Dow was up 22, advancers over decliners about 3-2 & NAZ rose 46. The MLP index retreated 1+ to the 245s. Junk bond funds were little changed & Treasuries inched higher in price. Oil dropped to the 51s (more below) & gold lost 1 to 1342.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
While other economic signs may be weakening, Americans are still confident about their job prospects. A recent NY Federal Reserve consumer expectations survey showed that workers’ confidence for finding a new job after losing their current position was at 61.5% in May, an increase from 59.3% in Apr & the highest since the central bank started keeping track in Jun 2013. Moreover, the confidence rise was best in those with incomes less than $50K, a key cohort as policymakers seek to bridge the wealth gap that blew open following the financial crisis. Earnings growth expectations also rose, up one-tenth of a point to 2.5% & the mean probability of respondents leaving their jobs voluntarily over the next 12 months, another sign of worker confidence, rose to 21.2% from 20.3%. The numbers came amid a cascade of conflicting data. Manufacturing readings lately have been weak, & May's nonfarm payrolls count also was disappointing. Consumer spending, meanwhile, has gotten stronger, but the number of economists expecting a recession over the next year or so has continued to grow. The Federal Reserve is wrestling with the crosscurrents as it prepares this week to signal where interest rates are heading. The policymaking FOMC is epxected to keep rates steady at the 2-day meeting that concludes Wed, but could signal future rate cuts. Markets expect a qtr-point rollback in Jul followed by another in Sep & possibly a third move as soon as Dec. Low inflation is one reason the Fed may ease policy. The consumer survey showed 3-month inflation expectations at 2.6% & one-year out at 2.5%, both the lowest since late 2017. The bond market also is looking ahead to low inflation & a possible period of negative growth somewhere on the horizon, as shorter-dated gov bond yields are now outpacing those at the longer end of the spectrum, a phenomenon known as an inverted yield curve that has been a reliable recession indicator.
Worker confidence in finding a new job has hit a six-year high, but it might be a ‘turning point’
Hundreds of businesses, trade groups & individuals have written to complain that the additional import taxes would drive up prices for consumers, squeeze profits & leave US companies at a competitive disadvantage to foreign rivals that aren't subject to higher taxes on the vital components they buy from China. They're pleading with the administration to rethink the tariffs, or at least spare the particular imports they & their customers rely on. Some will appear in person to air their grievances in 7 days of hearings in DC that began today. A common theme in their pleas is that American businesses, not China, as Trump often asserts, must pay the import taxes the pres is imposing on Chinese goods. And in the end, many of these companies will pass their higher costs on to their customers. Trump has already imposed 25% tariffs on $250B in Chinese imports. The goal is to pressure Beijing to stop stealing American technology, forcing US businesses to hand over trade secrets & unfairly subsidizing Chinese tech companies. 11 rounds of negotiations have failed to resolve the dispute over China's aggressive drive to surpass America's technological dominance. Businesses & investors say they hope the negotiations will gain momentum if Trump & Pres Xi Jinping hold a face-to-face meeting at a Group of 20 summit in Japan in 2 weeks. Trump's earlier tariffs largely spared American consumers by focusing on industrial goods that don't show up directly in the mall or big-box stores. But the new round will inflict financial pain on ordinary households because it will affect many consumer goods, from cellphones & computers to shoes & silk scarves. “We’re talking about things that you and I buy and buy in a store, and that’s going to be felt directly by consumers,” said Neil Bradley, chief policy officer at the US Chamber of Commerce. The companies that serve the retail market, he said, tend to have “much, much less margin to absorb those increased tariff costs.” A report commissioned by the National Retail Federation found that American consumers would pay an additional $4.4B a year for clothing, $2.5B more for shoes & $1.6B more for household appliances.
US companies’ message to Trump: Don’t expand China tariffs
Fitch Ratings cut its global economic outlook for 2020, blaming the ongoing trade war, & warned that central banks won't be able to compensate for depressed business investment. “Even though our base case assumes that further U.S. tariffs on China are avoided, our world growth forecast for 2020 has been lowered. Increased uncertainty about trade is already making firms more cautious on capex,” said Fitch. It even predicted that more supportive monetary policies will not be sufficient to shield the countries from the vagaries of the trade war & added that the Federal Reserve is likely to keep interest rates unchanged this year after 4 hikes last year. Market expectations are for 3 cuts, beginning in Jul. By & large, the Fed is expected to stand pat when the FOMC meets this week. But some economists believe the central bank may give itself some breathing space by pledging to cut rates if needed. Fitch trimmed 2020 global growth forecast to 2.7% from 2.8%, citing weaker investment in the US, softer consumer spending in China & subdued economic prospects in emerging markets. The economist, meanwhile, noted that the forecast is based on the scenario that the US backs off from raising tariffs on remaining $300B of Chinese imports. Negotiations between the US & China have ground to a halt last month with Pres Trump threatening to increase tariffs on more Chinese goods if Chinese Pres Xi Jinping does not meet with him at the G-20 summit in Japan later this month. If the tariffs are raised & China strikes back, global GDP will see a trim of 0.4 percentage point while the US. GDP may be reduced by 0.5 percentage point & China's economy could suffer a 0.8 percentage point cut, Fitch said.
China may avoid the worst of Trump’s tariff wrath, but Fitch has still cut its global economic outlook
Crude oil futures prices fell, with investors digesting worrisome demand updates issued last week & keeping tabs on typically Iran will break the uranium stockpile limit set by Tehran's nuclear deal with world powers in the next 10 days, the spokesman for the country’s atomic agency said. West Texas Intermediate crude for Jul delivery fell 58¢ (1.1%) to settle at $51.93 a barrel, following 2 consecutive session gains. The attack on 2 tankers in the Middle East's Strait of Hormuz last week triggered concerns about disruptions to the global flow of oil & prompted a late-week rally in prices, but the market failed to recoup the 4% loss from Wed, sending front-month WTI prices tumbling 2.7% for last week. Secretary of State Mike Pompeo accused Iran of orchestrating a series of attacks on tankers in the strait, in what he said was Iran's effort to get the US to ease up on sanctions. The narrow waterway is seen as the world's most sensitive choke point for transporting crude. Meanwhile, Aug Brent crude dropped $1.07 (1.7%) to $60.94 a barrel. Brent finished down 2% last week. Last week's losses followed reports of an expected slowdown in oil demand. In a report Fri, the International Energy Agency downgraded its 2019 forecast for global oil demand for a 2nd straight month, citing, in part, a global economic slowdown. OPEC had also cut its forecast for growth in world oil demand this year.
Stocks didn't much of anything today. They were bid higher early in the session & pretty much remained at those levels with selling into the close. Traders are waiting for the Fed to speak & that is still about 48 hours away. A lot will be riding on their statement. Meanwhile trade negotiations are going nowhere fast & safe investments (gold & Treasuries) are holding gains made in recent months.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
While other economic signs may be weakening, Americans are still confident about their job prospects. A recent NY Federal Reserve consumer expectations survey showed that workers’ confidence for finding a new job after losing their current position was at 61.5% in May, an increase from 59.3% in Apr & the highest since the central bank started keeping track in Jun 2013. Moreover, the confidence rise was best in those with incomes less than $50K, a key cohort as policymakers seek to bridge the wealth gap that blew open following the financial crisis. Earnings growth expectations also rose, up one-tenth of a point to 2.5% & the mean probability of respondents leaving their jobs voluntarily over the next 12 months, another sign of worker confidence, rose to 21.2% from 20.3%. The numbers came amid a cascade of conflicting data. Manufacturing readings lately have been weak, & May's nonfarm payrolls count also was disappointing. Consumer spending, meanwhile, has gotten stronger, but the number of economists expecting a recession over the next year or so has continued to grow. The Federal Reserve is wrestling with the crosscurrents as it prepares this week to signal where interest rates are heading. The policymaking FOMC is epxected to keep rates steady at the 2-day meeting that concludes Wed, but could signal future rate cuts. Markets expect a qtr-point rollback in Jul followed by another in Sep & possibly a third move as soon as Dec. Low inflation is one reason the Fed may ease policy. The consumer survey showed 3-month inflation expectations at 2.6% & one-year out at 2.5%, both the lowest since late 2017. The bond market also is looking ahead to low inflation & a possible period of negative growth somewhere on the horizon, as shorter-dated gov bond yields are now outpacing those at the longer end of the spectrum, a phenomenon known as an inverted yield curve that has been a reliable recession indicator.
Worker confidence in finding a new job has hit a six-year high, but it might be a ‘turning point’
Hundreds of businesses, trade groups & individuals have written to complain that the additional import taxes would drive up prices for consumers, squeeze profits & leave US companies at a competitive disadvantage to foreign rivals that aren't subject to higher taxes on the vital components they buy from China. They're pleading with the administration to rethink the tariffs, or at least spare the particular imports they & their customers rely on. Some will appear in person to air their grievances in 7 days of hearings in DC that began today. A common theme in their pleas is that American businesses, not China, as Trump often asserts, must pay the import taxes the pres is imposing on Chinese goods. And in the end, many of these companies will pass their higher costs on to their customers. Trump has already imposed 25% tariffs on $250B in Chinese imports. The goal is to pressure Beijing to stop stealing American technology, forcing US businesses to hand over trade secrets & unfairly subsidizing Chinese tech companies. 11 rounds of negotiations have failed to resolve the dispute over China's aggressive drive to surpass America's technological dominance. Businesses & investors say they hope the negotiations will gain momentum if Trump & Pres Xi Jinping hold a face-to-face meeting at a Group of 20 summit in Japan in 2 weeks. Trump's earlier tariffs largely spared American consumers by focusing on industrial goods that don't show up directly in the mall or big-box stores. But the new round will inflict financial pain on ordinary households because it will affect many consumer goods, from cellphones & computers to shoes & silk scarves. “We’re talking about things that you and I buy and buy in a store, and that’s going to be felt directly by consumers,” said Neil Bradley, chief policy officer at the US Chamber of Commerce. The companies that serve the retail market, he said, tend to have “much, much less margin to absorb those increased tariff costs.” A report commissioned by the National Retail Federation found that American consumers would pay an additional $4.4B a year for clothing, $2.5B more for shoes & $1.6B more for household appliances.
US companies’ message to Trump: Don’t expand China tariffs
Fitch Ratings cut its global economic outlook for 2020, blaming the ongoing trade war, & warned that central banks won't be able to compensate for depressed business investment. “Even though our base case assumes that further U.S. tariffs on China are avoided, our world growth forecast for 2020 has been lowered. Increased uncertainty about trade is already making firms more cautious on capex,” said Fitch. It even predicted that more supportive monetary policies will not be sufficient to shield the countries from the vagaries of the trade war & added that the Federal Reserve is likely to keep interest rates unchanged this year after 4 hikes last year. Market expectations are for 3 cuts, beginning in Jul. By & large, the Fed is expected to stand pat when the FOMC meets this week. But some economists believe the central bank may give itself some breathing space by pledging to cut rates if needed. Fitch trimmed 2020 global growth forecast to 2.7% from 2.8%, citing weaker investment in the US, softer consumer spending in China & subdued economic prospects in emerging markets. The economist, meanwhile, noted that the forecast is based on the scenario that the US backs off from raising tariffs on remaining $300B of Chinese imports. Negotiations between the US & China have ground to a halt last month with Pres Trump threatening to increase tariffs on more Chinese goods if Chinese Pres Xi Jinping does not meet with him at the G-20 summit in Japan later this month. If the tariffs are raised & China strikes back, global GDP will see a trim of 0.4 percentage point while the US. GDP may be reduced by 0.5 percentage point & China's economy could suffer a 0.8 percentage point cut, Fitch said.
China may avoid the worst of Trump’s tariff wrath, but Fitch has still cut its global economic outlook
Crude oil futures prices fell, with investors digesting worrisome demand updates issued last week & keeping tabs on typically Iran will break the uranium stockpile limit set by Tehran's nuclear deal with world powers in the next 10 days, the spokesman for the country’s atomic agency said. West Texas Intermediate crude for Jul delivery fell 58¢ (1.1%) to settle at $51.93 a barrel, following 2 consecutive session gains. The attack on 2 tankers in the Middle East's Strait of Hormuz last week triggered concerns about disruptions to the global flow of oil & prompted a late-week rally in prices, but the market failed to recoup the 4% loss from Wed, sending front-month WTI prices tumbling 2.7% for last week. Secretary of State Mike Pompeo accused Iran of orchestrating a series of attacks on tankers in the strait, in what he said was Iran's effort to get the US to ease up on sanctions. The narrow waterway is seen as the world's most sensitive choke point for transporting crude. Meanwhile, Aug Brent crude dropped $1.07 (1.7%) to $60.94 a barrel. Brent finished down 2% last week. Last week's losses followed reports of an expected slowdown in oil demand. In a report Fri, the International Energy Agency downgraded its 2019 forecast for global oil demand for a 2nd straight month, citing, in part, a global economic slowdown. OPEC had also cut its forecast for growth in world oil demand this year.
Oil extends last week’s sharp retreat as demand worries sour sentiment
Stocks didn't much of anything today. They were bid higher early in the session & pretty much remained at those levels with selling into the close. Traders are waiting for the Fed to speak & that is still about 48 hours away. A lot will be riding on their statement. Meanwhile trade negotiations are going nowhere fast & safe investments (gold & Treasuries) are holding gains made in recent months.
Dow Jones Industrials
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