Dow went up 78 (but 150 below session highs), advancers over declines 3-2 & NAZ advanced 81. The MLP index added 1+ to the 247s (extending its longer term sideways trend shown below). Junk bond funds inched higher & Treasuries were sold, as expected. Oil continues sliding lower in the 53s on China trade worries & gold tumbled 14 to 1332 with buying going into stocks.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Pres Trump says if Chinese Pres Xi Jinping doesn't meet with him at the upcoming Group of 20 summit in Osaka, Japan, this month, additional tariffs will go into effect. But Trump says he expects Xi to attend. Trump made the threat earlier today. Trump appeared to have called in response to the Chamber of Commerce, which had criticized Trump for using the threat of tariffs to force Mexico to do more to halt the flow of migrants across the US southern border. Trump is going after the chamber, saying it has its priorities wrong. Trump says: "They have to start representing the United States, not just the companies that are members of the U.S. Chamber of Commerce."
Pres Trump's ongoing trade war with China may be causing some companies to rethink their business strategies, as he predicted. According to a survey from Bain & Company, the tariff escalation has allowed companies to “reassess their business strategy.” 60% of companies said the tariffs on China provided the opportunity to recalibrate their plan. Part of those recalibrations included redirecting investments from China to other parts of the globe. 25% of respondents said they were altering their operations in this manner. Nearly ½ of companies said the tariffs would cause them to seek new sourcing partners, while 42% expected to source raw materials from a different region. Nearly 1-in-5 said they would modify production to add value outside of China, while 10% planned to shutter manufacturing assets in the country. Trump said last week that companies would avoid the tariffs because they would shift their operations back to the US. While it is unclear from the data where companies are shifting, it’s clear that some are rethinking their positions in China. The survey was conducted earlier this year, among more than 200 execs with operations in China. More than $28B of value is at stake in the ongoing trade talks between China & the US. A number of issues led to the imposition of US tariffs, including the country's treatment of intellectual property. About 60% of American companies agree with the US tariffs on Chinese goods, despite the fact that an equal number expect them to increase cost headwinds. Since the survey was released, the Trump administration raised the tariff rate imposed on $200B worth of Chinese goods to 25%, from 10%. In retaliation, Beijing announced it would raise tariffs on about $60B worth of American goods. Trump has also threatened to impose an additional 25% tariffs on $325B worth of imports from China.
Enthusiasm faded, starting at midday, on the US-Mexico trade deal & the popular averages finished off session highs. Mexico has made a lot of promises & now it has to deliver. In addition, the stock market is overbought after its rally in early Jun. It's up to the bulls to extend this advance in the face of so many problems on the trade scene.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
US employers hired the most people on record in
Apr, while the number of open jobs was largely unchanged, evidence
that the job market remains solid. The Labor
Dept said that businesses filled 5.9M jobs that
month, 4.2% more than in Mar & the most since records began in
2000. Some of the increase in hiring
simply reflects population growth. As a percentage of the workforce, new
hires reached 3.9%, a strong reading but below the record of 4.3%
reached in 2001. The report shows
employers are confident enough about the economy to add staff. Still,
there were warning signs: The number of job openings has declined from a
record 7.6M in Nov to 7.4M in Apr, suggesting
demand for labor is softening a bit. Growth
also appears to be slowing, with most economists forecasting that the
economy will expand in Q2 at about ½ the pace it
did in Q1. Rising trade tensions with
China, slowing growth in Europe & Asia, & the fading of stimulus
from tax cuts & greater gov spending last year are weighing on
the economy. On Fri, the gov said
employers added just 75K jobs in May & 224K in Apr. Those
monthly figures are a net total, while the 5.9M is a total count
of all hiring in Apr. There are still more
jobs available than there are unemployed workers, a rare development &
stark illustration of how low unemployment has fallen. Today's Job Openings & Labor Turnover Survey (JOLTS) also measures layoffs, which ticked up in Apr to 1.75M (but
remained at a low level). Rising layoffs would be a signal that the
economy was worsening. Hiring in Apr was
particularly strong in construction, professional & business services,
which includes IT workers as well as accountants & engineers, &
finance.
US employers hired a record number of people in April
Pres Trump says if Chinese Pres Xi Jinping doesn't meet with him at the upcoming Group of 20 summit in Osaka, Japan, this month, additional tariffs will go into effect. But Trump says he expects Xi to attend. Trump made the threat earlier today. Trump appeared to have called in response to the Chamber of Commerce, which had criticized Trump for using the threat of tariffs to force Mexico to do more to halt the flow of migrants across the US southern border. Trump is going after the chamber, saying it has its priorities wrong. Trump says: "They have to start representing the United States, not just the companies that are members of the U.S. Chamber of Commerce."
Trump threatens tariffs if China's Xi doesn't meet with him
Pres Trump's ongoing trade war with China may be causing some companies to rethink their business strategies, as he predicted. According to a survey from Bain & Company, the tariff escalation has allowed companies to “reassess their business strategy.” 60% of companies said the tariffs on China provided the opportunity to recalibrate their plan. Part of those recalibrations included redirecting investments from China to other parts of the globe. 25% of respondents said they were altering their operations in this manner. Nearly ½ of companies said the tariffs would cause them to seek new sourcing partners, while 42% expected to source raw materials from a different region. Nearly 1-in-5 said they would modify production to add value outside of China, while 10% planned to shutter manufacturing assets in the country. Trump said last week that companies would avoid the tariffs because they would shift their operations back to the US. While it is unclear from the data where companies are shifting, it’s clear that some are rethinking their positions in China. The survey was conducted earlier this year, among more than 200 execs with operations in China. More than $28B of value is at stake in the ongoing trade talks between China & the US. A number of issues led to the imposition of US tariffs, including the country's treatment of intellectual property. About 60% of American companies agree with the US tariffs on Chinese goods, despite the fact that an equal number expect them to increase cost headwinds. Since the survey was released, the Trump administration raised the tariff rate imposed on $200B worth of Chinese goods to 25%, from 10%. In retaliation, Beijing announced it would raise tariffs on about $60B worth of American goods. Trump has also threatened to impose an additional 25% tariffs on $325B worth of imports from China.
Trump tariffs encourage US companies to shift plans away from China
Enthusiasm faded, starting at midday, on the US-Mexico trade deal & the popular averages finished off session highs. Mexico has made a lot of promises & now it has to deliver. In addition, the stock market is overbought after its rally in early Jun. It's up to the bulls to extend this advance in the face of so many problems on the trade scene.
Dow Jones Industrials
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