Dow gave back 89. decliners over advancers 5-4 & NAZ fell 4. The MLP index was off fractionally in the 262s & the REIT index gave back 1+ to 351. Junk bond funds fluctuated & Treasuries were even. Oil slid back to the 73s & gold retreated 5 to 1248.
AMJ (Alerian MLP Index tracking fund)
The EU is slamming the Trump administration for considering tariffs on auto imports, saying they could lead to global retaliation against some $300B in US goods. European Commission spokesman Margaritis Schinas said the US investigation into the possibility of auto tariffs "lacks legitimacy, factual basis & violates international trade rules," just like last month's US tariffs on steel & aluminum imports. The EU sent comments to the US on whether auto imports pose enough of a threat to US national security to justify tariffs & estimating the economic impact. Pres Trump cited national security concerns for the previous tariffs. The EU, Mexico, Canada, Turkey & India introduced duties on US products in return. Schinas said European carmakers create over ½ a M jobs in the US.
The trade story remains gloomy with threats being thrown around by all parties. The Dow continues to struggle to hold above 24K, an important resistance level. Meanwhile, REITs are doing well with the index just under its record high level reached last year. REITs are viewed as hardly affected by trade issues & higher interest are being ignored.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 73.80 | -0.35 | -0.5% |
| GC=F | Gold | 1,248.30 | -6.20 | -0.5% |
Stocks opened the first trading session of Q3 in negative territory, as trade tensions are heating up
heading into the Jul 4th holiday week after Pres Trump made more
comments about possibly imposing global auto tariffs. Pres said that auto tariffs were his biggest weapon to extract
concessions from trading partners. “You know, the cars are the big one,” said Trump. “We can talk steel, we talk everything. The big thing is cars.” Concerning the EU & trade, Trump said it is possibly as bad as China just smaller. The
EU has warned the US that imposing import
tariffs on cars & car parts would harm its own automotive industry &
likely lead to counter-measures by its trading partners on $294B
of US exports. Economic data released today
included a reading on the US manufacturing sector. The Markit final
US manufacturing PMI for Jun came in at 55.4 versus the flash reading
of 54.6 & May's 56.4. The Institute of Supply Management's Jun
manufacturing PMI came in at 60.2 versus the expected 58.1. Construction
spending was fractionally higher in May. This will be a holiday shortened trading week as US markets will be closed Wed for Independence Day. Stocks rose on the final day of Jun, cementing a positive Q2 for all 3 major US stock indices. The
Dow gained 55 to 24,271 & the
S&P 500 rose 2 to 2718. The NAZ was up
6 points at 7510. For the week , the Dow fell 1.3% & has fallen 3 weeks in a row (the longest losing streak in more than 2 years). As
for the qtr, the Dow & S&P 500 rose 0.7% & 2.9%,
respectively, to bounce back from losses suffered in Q1. The tech-heavy NAZ has added 6.3%, its strongest 3-month period of trading since Q1-2017.
Stocks fall as trade tensions flare
The Trump administration is working on a 2nd
phase of tax cuts, Pres Trump said & it could
involve a further reduction in the US corp tax rate along with more
stimulus for the middle class. “This will be
even more aimed at the middle class,” Trump said. “One of the things I'm thinking about is bringing the 21%
[corporate tax rate] down to 20% and for the most part, the rest of it
will go right to the middle class. It's a great stimulus.” The pres added that the administration would “be doing” the new tax package in the fall, in Oct or possibly sooner. Earlier this year, the pres said the 2nd phase of
tax cuts would be aimed at both the middle class & helping US
companies. National Economic Director Larry Kudlow said that part of the 2nd round of reforms could involve
making individual tax cuts, & other provisions, permanent. The
new package could also include measures aimed at helping Americans save
for retirement. House Ways & Means Committee Chair Rep Kevin Brady said last month that the administration wants to
get families "in that savings mode earlier." Brady also said the 2nd round of cuts could be completed before the Nov midterm
elections. The Tax Cuts & Jobs Act was signed into law in Dec.
Here's what Trump said will be included in tax cuts 2.0
If China & the US are unable to strike a trade
deal soon, Pres Trump is threatening to impose an additional round
of tariffs on Beijing, raising the total worth of Chinese imports that
would be taxed to $500B. “The tariffs
are – well, in fact, It could go up to $500 [billion], frankly, if we
don’t make a deal, and they want to make a deal,” Trump said. “I will tell you, China
wants to make a deal, and so do I, but it’s got to be a fair deal for
this country.” Already, the White House has
imposed a 25% tariff on $50B worth of Chinese goods containing “industrially significant technologies” in an escalating, tit-for-tat
conflict between the world's 2 largest economies. In
response, China slapped tariffs worth $34B on 545 American
goods. In mid-Jun, Trump warned that if Beijing went thru with the
tariffs, he would impose tariffs on an additional $200B worth of
goods. It was the latest in a series of tariffs imposed
by the pres in early Feb. The White House had initially
announced tariffs, 25% on steel & 10% on aluminum, arguing they
would protect US companies & allow for the creation of new
manufacturing plants, one of Trump’s main promises during the 2016
presidential campaign. Trump has argued that
tariffs will eliminate the $370B trade deficit with China &
stop Beijing's theft of American intellectual property, which he has
said costs the US B$ each year. In May, China agreed
to “significantly reduce” the deficit by increasing the number of
American goods it buys. China isn’t the only
country that’s been targeted by the Trump administration. The EU, Canada & Mexico were included in the first round of aluminum & steel tariffs, & responded by imposing their own tariffs on
American products. “The European Union is possibly as bad as China just smaller, OK,” Trump said. “It’s terrible what they did to us.”
Trump refuses to back down from the China tariffs
The EU is slamming the Trump administration for considering tariffs on auto imports, saying they could lead to global retaliation against some $300B in US goods. European Commission spokesman Margaritis Schinas said the US investigation into the possibility of auto tariffs "lacks legitimacy, factual basis & violates international trade rules," just like last month's US tariffs on steel & aluminum imports. The EU sent comments to the US on whether auto imports pose enough of a threat to US national security to justify tariffs & estimating the economic impact. Pres Trump cited national security concerns for the previous tariffs. The EU, Mexico, Canada, Turkey & India introduced duties on US products in return. Schinas said European carmakers create over ½ a M jobs in the US.
EU warns Trump: auto tariffs could lead to $300B retaliation
The trade story remains gloomy with threats being thrown around by all parties. The Dow continues to struggle to hold above 24K, an important resistance level. Meanwhile, REITs are doing well with the index just under its record high level reached last year. REITs are viewed as hardly affected by trade issues & higher interest are being ignored.
Dow Jones Industrials
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