Dow dropped 159, decliners over advancers 3-2 & NAZ sank 107. The MLP index was even in the 279s & the REIT index also did not move much. Junk bond funds fluctuated & Treasuries were a tad lower. Oil was off pennies in the 74s & gold tumbled 17 to 1188 after recent strength.
AMJ (Alerian MLP Index tracking fund)
The decision by China's central bank to cut the amount of reserves held by banks is an indication that authorities in the world's 2nd-largest economy are getting nervous about a long-drawn trade war with the US, experts said. China insisted last month, in a 71-page paper, that its economy is "highly resilient" & Beijing is not afraid of a trade war. At the World Economic Forum in Tianjin, China in Sep, an official from the country's securities regulator said there was nothing Pres Trump's administration could do to make a significant dent in the Chinese economy. Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said that the worst that could happen is the US imposing levies on all Chinese imports, but that would only hit 0.7 percentage points of China's growth. But the central bank's move to ease some pressure on the banking sector signals that the situation in China is perhaps not all rosy, experts noted. The People's Bank of China announced yesterday a 100 basis points cut to the reserve requirement ratio (RRR) for most banks, which will result in an injection of 750B yuan ($109B) in cash into the banking system. But the central bank maintained that its monetary policy is still prudent & neutral, not accommodative. A neutral monetary policy means the central bank is neither trying to slow nor stimulate the economy. When policy is said to be accommodative, it means the central bank is making it cheaper for businesses & households to borrow in hopes that they will increase spending & lift the economy. Despite the PBOC's official stance that its monetary policy is not yet accommodative, the 4th RRR cut of the year came as trade tensions between China & the US escalate & will likely drag longer than many expect, analysts noted. A prolonged trade war as the US economy appears strong may lead to more investors pulling money out of China. Beijing is therefore taking pre-emptive steps to avoid massive outflows of investor money from its financial system, analysts said, adding that could deal another blow to its economy which is already experiencing slower growth.
China says it's not afraid of a trade war with the US — its actions show otherwise
Beijing's tariffs on US liquefied natural gas threaten to raise prices for buyers throughout Asia & deal a self-inflicted wound to China's state-owned energy companies. The import tax on American LNG essentially removes US suppliers from consideration at trading desks across China's growing LNG market. There are plenty of supplies elsewhere in the world, but in closing the door to US LNG, China is throwing a wrench into the market & giving sellers an opportunity to hike prices. China is trying to shift from coal to cleaner-burning natural gas as the gov aims to reduce air pollution. But the country's domestic gas production & pipeline imports are not growing fast enough to meet demand, so China is turning to LNG, a form of natural gas super-chilled to liquid form & transported by sea in massive tankers. Despite its dependence on LNG, Beijing nevertheless imposed a 10% tariff on US supplies last month, retaliating after the Trump administration slapped a 10% import tax on $200B of Chinese goods. The world's largest economies play an influential role in the on-demand market for LNG, China as a buyer & the US as a seller. Their trade dispute promises to redirect LNG trade routes & reverberate throughout the market. It also comes ahead of winter, when demand is highest & LNG customers are vulnerable to price spikes.
Why China may soon regret its tariffs on US LNG
Stock averages are declining as I write. Trading should be uninspiring on this semi holiday, but higher yields are spooking investors making for a very ugly day.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 73.86 | -0.48 | -0.7% |
| GC=F | Gold | 1,189.30 | -16.30 | -1.4% |
Although some prominent economists have warned
that, despite the current strong economic gains, an impending recession
is on the horizon, Director of the National Economic Council Larry
Kudlow dismissed those concerns. “I just don’t see where this is going to end,” Kudlow said yesterday. Even
Federal Reserve Chair Jerome Powell has struck a note of optimism about
the economy: In comments he made Tues, Powell said the
combination of steady, low inflation & very low unemployment proves
the country is going through “extraordinary times,” but maintained the
central bank's position of gradually raising interest rates. At
3.7%, the unemployment rate is at a 49-year low. And although
job creation faltered in Sep, falling below expectations, Kudlow previously said it would likely top 2.4M by
the end of the year. “Now look, 2020 is a couple years away,” he said.
“I think we’re in the biggest capital goods, business investment
spending in 20 years. This is an economy that looks more like the 80s
and 90s.” In Sep, David Stockman, the
former budget director for Pres Reagan, warned that the US
economy was already beginning to show signs that it's ready to roll
over into the next recession, largely because of a tightening monetary
policy by the Fed & an intl trade war. But
at the end of the month, the US, Canada & Mexico concluded months
of fraught negotiations & agreed upon a revised version of the North
American Free Trade Agreement,a deal that will open up a “lot of
markets” for American farmers. “It’s a big help to American workers, you know main street, blue-collar workers,” he said.
America's economic boom has legs: Larry Kudlow
The decision by China's central bank to cut the amount of reserves held by banks is an indication that authorities in the world's 2nd-largest economy are getting nervous about a long-drawn trade war with the US, experts said. China insisted last month, in a 71-page paper, that its economy is "highly resilient" & Beijing is not afraid of a trade war. At the World Economic Forum in Tianjin, China in Sep, an official from the country's securities regulator said there was nothing Pres Trump's administration could do to make a significant dent in the Chinese economy. Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said that the worst that could happen is the US imposing levies on all Chinese imports, but that would only hit 0.7 percentage points of China's growth. But the central bank's move to ease some pressure on the banking sector signals that the situation in China is perhaps not all rosy, experts noted. The People's Bank of China announced yesterday a 100 basis points cut to the reserve requirement ratio (RRR) for most banks, which will result in an injection of 750B yuan ($109B) in cash into the banking system. But the central bank maintained that its monetary policy is still prudent & neutral, not accommodative. A neutral monetary policy means the central bank is neither trying to slow nor stimulate the economy. When policy is said to be accommodative, it means the central bank is making it cheaper for businesses & households to borrow in hopes that they will increase spending & lift the economy. Despite the PBOC's official stance that its monetary policy is not yet accommodative, the 4th RRR cut of the year came as trade tensions between China & the US escalate & will likely drag longer than many expect, analysts noted. A prolonged trade war as the US economy appears strong may lead to more investors pulling money out of China. Beijing is therefore taking pre-emptive steps to avoid massive outflows of investor money from its financial system, analysts said, adding that could deal another blow to its economy which is already experiencing slower growth.
China says it's not afraid of a trade war with the US — its actions show otherwise
Beijing's tariffs on US liquefied natural gas threaten to raise prices for buyers throughout Asia & deal a self-inflicted wound to China's state-owned energy companies. The import tax on American LNG essentially removes US suppliers from consideration at trading desks across China's growing LNG market. There are plenty of supplies elsewhere in the world, but in closing the door to US LNG, China is throwing a wrench into the market & giving sellers an opportunity to hike prices. China is trying to shift from coal to cleaner-burning natural gas as the gov aims to reduce air pollution. But the country's domestic gas production & pipeline imports are not growing fast enough to meet demand, so China is turning to LNG, a form of natural gas super-chilled to liquid form & transported by sea in massive tankers. Despite its dependence on LNG, Beijing nevertheless imposed a 10% tariff on US supplies last month, retaliating after the Trump administration slapped a 10% import tax on $200B of Chinese goods. The world's largest economies play an influential role in the on-demand market for LNG, China as a buyer & the US as a seller. Their trade dispute promises to redirect LNG trade routes & reverberate throughout the market. It also comes ahead of winter, when demand is highest & LNG customers are vulnerable to price spikes.
Stock averages are declining as I write. Trading should be uninspiring on this semi holiday, but higher yields are spooking investors making for a very ugly day.
Dow Jones Industrials
No comments:
Post a Comment