Dow jumped up 207, advancers over decliners better than 3-1 & NAZ went up 87. The MLP index added 1+ to 251 & the REIT index gained 1+ to 381. Junk bond funds were bid higher & Treasuries slid back after yesterday's rally. Oil climbed in the 61s on worries about supply risks & gold fell 5 to 1296.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
US stocks higher after big sell-off
The threat of the US-China trade war escalating into something beyond nasty rhetoric & modestly effective tariffs for the most part has been dismissed by market participants & economists. But the idea that the dispute could turn into something more is starting to become reality. Today's relief rally notwithstanding, several under-the-radar indicators are pointing to the danger that a prolonged conflict could put a serious dent into the economy of both nations, & reverberate through a global picture that at best looks tenuous. Whether it’s increased expectations for interest rate cuts, decreasing expectations for inflation or queasy bond & stock market investors who are more aggressively pricing in slower growth, the message is being sent to the US & China that danger lurks.
Markets send clear signal to US and China on the trade war: You have ‘blundered into a minefield’
Boeing (BA), a Dow stock, handed over 24% fewer jet airplanes in the first 4 months of 2019 compared with the same period a year earlier as the grounding of its top-selling 737 MAX aircraft halted deliveries for a 2nd month. As expected, the company took no new orders in Apr for the narrowbody jets as it continues to work on a software fix for the plane's anti-stall system MCAS. Deliveries of the aircraft were stopped in early Mar, a few days after an Ethiopian Airlines plane crashed, killing all 157 people on board, the 2nd fatal accident involving the 737 MAX in just 5 months. Last month BA abandoned its 2019 financial outlook, halted share buybacks & said lowered production of the fastest-selling 737 MAX jets in the wake of the groundings had cost it at least $1B. The company recognizes full payment for planes when they are handed over to customers & the formal grounding of the 737 MAX in almost all global airspace has completely halted deliveries. At the end of Mar, BA had 91 net orders, but the company's leasing & lending services unit Boeing Capital moved 4 of its 737 MAX delivery slots to a lessor. That led to the company recording 87 net orders through Apr across its aircraft lineup, a reduction of 4 on a net basis. BA had also removed 206 planes from its order backlog last month due to the near-collapse of India's Jet Airways. As a result, its net orders for the first 4 months slid into negative territory, with a total of minus 119 net orders after cancellations, despite a slew of new wide-body sales. The stock recovered 5.67.
If you would like to learn more about BA, click on this link:
club.ino.com/trend/analysis/stock/BA?a_aid=CD3289&a_bid=6ae5b6f7
Boeing deliveries hammered by 737 MAX groundings
Fed’s Esther George says there’s no need for a rate cut even with the trade threat lo…
Buyers returned & bid prices higher. They were active in the first few hours, but during the rest of the session the market drifted sideways with selling into the close. All is not well in the stock market & a quick fix is not in the cards. The Dow is down 410 in the first 2 days of this week.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Stocks rose, with the Dow surging
more than 300 points, after major averages the day before plunged more
than 2% in what was the worst start to May since 1970. Investors appeared to have expected the worsening of tensions between the US & China after Beijing said it would raise tariffs on $60B of US imports in response to Pres Trump's tariff hike last week. The yield on the 10-year Treasury was flat at 2.41%. Crude oil prices slipped modestly, with West Texas Intermediate, the US benchmark, selling for $61 per barrel. China's
Shanghai Composite closed down 0.7%, the Hang Seng was lower
1.5% & Japan's Nikkei 225 ended off 0.6%. Britain's FTSE 100 was up 0.8%, France's CAC 40 climbed 0.9% & Germany's DAX rose 0.4%.
US stocks higher after big sell-off
US officials listed $300B more of Chinese
goods for possible tariff hikes while Beijing vowed to "fight
to the finish" in an escalating trade battle that is fueling fears about
damage to global economic growth. The US
Trade Representative's Office (USTR) issued its target list after Beijing
announced tariff hikes yesterday on $60B of American goods in their
spiraling dispute over Chinese technology ambitions & other irritants.
Chinese authorities were reacting to Pres Trump's surprise
decision last week to impose punitive duties on $200B of imports
from China. "China will fight to the finish," said a foreign ministry spokesman. "We
have the determination and capacity to safeguard our interests," he added. "China's countermeasures have shown our determination to safeguard
the multilateral trade system." Trump
downplayed the standoff that sent global markets plummeting to start
the week, calling it "a little squabble" between friends. The
latest US list of 3805 product categories is a step toward carrying
out Trump's May 5 threat to extend punitive 25% duties to all Chinese
imports, the USTR said. It said a Jun 17 hearing would be held before DC decides how to proceed. The list "covers essentially all products" not already affected by punitive tariffs, the USTR said. It
includes laptop computers, saw blades, turbine parts, tuna & garlic.
The USTR noted it excludes pharmaceuticals & rare earths minerals used
in electronics & batteries. Also, China's tightly controlled social media were filled with
comments lambasting DC following weeks of little online
discussion of the dispute. That suggested official censors might have
blocked earlier comments but started allowing those that favor Beijing
to deflect potential criticism of Pres Xi Jinping's gov.
US targets $300B of Chinese goods for new tariff hikes
The threat of the US-China trade war escalating into something beyond nasty rhetoric & modestly effective tariffs for the most part has been dismissed by market participants & economists. But the idea that the dispute could turn into something more is starting to become reality. Today's relief rally notwithstanding, several under-the-radar indicators are pointing to the danger that a prolonged conflict could put a serious dent into the economy of both nations, & reverberate through a global picture that at best looks tenuous. Whether it’s increased expectations for interest rate cuts, decreasing expectations for inflation or queasy bond & stock market investors who are more aggressively pricing in slower growth, the message is being sent to the US & China that danger lurks.
Markets send clear signal to US and China on the trade war: You have ‘blundered into a minefield’
Boeing (BA), a Dow stock, handed over 24% fewer jet airplanes in the first 4 months of 2019 compared with the same period a year earlier as the grounding of its top-selling 737 MAX aircraft halted deliveries for a 2nd month. As expected, the company took no new orders in Apr for the narrowbody jets as it continues to work on a software fix for the plane's anti-stall system MCAS. Deliveries of the aircraft were stopped in early Mar, a few days after an Ethiopian Airlines plane crashed, killing all 157 people on board, the 2nd fatal accident involving the 737 MAX in just 5 months. Last month BA abandoned its 2019 financial outlook, halted share buybacks & said lowered production of the fastest-selling 737 MAX jets in the wake of the groundings had cost it at least $1B. The company recognizes full payment for planes when they are handed over to customers & the formal grounding of the 737 MAX in almost all global airspace has completely halted deliveries. At the end of Mar, BA had 91 net orders, but the company's leasing & lending services unit Boeing Capital moved 4 of its 737 MAX delivery slots to a lessor. That led to the company recording 87 net orders through Apr across its aircraft lineup, a reduction of 4 on a net basis. BA had also removed 206 planes from its order backlog last month due to the near-collapse of India's Jet Airways. As a result, its net orders for the first 4 months slid into negative territory, with a total of minus 119 net orders after cancellations, despite a slew of new wide-body sales. The stock recovered 5.67.
If you would like to learn more about BA, click on this link:
club.ino.com/trend/analysis/stock/BA?a_aid=CD3289&a_bid=6ae5b6f7
Boeing deliveries hammered by 737 MAX groundings
The Federal Reserve doesn't need to cut interest
rates to boost inflation, Kansas City Fed Pres Esther George said
in a speech. In fact, George said, low inflation is of
little concern to anyone but financial market participants &
economists who fear that the central bank is undershooting its 2%
target & thus should ease policy to boost activity. “As I listen to business and community leaders around my region, I hear
few complaints about inflation being too low. In fact, I am more likely
to hear disbelief when I mention that inflation is as low as measured
in a number of key sectors,” she said.
“This leads me to the observation that inflation as experienced by
households and businesses is fundamentally different from inflation as
viewed by financial market participants and many economists.” Her comments come amid a public debate that has seen Pres Trump repeatedly push the Fed to lower its benchmark interest rate from its
target range of 2.25-2.5%. As recently as yesterday, the pres tweeted that the Fed should cut rates to keep pace with China's central bank loosening its monetary policy. George identified the ongoing trade war between the US & China
along with slower growth abroad as the 2 biggest threats to the US
economy. But she said things look good otherwise in the US, & she's
not very concerned with an inflation rate that the Fed's preferred gauge
currently puts around 1.6%. Most people & business owners look
at costs like gasoline, food, housing costs & health care & see
prices that continue to rise, George said. In that light, she sees
little reason to cut rates now. She worries that a rate reduction would
limit the Fed's policy flexibility in the event of an economic downturn. “The current level of inflation may perplex central bankers and
financial market participants, but in the context of a growing economy
and job gains, it doesn’t demand a Fed policy response in my view,” she added. George also noted the Fed's struggles in trying to nudge
inflation back up to 2% but said she generally supports the target even
if inflation is allowed to move ½ a point in either direction. George
is a voting member this year on the policymaking FOMC.
Fed’s Esther George says there’s no need for a rate cut even with the trade threat lo…
Buyers returned & bid prices higher. They were active in the first few hours, but during the rest of the session the market drifted sideways with selling into the close. All is not well in the stock market & a quick fix is not in the cards. The Dow is down 410 in the first 2 days of this week.
Dow Jones Industrials
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