index gained 4 to the 267s & the REIT index fell 1+ to the 349s. Junk bond funds were flattish & Treasuries slid a little lower. Oil went higher in late day trading (more below) & gold remained even at a depressed 1227.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.8116015171332475)
The Mexcian peso & Canadian $ both moved slightly higher after Pres Trump said the US may do a trade deal with Mexico & then do a deal with Canada later. While a sign of positive momentum with Mexico, the comment cast doubt on efforts to revise the 24-year old NAFTA agreement. The US talks with Canada & Mexico on a new North American Free Trade Agreement were put on hold ahead of Mexico's Jul 1 presidential election. US officials have since visited Mexico's current gov & pres-elect Andres Manuel Lopez Obrador. Trump, in a cabinet meeting today, said there have been "good sessions" with Mexico & Lopez Obrador, who met with Secretary of State Mike Pompeo last week. Lopez Obrador said he wants good relations with the US & that his transition team would participate in NAFTA talks. Earlier, White House top economic advisor Larry Kudlow said there is "good progress" being made with Mexico on trade & the discussions are a "promising avenue." Political strategists have said the Trump administration may use a warming relationship & progress with Mexico to prod Canada on some areas of disagreement. They also have said the administration is looking for a win on trade, since talks with China have stalled. The Trump administration has said it would like bilateral deals, even as it renegotiated NAFTA.
Trump talks of 'good sessions' with Mexico, sparking jump in peso on trade deal hopes
Manufacturers in every one of the Fed's 12 districts worried about the impact of tariffs, a Federal Reserve report said, even as the US economy continued to expand at a moderate to modest pace. The latest snapshot of the health of the economy, derived from the central bank's discussions with business contacts around the country, echoed anecdotes from lawmakers in Congress yesterday & today of the impact in their districts of tariffs during a 2-day hearing with Fed Chairman Jerome Powell. "Manufacturers in all districts expressed concern about tariffs and in many districts reported higher prices and supply disruptions that they attributed to the new trade policies," the Fed said. Pres Trump so far has imposed or threatened tariffs on $250B of Chinese goods & riled key allies by slapping on steel & aluminum tariffs. Powell has said that the Fed has yet to see material change to the economy showing up in data & he repeated this week that the central bank intends to keep raising interest rates gradually as it seeks to keep pace with a strengthening economy but not raise rates so high or so fast that it weakens growth. But a number of districts detailed how the uncertainty over escalating trade disputes between the US & China, Europe, Canada, Mexico & elsewhere, were already hitting firms to varying degrees. In Boston for example, contacts expressed concern but none had yet to see it feed thru into demand or hiring & capital expenditure plans. However, in NY trade uncertainty was "a major concern" while in Philadelphia a machinery manufacturer said the impact of steel tariffs "have been chaotic to its supply chain disrupting planned orders, increasing prices, and prompting some panic buying." A number of districts reported higher input costs due to the import tariffs raising prices for fuel, metals & other goods. Economic growth has accelerated this year & unemployment is lower than policymakers believe is sustainable in the longer-run. However, there are few signs yet of a spike in inflation high enough to force the Fed to up the pace of rate rises. The Fed's last 3 rate hikes have come at a pace of every other meeting & it projects another 2 rate rises by year-end following moves in Mar & Jun. Also, Fed contacts continued to note tight labor markets & a shortage of skilled workers, but wage increases remained modest to moderate. The price of key inputs rose further & some districts said that they expected pricing pressures to intensify further.
Manufacturers are concerned about impact of tariffs: Fed
Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming
The Commerce Dept is opening an investigation into whether imports of uranium, the chemical element that fuels nuclear power, pose a risk to national security. The new probe marks the Trump administration's latest use of a 1962 trade law to scrutinize imports. Pres Trump has placed tariffs on foreign steel & aluminum following an earlier investigation & the Commerce Dept is conducting a review into auto imports. Commerce is taking action after 2 American uranium producers petitioned the department to open a Section 232 investigation into whether the dominance of imports in the US uranium market raises national security concerns. “Our production of uranium necessary for military and electric power has dropped from 49% of our consumption to 5%,” Commerce Secretary Wilbur Ross said. “The Department of Commerce’s Bureau of Industry and Security will conduct a thorough, fair, and transparent review to determine whether uranium imports threaten to impair the national security.” Tariffs on uranium would potentially raise prices for nuclear power plants at a time when many are struggling to turn a profit. The problem is particularly acute in the parts of the country with unregulated power markets, where they face tough competition from cheap natural gas & renewable energy. Uranium also powers the Navy's nuclear submarines & aircraft carriers. However, the fleet runs on highly-enriched uranium, which the US sources from its stockpile of weapons-grade material. The military will need new sources of fuel for naval purposes around 2060, according to a Dept of Energy assessment. Commerce said its investigation will examine the entire uranium sector, including mining, enrichment, defense & uses by industry. The dept consulted with industry stakeholders, members of Congress & the depts of Defense & Energy prior to launching the probe. The 2 companies submitted their request to Commerce in Jan, arguing that imports of subsidized uranium from state-owned companies threatens to undermine national security.
Commerce Department opens probe into uranium imports, teeing up new tariffs
While the Beige Book talked about modest or faster growth in most districts, the dark cloud of trade talks is never far away which dampens demand for stocks. The chart below shows the Dow remains at the high end of its trading range for most of this year. The US & global economies may be strong, but trade issues are haunting stock buyers.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The Chinese theft of American intellectual
property, according to a former NSA director, is the “greatest transfer
of wealth in history,” likely costing the US upward of $400B
per year. “I’ve stated on the record that
Chinese attacks into our country is the greatest theft of intellectual
property,” Keith Alexander, who served under Pres Barack Obama,
said. “We need to address those problems.” In
an effort to curtail intellectual property theft, Pres Trump
slapped a 25% tariff on $50B worth of Chinese goods, containing
“industrially significant technologies.” In response, Beijing imposed
tariffs with $34B on 545 American products. But
stopping Chinese intellectual property theft, & cyberattacks from
Russia, will likely take more than tariffs, according to Alexander,
who said the US needs to act proactively in defending its
cybersecurity sector. “We absolutely need to get that right,” he said.
“And that’s a partnership between government and industry. We can push
back and say to Russia, ‘Don’t hack our elections.’ But they're going to
act in their own national interest. We’ve got to fix that problem.” Special
counsel Robert Mueller is currently investigating possible ties between
the Trump campaign & Russia during the 2016 campaign, & has already
issued dozens of indictments for interference in the presidential
election on behalf of Trump.
China stealing some $400B yearly of US intellectual property, former NSA official says
The Mexcian peso & Canadian $ both moved slightly higher after Pres Trump said the US may do a trade deal with Mexico & then do a deal with Canada later. While a sign of positive momentum with Mexico, the comment cast doubt on efforts to revise the 24-year old NAFTA agreement. The US talks with Canada & Mexico on a new North American Free Trade Agreement were put on hold ahead of Mexico's Jul 1 presidential election. US officials have since visited Mexico's current gov & pres-elect Andres Manuel Lopez Obrador. Trump, in a cabinet meeting today, said there have been "good sessions" with Mexico & Lopez Obrador, who met with Secretary of State Mike Pompeo last week. Lopez Obrador said he wants good relations with the US & that his transition team would participate in NAFTA talks. Earlier, White House top economic advisor Larry Kudlow said there is "good progress" being made with Mexico on trade & the discussions are a "promising avenue." Political strategists have said the Trump administration may use a warming relationship & progress with Mexico to prod Canada on some areas of disagreement. They also have said the administration is looking for a win on trade, since talks with China have stalled. The Trump administration has said it would like bilateral deals, even as it renegotiated NAFTA.
Trump talks of 'good sessions' with Mexico, sparking jump in peso on trade deal hopes
Manufacturers in every one of the Fed's 12 districts worried about the impact of tariffs, a Federal Reserve report said, even as the US economy continued to expand at a moderate to modest pace. The latest snapshot of the health of the economy, derived from the central bank's discussions with business contacts around the country, echoed anecdotes from lawmakers in Congress yesterday & today of the impact in their districts of tariffs during a 2-day hearing with Fed Chairman Jerome Powell. "Manufacturers in all districts expressed concern about tariffs and in many districts reported higher prices and supply disruptions that they attributed to the new trade policies," the Fed said. Pres Trump so far has imposed or threatened tariffs on $250B of Chinese goods & riled key allies by slapping on steel & aluminum tariffs. Powell has said that the Fed has yet to see material change to the economy showing up in data & he repeated this week that the central bank intends to keep raising interest rates gradually as it seeks to keep pace with a strengthening economy but not raise rates so high or so fast that it weakens growth. But a number of districts detailed how the uncertainty over escalating trade disputes between the US & China, Europe, Canada, Mexico & elsewhere, were already hitting firms to varying degrees. In Boston for example, contacts expressed concern but none had yet to see it feed thru into demand or hiring & capital expenditure plans. However, in NY trade uncertainty was "a major concern" while in Philadelphia a machinery manufacturer said the impact of steel tariffs "have been chaotic to its supply chain disrupting planned orders, increasing prices, and prompting some panic buying." A number of districts reported higher input costs due to the import tariffs raising prices for fuel, metals & other goods. Economic growth has accelerated this year & unemployment is lower than policymakers believe is sustainable in the longer-run. However, there are few signs yet of a spike in inflation high enough to force the Fed to up the pace of rate rises. The Fed's last 3 rate hikes have come at a pace of every other meeting & it projects another 2 rate rises by year-end following moves in Mar & Jun. Also, Fed contacts continued to note tight labor markets & a shortage of skilled workers, but wage increases remained modest to moderate. The price of key inputs rose further & some districts said that they expected pricing pressures to intensify further.
Manufacturers are concerned about impact of tariffs: Fed
Larry Kudlow, Pres Trump's top economic advisor, gave an optimistic view of the economy in which growth will run considerably above what has been the
norm for the past decade. As part of the administration's plan to grow the economy, Kudlow said there would be additional rounds of tax cuts ahead. "We are getting 3 [percent] and
it may be 4 for a quarter or two," Kudlow said. "That's all for the good. Literally millions more people are working." He said there could be a "2.0 & 3.0 & a
4.0." Economists widely expect Q2 growth to approach 4% after GDP rose 2% in Q1 & 2.3% in 2017, Trump's first year in office. The administration has
used a mix of tax cuts, spending increases & regulatory rollbacks in
an effort to goose the economy out of what Kudlow characterized as a
"growth recession" after the financial crisis. "You've got kids,
millennials etc. ... who have never seen a full-fledged, long-lasting
prosperity," Kudlow said. "It's not that they're cynics, they've just
never seen it. We haven't had one in 20 years." His remarks come as the
White House has launched a trade war against both adversaries like China & friends including EU nations. Long known as a free
market proponent, Kudlow has said that while he generally opposes
tariffs, something needs to be done. "This guy, President Trump, has the biggest backbone," he said. "He will not let go of this point, nor should he in my opinion." Kudlow claimed that sources have told the administration that "the Chinese government knows they're wrong." "They know they're wrong, the rest of the world knows they're wrong" he added. "Something has to be done here."
Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming
The Commerce Dept is opening an investigation into whether imports of uranium, the chemical element that fuels nuclear power, pose a risk to national security. The new probe marks the Trump administration's latest use of a 1962 trade law to scrutinize imports. Pres Trump has placed tariffs on foreign steel & aluminum following an earlier investigation & the Commerce Dept is conducting a review into auto imports. Commerce is taking action after 2 American uranium producers petitioned the department to open a Section 232 investigation into whether the dominance of imports in the US uranium market raises national security concerns. “Our production of uranium necessary for military and electric power has dropped from 49% of our consumption to 5%,” Commerce Secretary Wilbur Ross said. “The Department of Commerce’s Bureau of Industry and Security will conduct a thorough, fair, and transparent review to determine whether uranium imports threaten to impair the national security.” Tariffs on uranium would potentially raise prices for nuclear power plants at a time when many are struggling to turn a profit. The problem is particularly acute in the parts of the country with unregulated power markets, where they face tough competition from cheap natural gas & renewable energy. Uranium also powers the Navy's nuclear submarines & aircraft carriers. However, the fleet runs on highly-enriched uranium, which the US sources from its stockpile of weapons-grade material. The military will need new sources of fuel for naval purposes around 2060, according to a Dept of Energy assessment. Commerce said its investigation will examine the entire uranium sector, including mining, enrichment, defense & uses by industry. The dept consulted with industry stakeholders, members of Congress & the depts of Defense & Energy prior to launching the probe. The 2 companies submitted their request to Commerce in Jan, arguing that imports of subsidized uranium from state-owned companies threatens to undermine national security.
Commerce Department opens probe into uranium imports, teeing up new tariffs
Oil prices fell after news of a rise
in US crude inventories last week, defying expectations for a
big fall, while concerns about weak demand also resurfaced. Brent crude oil was down 60¢ at $71.56 a barrel after the benchmark hit a 3-month low on yesterday. US light crude was down 50¢ at $67.58, not far off yesterday's one-month low of $67.03 per barrel. Oil
markets have fallen over the last week as Saudi Arabia & other
members of OPEC &
Russia have increased production and as some supply disruptions have
eased. Investors have also begun to worry about the
impact on global economic growth & energy demand of the escalating
trade dispute between the US & its trading partners,
including China. The US oil market has been
tight in recent months but data yesterday from the American Petroleum
Institute (API) showed an unexpected a rise of more than 600K barrels
in national crude inventories. The forecast called for a decline of 3.6M barrels in the latest week.
Oil prices fall on rise in U.S. stocks, demand worries
While the Beige Book talked about modest or faster growth in most districts, the dark cloud of trade talks is never far away which dampens demand for stocks. The chart below shows the Dow remains at the high end of its trading range for most of this year. The US & global economies may be strong, but trade issues are haunting stock buyers.
Dow Jones Industrials
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