Dow dropped 80. decliners over advancers about 2-1 & NAZ fell 40. The MLP index gave back 1+ to the 246s & the REIT index added 1 to the 367. Junk bond funds were mixed & Treasuries rose in price. Oil slid lower in the 56s & gold recovered 2 to 1286.
AMJ (Alerian MLP Index tracking fund)
Stocks slide on weakening global growth outlook
The US trade deficit surged to a 10-year high in 2018, with the politically sensitive shortfall with China hitting a record peak, despite the Trump administration slapping tariffs on a range of imported goods in an effort to shrink the gap. The Commerce Dept said that an 18.8% jump in the trade deficit in Dec had contributed to the $621B shortfall last year. The 2018 deficit was the largest since 2008 & followed a $552B gap in 2017. The trade deficit has deteriorated despite the White House's protectionist trade policy, which Pres Trump said is needed to shield US manufacturers from what he says is unfair foreign competition. The US last year imposed tariffs on $250B worth of goods imported from China, with Beijing hitting back with tariffs on $110B worth of American products, including soybeans & other commodities. Trump has delayed tariffs on $200B worth of Chinese imports as negotiations to resolve the 8-month trade war continue. The US has also slapped duties on imported steel, aluminum, solar panels & washing machines. The goods trade deficit with China increased 11.6% to an all-time high of $419B in 2018. The Dec trade deficit of $59.8B was the largest in 10 years & overshot expectations for a $57.9B shortfall, as exports fell for a 3rd straight month while imports rebounded. When adjusted for inflation, the goods trade deficit surged $10B to a record $91.6B in Dec. The jump in real goods trade deficit suggests that trade was probably a bigger drag on Q4 GDP than initially estimated by the gov. The gov reported last week that trade subtracted 0.22 percentage point from GDP growth in Q4. The economy grew at a 2.6% annualized rate in the Oct-Dec qtr, slowing from Q3's brisk 3.4% pace. The downbeat trade data joined weak Dec retail sales, construction spending, housing starts & business spending on equipment reports in setting the economy on a low growth trajectory in Q1. The trade deficit in Dec was driven by 1.9% drop in exports of goods & services to a 10-month low of $205B. Exports are weakening because of slowing global demand & a strong $, which is making US-made goods less competitive on the intl market. Exports of industrial supplies & materials fell $2.1B, with shipments of petroleum products dropping $0.9B & crude oil decreasing $0.5B. Exports of capital goods dropped $1.7B, led by a $1.0B decline in civilian aircraft shipments. In Dec, imports of goods & services increased 2.1% to $264.9B, likely as businesses stocked up in anticipation of further duties on Chinese imports. Consumer goods imports jumped $2.4B, boosted by a $0.7B increase in imports of household & kitchen appliances. Cellphone imports increased $0.6B. Capital goods imports increased $2.7B, with imports of computer accessories rising $0.7B. Computer imports also increased $0.7B.
US trade deficit jumps to 10-year high in 2018
Trump pushing for trade deal with China in hopes of boosting stock market ahead of 2020 bid
The stock market is vastly overbought & that is becoming obvious to traders. The 2019 rally has hardly had a hiccup along the way. There is a growing awareness that optimism about a new trade deal with China is already priced into stocks at these levels. Meanwhile economic data is so-so after a weak Jan, partially related to the gov shutdown, making managers nervous about the future of the US economy. Q1 is traditionally a sluggish time for the economy & this year looks like it will not be an exception. In today's early trading, stocks keep selling off But the bulls feel good with the Dow not far from its record high.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 56.10 | -0.46 | -0.8% |
| GC=F | Gold | 1,286.70 | +2.00 | +0.2% |
Stocks fell as the Organisation for Economic Co-operation & Development (OECD) cut its forecast for global economic growth. Investors
also will were watching for the Labor Dept report
on worker productivity & any hints that the months-long trade
negotiations between the US & China will reach a successful
conclusion. The OECD cut expected global economic growth for 2019 by 0.2 percentage points to 3.3%. In Europe, stocks closed largely unchanged. In Asia, Chinese stocks led
markets higher on hopes for new stimulus measures. The Shanghai Stock
Exchange was up 1.6%, Hong Kong's Hang Seng Index gained 0.3% & Japan's Nikkei was down 0.6%.
Stocks slide on weakening global growth outlook
Hiring in the US private sector decelerated in
Feb, according to research released from payroll
services firm ADP, results that come ahead of federal employment numbers on Fri that will provide greater insight into whether the nation'a economy is slowing. Non-farm
payrolls increased 183K last month, slightly less than the expected
189K. It was also a decline from Jan, which ADP revised up to
300K from an initial estimate of 213K – indicating that Feb's
numbers could also increase. The Bureau of Labor Statistics will report Feb employment numbers
on Fri. The forecast is that unemployment will sit at 3.9% & the US economy added 190K new jobs last month.
Private payrolls up 183,000 last month
The US trade deficit surged to a 10-year high in 2018, with the politically sensitive shortfall with China hitting a record peak, despite the Trump administration slapping tariffs on a range of imported goods in an effort to shrink the gap. The Commerce Dept said that an 18.8% jump in the trade deficit in Dec had contributed to the $621B shortfall last year. The 2018 deficit was the largest since 2008 & followed a $552B gap in 2017. The trade deficit has deteriorated despite the White House's protectionist trade policy, which Pres Trump said is needed to shield US manufacturers from what he says is unfair foreign competition. The US last year imposed tariffs on $250B worth of goods imported from China, with Beijing hitting back with tariffs on $110B worth of American products, including soybeans & other commodities. Trump has delayed tariffs on $200B worth of Chinese imports as negotiations to resolve the 8-month trade war continue. The US has also slapped duties on imported steel, aluminum, solar panels & washing machines. The goods trade deficit with China increased 11.6% to an all-time high of $419B in 2018. The Dec trade deficit of $59.8B was the largest in 10 years & overshot expectations for a $57.9B shortfall, as exports fell for a 3rd straight month while imports rebounded. When adjusted for inflation, the goods trade deficit surged $10B to a record $91.6B in Dec. The jump in real goods trade deficit suggests that trade was probably a bigger drag on Q4 GDP than initially estimated by the gov. The gov reported last week that trade subtracted 0.22 percentage point from GDP growth in Q4. The economy grew at a 2.6% annualized rate in the Oct-Dec qtr, slowing from Q3's brisk 3.4% pace. The downbeat trade data joined weak Dec retail sales, construction spending, housing starts & business spending on equipment reports in setting the economy on a low growth trajectory in Q1. The trade deficit in Dec was driven by 1.9% drop in exports of goods & services to a 10-month low of $205B. Exports are weakening because of slowing global demand & a strong $, which is making US-made goods less competitive on the intl market. Exports of industrial supplies & materials fell $2.1B, with shipments of petroleum products dropping $0.9B & crude oil decreasing $0.5B. Exports of capital goods dropped $1.7B, led by a $1.0B decline in civilian aircraft shipments. In Dec, imports of goods & services increased 2.1% to $264.9B, likely as businesses stocked up in anticipation of further duties on Chinese imports. Consumer goods imports jumped $2.4B, boosted by a $0.7B increase in imports of household & kitchen appliances. Cellphone imports increased $0.6B. Capital goods imports increased $2.7B, with imports of computer accessories rising $0.7B. Computer imports also increased $0.7B.
US trade deficit jumps to 10-year high in 2018
Pres Trump is pushing hard to strike a trade deal with China in the hope of
lifting the stock market ahead of his re-election bid, according to leakers. They said Trump wants a rally
as he gets set to run for a 2nd term & has decided that resolving
the US-China trade dispute can make that happen. He is increasingly concerned that the lack of a trade agreement could knock down stocks. Trump has taken notice of the market’s gains as both sides get closer to a deal. US stocks started 2019 strong, with the S&P 500 rallying more than 11% thru yesterday's close. Part of the
rally has been fueled by investors increasing bets that China & the
US will strike a trade deal soon. However, there are growing concerns
that a deal is fully baked into the market, possibly limiting any more
gains coming from positive trade news. It has been reported that China & the US were in the “final stage” of trade talks that could end this month. Sources also said the 2
sides are working on a Mar-a-Lago summit to cap off the negotiations. Worries
over the 2 countries' skirmish kept investors on edge for most of
last year as investors worried about the impasse's impact on corp
earnings. One of the pres's goals in striking a new deal with
China is to reign in the US trade deficit, a sticking point of his
since he first ran in 2016. The trade deficit keeps growing, however, described above.
Trump pushing for trade deal with China in hopes of boosting stock market ahead of 2020 bid
The stock market is vastly overbought & that is becoming obvious to traders. The 2019 rally has hardly had a hiccup along the way. There is a growing awareness that optimism about a new trade deal with China is already priced into stocks at these levels. Meanwhile economic data is so-so after a weak Jan, partially related to the gov shutdown, making managers nervous about the future of the US economy. Q1 is traditionally a sluggish time for the economy & this year looks like it will not be an exception. In today's early trading, stocks keep selling off But the bulls feel good with the Dow not far from its record high.
Dow Jones Industrials
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