Dow gave back 9, advancers over decliners 5-2 & NAZ gained 50. The MLP index was fractionally lower in the 247s & the REIT index recovered 2+ to 381. Junk bond funds did little & Treasuries were purchased. Oil was up pennies in the 59s & gold fell 7 to 1408.
AMJ (Alerian MLP Index tracking fund)
US stocks edge higher on trade optimism ahead of G20 Summit
GDP rises 3.1 percent showing solid growth
China is not budging ahead of Xi-Trump G-20 meeting
China wants a ‘balanced’ trade deal at summit, but the US isn’t interested
Today & tomorrow are not expected to create a lot excitement for stocks. That will come on Sat when the 2 leaders discuss the trade deal. The GDP data came in as expected, a good qtr but Q2 will likely be only so-so. Confusion over trade discussions are not helping the US & global business environment.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 59.34 | -0.04 | -0.1% |
| GC=F | Gold | 1,406.20 | -9.20 | -0.7% |
Stocks traded cautiously higher ahead of a weekend meeting between Pres Trump & China's Xi Jinping at the G20 Summit. China has however listed the removal of Huawei from the US banned list as a demand for a trade deal. The gov reported that the final reading on Q1 GDP came in at 3.1%, matching expectations. Initial
claims for state unemployment benefits increased 10K to a seasonally
adjusted 227K, the Labor Dept reported. In Asia, China's Shanghai Composite
added 0.7%, Hong Kong's Hang Seng jumped 1.4% & Japan's
Nikkei rose 1.2%. In
European markets, London's FTSE slipped 0.3%, Germany's DAX
added 0.3% & France's CAC was off a smidgen.
US stocks edge higher on trade optimism ahead of G20 Summit
The US economy grew at a solid rate of 3.1% in Q1,
but the healthy number concealed several emerging threats to global
growth, including strains from the year-long US-China trade war. The
Dept of Labor released its 3rd & final GDP reading, revealing that the gain in GDP was unchanged from one
month ago in Q1. Upward
revisions to non-residential fixed income, exports, state & local tax
spending & residential fixed income were offset by downward revisions
to consumer spending & inventory investment. Despite the healthy figure, some analysts suggested the economy
will still decelerate this year, evident in the reading for Q2 which ends this weekend. Earlier this week Federal Reserve Chair Jerome Powell, indicated that while the economy
remains on solid footing "the risks to this favorable baseline outlook
appear to have grown." He also reminded investors that the Fed is
independent despite ongoing criticisms from Pres Trump. “Congress
chose to insulate the Fed this way because it had seen the damage that
often arises when policy bends to short-term political interests,”
Powell added.
“Central banks in major democracies around the world have similar
independence.”
GDP rises 3.1 percent showing solid growth
The Chinese Ministry of Commerce maintained a firm stance against the US during a
weekly press conference, less than 2 days ahead of a
scheduled meeting between the leaders of the 2 countries. “We
urge the U.S. to immediately cancel its pressure and sanction measures
on Huawei and other Chinese companies, and push for the stable and
healthy development of China-U.S. trade relations,“ Gao Feng, spokesman
for the Ministry of Commerce, said. He
added that China is unchanged in its position on the trade war, as laid
out by lead negotiator & Vice Premier Liu He in May. The 3
primary points are canceling all additional tariffs, not arbitrarily
changing what the 2 countries' leaders agreed upon at the G-20 meeting
in Argentina late last year & that a trade agreement must be on equal
terms. The comments, & those of Ministry of Foreign Affairs Spokesman Geng
Shuang at a separate press conference, generally reiterated the Chinese side’s talking points from the last several weeks. Pres Trump & Chinese Pres Xi Jinping are set to meet Sat in Osaka during the G-20 summit. In
the run-up to the meeting, the Trump administration has sent mixed
messages. Trump has wanted to meet with Xi, & last week the Chinese
leader said in a phone call he was willing to accept the request. A
few days later, the Commerce Dept added 5 Chinese
companies to the same list that Huawei is on, effectively cutting them
off from US suppliers. Yesterday, Treasury Secretary Steve Mnuchin said the US & China had been close to a trade deal, & that he said “there’s a path to complete” one. The
delegations have been in contact since the 2 leaders communicated.
Liu held a phone call with Mnuchin & the Trade Representative Robert
Lighthizer on Mon to discuss economic & trade issues. According to
state news agency Xinhua,
both sides are preparing press releases for an expected agreement that
includes the US postponing planned tariff increases on $300B
worth of Chinese goods.
China is not budging ahead of Xi-Trump G-20 meeting
One of the key issues that will be discussed
between US & China officials at this week’s G-20 summit in Japan is
getting a balanced deal. China believes any new agreement will
need to be evenhanded, while Trade Representative Robert Lighthizer
told his Chinese counterparts that balance won't happen, citing to a leaker with knowledge of the White House position. The
reason why the US will not prioritize balance is because of China's
past trade transgressions. Among other things, China has been accused
for stealing US technology. Pres Trump has targeted China for tariffs as he seeks level ground & to reduce
the deficit the US has consistently run in trade between the 2
sides. The deficit in 2018 stood at $419B & was already at
$107B thru the first 4 months of 2019. Trump said yesterday he would like to see a deal but is content with where things are now. “They want a deal more than I do,” he said. The
US has levied 25% tariffs on $250B worth of Chinese goods &
has threatened to put additional duties on the remaining $300B of
imports. Chinese officials have hopes that they can get some of
their issues resolved since Trump has tightened the clamps on the trade
issue. Among their priorities will be a lifting of the ban on the sale
of US technology to Huawei Technologies & to get all current tariffs
dropped. Trump is being joined in Osaka by
multiple members of his trade team, including Trade Representative
Robert Lighthizer & economic advisor Peter Navarro, who has pushed for
an aggressive posture with China, & it was reported that the key
deputies have reached out to their Chinese counterparts.
China wants a ‘balanced’ trade deal at summit, but the US isn’t interested
Today & tomorrow are not expected to create a lot excitement for stocks. That will come on Sat when the 2 leaders discuss the trade deal. The GDP data came in as expected, a good qtr but Q2 will likely be only so-so. Confusion over trade discussions are not helping the US & global business environment.
Dow Jones Industrials
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