Dow crawled up 14, decliners over advancers 5-4 & NAZ gained 35. The MLP index lost 1+ to the 289s & the REIT index were off 2 to the 359s. Junk bond funds went up in price & Treasuries were even. Oil was off pennies in the 67s after recent buying & gold fell 6 to 1196 (still very low) following a small rebound.
AMJ (Alerian MLP Index tracking fund)
Stocks seek direction as trade dispute escalates
US jobless claims fall, point to labor market strength
The meeting in Jackson Hole is getting a lot of attention, although little is decided there. It's basically a paid vacation for the big boys. New tariffs from the US & China are more important because they suggest additional ones are on the way. However bullish thoughts dominate thinking in the stock market as economic measures are strong along with the stories about the longest run for the bull market. That's measured in years!
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 67.63 | -0.23 | -0.3% |
| GC=F | Gold | 1,198.00 | -5.30 | -0.4% |
Stocks were little changed as
investors gauged the latest US-China tariffs, one day after the bull
market run officially became the longest in history. The
US kept its promise to add another round of tariffs on $16B
worth of China imports today & China quickly countered &
raised tariffs on the same number of US goods. That
makes it $50B worth of imports subjected to tariffs on either
side since early Jul & more are in the pipeline, adding to risks for
global economic growth. The tariffs took effect while US & Chinese officials hold 2 days of talks in DC. Stocks closed mixed in a tight range yesterday as the market
extended its bull run into record territory when the bull market turned
3453 days old. Over the period, the S&P 500 rallied
more than 320%, the Dow by nearly 300% & the NAZ by more than 600%.
Stocks seek direction as trade dispute escalates
The number of Americans filing for unemployment
benefits fell last week, a sign the labor market was holding firm
despite tensions between the US & its trading partners that
have spawned restrictions on global commerce. Initial
claims for state unemployment benefits slipped 2K to a seasonally
adjusted 210K for the latest week, the Labor Dept said. It was the 3rd straight week of
declines for claims, which have dropped so low that economists have
scrambled for explanations. In Jul, claims fell to their lowest level
since 1969 even though the workforce is much larger than in prior
decades. The forecast called for claims rising to 215K. Signs of strength in the labor market have been a key reason
behind the Federal Reserve's ongoing campaign to raise interest rates. Minutes
of the central bank's last policy meeting showed officials discussed raising rates soon to counter excessive
economic strength, although policymakers also examined how global trade
disputes could batter businesses & households. The Fed has already raised rates twice this year & is widely expected to do so again in Sep. The
claims data is being closely watched for signs of layoffs as a result
of the administration's protectionist trade policy, which has led
to an escalating trade war with China & import tariffs
with trading partners, including the EU, Canada & Mexico. While
there have been reports of some companies either laying off workers or
planning to as a result of the import duties, that is not yet evident in
the claims data. A robust economy is helping the labor market weather the trade storm. The 4-week moving average of initial claims, considered a better
measure of labor market trends as it irons out week-to-week volatility,
dropped 1K last week to 213K. The claims
report also showed the number of people receiving benefits after an
initial week of aid dropped 2K to 1.73M in the latest week. The 4-week moving average of the claims
fell 5K to 1.74M.
US jobless claims fall, point to labor market strength
The latest round in the trade war between the US & China is underway. The 2 countries put into effect 25% tariffs on $16B worth of each other's goods. That
makes it $50B worth of imports subjected to tariffs on either
side since early Jul & more are in the pipeline, adding to risks for
global economic growth. China's Commerce Ministry said the US was "remaining obstinate" by implementing the latest tariffs. The next round could see a list of an additional $200B worth of Chinese imports face duties. The tariffs took effect while US & Chinese officials hold 2 days of talks in DC. Pres
Trump has threatened to impose duties on virtually all of the more than
$500B of Chinese goods exported annually to the US
unless Beijing agrees to sweeping changes to its intellectual property
practices, industrial subsidy programs & tariff structures & buys
more US goods. DC's latest tariffs
apply to products including semiconductors, plastics, chemicals &
railway equipment that the Office of the US Trade Representative has
said benefit from Beijing's "Made in China 2025" industrial plan to make
China competitive in high-tech industries. China's
list of 333 US product categories hit with duties includes coal,
copper scrap, fuel, steel products, buses & medical equipment.
US, China impose new round of tariffs
The head of the Federal Reserve Bank of Kansas
City said it’s not surprising that Pres Trump recently said he is
“not thrilled” with his Fed appointee, Chairman Jerome Powell, for
raising interest rates & said the US central bank should do more to
help boost the economy. “Expressions of angst
at a time when there are higher interest rates is not unique to this
administration,” said Esther George. “So we’ve seen this before. We know
higher rates do cause adjustments in the economy.” But
George also said the US central bank will remain faithful to its
congressional mandate to both promote full employment & preserve the
value of the currency, even – or especially – when political interests
complain. “I think what’s important for the
public to remember is Congress understood this tension might exist
between a central bank which is responsible for the money supply and
those that have other angles in the economy and so they put important
firewalls in place to allow an institution like the Fed to keep its
focus on the public interest and the long-run nature of the economy and
that’s what we are doing and what I continue to do.” George made the comments from the Fed's annual
economic symposium in Jackson Hole, Wyoming. The Kansas City Fed pres, who is hosting the meeting, describes the economy as firing on all cylinders. “We
are at a good point in the economy, which has allowed the Federal
Reserve to begin to remove some of the stimulus we’ve put in place years
ago,” said George. George was asked how close to normal is the economy?
“It’s
a great question and its one my colleagues and I continue to explore,
because our objective is to maintain the long-run growth of the economy
as best we can and try to understand when we get to normal,” she said. “It’s
a function of knowing, remember this policy acts with lags, so each
time we made an interest rate increase that will flow through the
economy after the fact somehow. So that’s why you focus carefully on the
data.” The latest round in the trade war
between the US & China got underway today when the 2
countries put into effect 25% tariffs on $16B worth of
each other's goods. That totals $50B worth of imports subjected
to tariffs on either side since early Jul & more are in the
pipeline, adding to risks for global economic growth. “This
is an area that I watch very carefully. I consider it a downside risk
from the standpoint that it’s hard to gauge,” said George. “If this is
all we see, then maybe we conclude that we’ll work through the system
and it won’t affect an economy the size of ours.” “On
the other hand, if it looks like this will continue, if there is some
persistence to these discussions, if it leaves businesses feeling
uncertain, that could flow through to holding back on investment or less
investment and that’s something I want to watch carefully to see if it
shows up in the data at some point.” George
addressed concerns that interest rates on long-term bonds are falling
below the level of shorter-length bonds, something known as an “inverted
yield curve” & that can signal a coming recession. “We
should look at the yield curve, because as history tells us, that’s
when the yield curve flattens and then inverts, we’ve experienced
recessions, she said. “Obviously nobody wants to do that. So the
question is what circumstances led to that inversion and why are we
seeing a flattening yield curve. That is where the debate is right now.” George said the Fed pays special attention to the yield curve, but it’s not their sole objective.
Kansas City Fed chief supports central bank independence
The meeting in Jackson Hole is getting a lot of attention, although little is decided there. It's basically a paid vacation for the big boys. New tariffs from the US & China are more important because they suggest additional ones are on the way. However bullish thoughts dominate thinking in the stock market as economic measures are strong along with the stories about the longest run for the bull market. That's measured in years!
Dow Jones Industrials
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