Thursday, May 9, 2019

Markets dive as new tariff deadline looms

Dow tumbled 414, decliners over advancers about 4-1 & NAZ sank 128.  The MLP index was off 3+ to the 242s & the REIT index pulled back 1+ to the 372s.  Junk bond funds were mixed & Treasuries rose in price, taking the yield on the 10 year Treasury down 5 basis points to 2.43%.  Oil fell to the 61s & gold rose 7 to 1288 as global markets retreat.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil61.35
 -0.77 -1.2%

GC=FGold   1,286.30

3 Stocks You Should Own Right Now - Click Here!

Stocks opened lower as traders braced for an escalation in the trade conflict between the U.S & China, with both sides making tariff threats against one another, even as trade talks were set to resume later today.  China threatened to retaliate against the Pres Trump goes ahead with his plan for a sharp increase in tariffs against the world's 2nd-largest economy.  Beijing's threat responds to Trump's decision to slap an additional 25% tariffs on $325B worth of Chinese goods, which the administration says will kick in tomorrow at 12:01 AM.  China's Commerce Ministry said that the "Chinese side deeply regrets that if the U.S. tariff measures are implemented, China will have to take necessary countermeasures."  It was reported that Beijing took comments this week by Trump & VP Mike Pence that the Fed should cut interest rates as a sign the White House is worried about the US economy &, thus, ready to make concessions.  The trade tensions have been weighing on markets.  The S&P 500 & NAZ are already on track for their worst week of 2019, specifically, since the week ending Dec 21 when they tumbled 7%.  The Dow is looking at its largest weekly since Mar 8.   However, if the Dow falls more than 49 today, the blue-chip index will also suffer its worst week since Dec 21, 2018.  Crude oil prices declined to $61.38 per barrel & the yield on the 10-year Treasury slipped to 2.44%.  China's Shanghai Composite closed down 1.5%, the Hang Seng was off 2.4% & Japan's Nikkei 225 declined 0.9%.  Britain's FTSE 100 was down 0.4%, France's CAC 40 fell 1.3% & Germany's DAX retreated 1.0%.

US stocks down on tariff hike threats

China threatened to retaliate against the US. if Pres Trump goes ahead with his plan for a sharp increase in tariffs, even as trade talks between the 2 nations resume today.  Beijing's threat responds to Trump's decision, announced over the weekend, to slap an additional tariffs on $325B of Chinese goods.  The US already imposes a 10% tariff on $200B of goods & a 25% tariff on $50B of tech products.  Talks between the US & China are expected to begin later today & extend into Fri at least, the date the US is expected to impose a new round of tariffs against China.

China threatens US with tariff retaliation

The US trade deficit increased slightly in Mar even though the deficit with China fell to the lowest point in 5 years.  The Commerce Dept said that the total deficit in good & services edged up 1.5% to $50B in Mar, after falling 3.6%in Feb.  The deficit is the difference between what America sells to the rest of the world & what it imports.  Exports rose 1% to $212B in Mar while imports rose a slightly faster 1.1% to $262B.  The deficit in goods with China dropped 16.2% to $20.7B, the lowest level since Mar 2014.  The US & China have been locked in a trade war for the past year with a new round of US tariffs scheduled to go into effect shortly.

US trade deficit edges up to $50B in March

Liu He, China's vice premier & top trade negotiator, will have dinner with Pres Trump's trade team this evening, just hours before the US will hike tariffs on $200B in Chinese goods.  Liu will dine with Trade Representative Robert Lighthizer & other US officials as the 2 largest economies try to salvage a trade deal.  Liu is not expected to meet with Pres Trump today.  Markets will be watching for any clues or updates to leak out of the dinner.  Stocks declined at the opening bell after Trump said during a campaign rally last night that China "broke the deal."  Investors have followed the talks closely as they hope the US & China can avoid widening their trade conflict and damaging the global economy.  Asked whether the White House, which closely watches financial markets, is prepared for the market reaction Fri if no deal takes shape, Sarah Sanders responded: "We're always prepared."  The US has officially filed paperwork to raise duties on the Chinese products to 25% from 10% at 12:01 AM ET on Fri.  While the Trump administration said it could reverse its decision if the sides make progress during talks today, it is unclear whether DC & Beijing can move close enough to a deal.  Trump has pushed for an agreement to address grievances with China such as intellectual property theft, forced technology transfers & trade deficits.  The Trump administration has already placed tariffs on $250B in Chinese goods & has threatened to levy duties on more products as it tries to bring Beijing to the table.

China’s Liu He will have dinner with Trump trade negotiators hours before tariff hike takes effect

Trade negotiations are not going well & investors are loosing heart.  The Dow is already down a massive 900 this week & the outlook remains glum.  There was significant selling at today's opening & the bears have continued selling.  These are not good times for investors weak of heart.  As expected in this environment, demand is strong for safe  haven investments such as gold & Treasuries.

Dow Jones Industrials

No comments: