Friday, August 31, 2018

Markets struggle as Canada trade talks stall

Dow fell 23 (ending under 26K), advancers ahead of decliners about 5-4 & NAZ went up 21 to a new record.  The MLP index gave back 1+ to the 279s & the REIT index was of 1+ to the 361s.  Junk bond funds were slightly lower & Treasuries inched higher in price.  Oil dipped below 70 (more below) & gold was steady at 1205.

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Pres Trump is expected to sign an exec order today that could affect how you save for retirement.  The White House said the measure, which directs the Treasury & Labor Dept to consider issuing regulations or guidelines, will look at updating the rules on required minimum distributions for retirement plans, in an effort to allow retirees to stash away more money in their accounts for a longer period of time.  Under current law, retirees are required to begin withdrawing funds from their retirement accounts when they turn 70.5.  Trump is also asking the administration to look into ways to make work-based retirement programs more affordable for small businesses, in order to increase the number of those businesses that offer options.  One potential measure, for example, would be to allow small businesses to band together to offer joint plans.  According to the administration, only 53% of businesses with fewer than 100 employees offer workplace retirement plans, compared with nearly 90% of businesses with more than 100 workers that do so.  In addition to reducing costs as a pathway for more small businesses to offer plans, the order directs the agencies to look at ways to reduce bureaucratic barriers.  The pres is expected to sign the order shortly.  Retirement has been a focal point for Trump this week: yesterday, he took to Twitter to comment on the stock market & how continued over performance could lead to a bump in retirement account balances.  The administration has said it wants to help more Americans save: As of May, more than 20% of Americans had no cash stashed away for retirement.  The administration hopes it can help change that with its 2nd round of tax legislation, which Republican leaders have said they have begun working on.

Trump seeks to update retirement rules, help Americans save more

Canada's top trade negotiator Chrystia Freeland said today that the country's delegation & American officials had not reached consensus on a new North American Free Trade Agreement as they reached a key deadline.  Heading into another round of talks a short time ago, the Canadian minister of Foreign Affairs said the 2 sides continued to negotiate.  After leaving talks with US officials a few hours ago, she said "we're not there yet" on an agreement.  Her comments came after a report that Trump privately said he would not make any compromises in trade talks with Canada.  In remarks to reporters that the pres wanted to be off the record, Trump said that he would not publicly state his positions because "it's going to be so insulting they're not going to be able to make a deal."  Trump later confirmed his comments, saying "At least Canada knows where I stand!"  Pres Trump has sought to revise the 3-nation trade agreement, which he says has punished American workers since it went into effect more than 20 years ago.  The pres has used tariffs on Canadian & Mexican goods to bring the countries to the negotiating table & wants them to drop their own barriers on certain products.  The US has focused in particular on Canada's agricultural policy, which Trump contends has unfairly curbed sales of US dairy products there.  He also aims to boost American farmers in Midwestern states who helped to propel him to the White House.  Many of those farmers have taken a hit from the effects of the White House's mounting trade conflicts with China, Canada, Mexico & the EU.  Earlier today, the Office of the US Trade Representative said that talks are "ongoing" & "there have been no concessions by Canada on agriculture."

Oil prices slipped lower but remained near $70 a barrel as impending US sanctions on Iran & falling Venezuelan output offset concerns over the impact of a global trade war.  Benchmark Brent crude oil was down 35¢ a barrel at $77.42  & US light crude ended the session down 45¢ lower at $69.80.  Despite the losses, both Brent & US light crude jumped up about 2% this week after strong gains in the last 2 sessions.  US light crude gained 1.5%  in Aug, while Brent was on track for a rise of 4.3% & some analysts say the uptrend in crude prices will continue.  Oil markets are tightening with a recent surplus draining, trade figures show. The volume of unsold crude stored in the Atlantic basin has dwindled from around 30 cargoes to just a handful in recent weeks.  Investors are worried that, with Venezuelan supply falling sharply, Iranian crude supply will be cut sharply ahead of the imposition on US sanctions on Tehran in Nov.  Pres Trump threatened to withdraw from the World Trade Organization, his latest salvo in a deepening dispute between the US & its major trading partners.  Economists are worried that rising trade barriers between the world's major economies will drag on global growth&, by extension, erode energy demand.

Oil holds near $70 as Iran sanctions offset trade war worries

Stocks had a good month with the Dow advancing more than 500.  Trade deals are important & one was completed with Mexico.  But that leaves Canada, the EU & China which need more work.  Sep has the reputation for being the toughest month for stocks.  The stock market is overbought & the bulls may have their work cut out to extend the current rally in Sep.

Dow Jones Industrials

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