Tuesday, July 30, 2019

Markets decline after Trump's tweets on Chinese trade

Dow fell 65, decliners over advancers 4-3 & NAZ lost 33.  The  MLP index dropped 3+ to the 246s & the REIT index jumped up 4+ to the 391s.  Junk bond funds drifted lower & Treasuries fell slightly.  Oil climbed into the 57s & gold rose 6 to 1439 while stocks were being sold.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil57.32

GC=FGold   1,439.70

3 Stocks You Should Own Right Now - Click Here!

The Federal Reserve begins its 2-day policy meeting in which it is being widely anticipated that the central bank will cut interest rates for the first time in a decade.  US & China were heading into another round of trade negotiations in Shanghai.  Stocks moved lower following Pres Trump's comments warning China that a much tougher trade deal would be coming if he gets reelected.  Investors are hoping Beijing & DC will avoid another escalation in tariffs like the one that occurred after talks collapsed in May.  Treasury Secretary Steve Mnuchin & Trade Representative Robert Lighthizer will meet in Shanghai with a delegation led by China's economy czar, Vice Premier Liu He.  In economic news, the leading measure of US home prices saw annual gains slip in May to 3.4%.  According to the S&P Corelogic Case-Shiller report, the 20-City Composite reported a 0.6% increase for the month.  Contracts to buy previously owned homes rose more than expected in Jun, the National Association of Realtors said.  The pending home sales index rose to a reading of 108.3 last month, up 2.8% from the prior month.

Stocks move lower after Trump's China comments

US & China were heading into another round of trade negotiations & investors are hoping Beijing & DC will avoid another escalation in tariffs like the one that occurred after talks collapsed in May.  Officials have downplayed the potential for a breakthrough, however, since the same issues that caused talks to bog down earlier remain.  A working dinner is reportedly scheduled for later with talks scheduled for Wed.  The talks resume amid an array of disputes that has grown to include tension over Chinese tech giant Huawei.  Pres Trump in a series of tweets said that negotiations with China could get tougher.  Pres & Xi Jinping agreed in Jun to revive efforts to end the costly fight over China's technology ambitions & trade surplus.  Trump has repeated his claim that the US is prospering by "taking in tens of billions of dollars" from his tariff hikes on Chinese products.  In reality, those are paid by US companies and often trickle down to consumers who buy Chinese goods.  Chinese leaders are resisting US pressure to roll back plans for gov-led development of industry leaders in robotics, artificial intelligence & other technologies.  The US complains those efforts depend on stealing or pressuring foreign companies to hand over technology.

Trump: China continues to ripoff the USA

Procter & Gamble (PG), a Dow stock & Dividend Aristocrat, swung to a net loss in its fiscal Q4 after the company reported an $8B write down of its Gillette brand.  But PG shares rallied, as earnings topped expectations after stripping out the impact of the charge, & the company offered up an optimistic forecast for fiscal 2020.  The consumer products giant reported a fiscal Q4 net loss of $5.24B ($2.12 per share) compared with net income of $1.89B (72¢ per share) a year earlier.  The primary driver of the loss was the one-time charge to write down the value of Gillette.  Excluding items, EPS was $1.10, beating the $1.05 estimate.  Net sales rose 4% to $17.09B, topping expectations of $16.86B.  The currency devaluations & market contraction of blades & razors, primarily in developed markets, led the company to adjust the carrying values of goodwill & intangible assets for the business.  Organic sales increased 7% during the qtr, helped by price hikes & more consumers buying products from brands like Tide & Swiffer.  The company expects fiscal 2020 revenue growth of 3-4%.  This includes a slight negative impact from foreign currency.  Ther forecast for fiscal 2020 revenue was $69.76B, up 3.5% from fiscal 2019.  It also expects adjusted EPS to increase by 4-9%.  PG said that its current forecast for commodities, foreign currency, transportation & tariffs is expected to result in a “modest net benefit” to earnings growth in fiscal 2020.  Analysts were estimating that the company’s adjusted EPS next fiscal year would rise 5.1% to $4.75.  The stock rose 4.65.
If you would like to learn more about PG, click on this link:

Procter & Gamble shares jump as investors shrug off Gillette write-down and focus on strong sales

American consumer confidence rebounded this month to the highest level since Nov after drooping in Jun.  The Conference Board, a business research group, said  that its consumer confidence index rose to 135.7 in Jul from 124.3 in Jun.  The bounce back from last month's drop was much stronger than expected.  The index measures consumers' assessment of current economic conditions & their expectations for the next 6 months.  Both rose substantially in Jul.  Consumers shrugged off trade tensions with China & a slowing US economy.  Economists keep close watch on consumers' spirits because their spending accounts for about 70% of economic activity.  Lynn Franco, senior director of economic indicators at the Conference Board, says the sustained confidence should continue to support robust spending in the near-term.

Consumer Confidence rebounds in July to 135.7, the highest level since November

While the Fed starts its 2 day meeting, the trade talks in China are beginning.  With a lot of advance warnings, they are expected to plod along at a slow pace.  The Fed announcement will be made tomorrow & the trade talks could drag on for months.  As expected, safe haven gold is in strong demand.

Dow Jones Industrials

No comments: