Dow went up 240, advancers over decliners 5-2 & NAZ rose 71. The MLP index was fractionally higher to the 233s & the REIT index rose 1+ to 400. Junk bond funds edged higher & Treasuries drifted lower in price. Oil pulled back to the 55s & gold was off 3 to 1511.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Federal Reserve officials who voted to lower interest rates at the
end of Jul saw their decision as part of a policy recalibration in the
face of a darkening economic outlook. Minutes
from the Jul 30-31 FOMC meeting revealed that most policymakers believed the decision to cut
the benchmark federal funds, for the first time since the financial
crisis 11 years ago, was part of a mid-cycle adjustment, not the
beginning of a series of deeper rate cuts. "In
their discussion of the outlook for monetary policy beyond this meeting,
participants generally favored an approach in which policy would be
guided by incoming information and its implications for the economic
outlook and that avoided any appearance of following a preset course,"
the minutes said. Last month, the central
bank lowered rates by 25 basis points to 2-2.25%, but left the door open for a 2nd cut later this year. Currently, traders are pricing in a 100% chance of a rate cut
during the Fed's upcoming Sep meeting. Fed Chair Jerome Powell is expected to pave the
way for a 2nd rate cut during his speech at the Jackson Hole on Fri on the heels of the yield
curve's inversion last week. But members did
not commit to additional cuts during the meeting, instead choosing to
wait and see how certain economic uncertainties, like slowing global
growth & the US-China trade war, play out. However, policymakers
warned that the trade war appears to be a "persistent headwind." "A
number of participants suggested that the nature of many of the risks
they judged to be weighing on the economy, and the absence of clarity
regarding when those risks might be resolved, highlighted the need for
policymakers to remain flexible and focused on the implications of
incoming data for the outlook," the minutes said.
The US made an 11th-hour agreement with Mexico over dumping tomatoes on the US market. The agreement means there will be price stability for tomatoes for multiple years to come, Commerce Secretary Wilbur Ross said. “This never would have happened if the president did not threaten tariffs,” Ross said, adding, "The real objective of the administration is not tariffs, but free trade, and this proves that point.” Under the multi-year deal, tomatoes coming into the US from Mexico are duty-free. There will be a set price at 31¢ per pound for roma & round tomatoes. The range tops out at 59¢ per pound for specialty tomatoes. Organic tomatoes can be up to 40% more than this because of added growing costs. Mexican tomatoes account for 50% of US consumption & about 400K jobs for Mexico. “This means they won’t be dumping tomatoes in our market," he said. The Commerce Dept, according to Ross, was prepared to make permanent 25% tariffs on tomatoes starting Wed. On May 7, the US announced the suspension of a 2013 agreement. That suspension reinstated tariffs of 25%. Under the new agreement, Mexican farmers can recoup the tariff they have paid since May 7. “This result is good news because it will keep the market open for our tomato exports to the United States,” Mexican Economy Minister Graciela Marquez Colin said. Negotiations have been going on since that date. The talks intensified over the past 2 weeks with about 20 meetings between the 2 trade teams. “The President will make sure other countries will not take advantage of US farmers,” Ross warned. The agreement, in draft form, is expected to be signed Sep 19.
US strikes Mexican tomato trade deal in win for consumers
The Congressional Budget Office is sounding the alarm on Pres Trump's trade war, saying tariffs will have a material impact on the US economy. “CBO expects the changes in U.S. and foreign trade policies since January 2018 to reduce the level of real U.S. GDP by about 0.3 percent by 2020,” the CBO said in its updated budget & economic outlook for 2019-2029. “Tariffs reduce domestic GDP chiefly by raising domestic prices, which reduces the purchasing power of U.S. consumers and increases the cost of business investment.” The report also said real income for the average US household would fall by 0.4% during that time. While the CBO sees the US economy growing at a 2.3% pace in 2019, it expects growth to slow to an average of 1.8% in 2020-2023. Since Jan 2018, the Trump administration has placed tariffs on $250B worth of Chinese goods & threated tariffs on another $300B of goods. The taxes have drawn the ire of Beijing, which has responded by escalating the dispute into a tit-for-tat trade war. The trade war may already be having an impact on the US economy. GDP grew at an annualized rate of 2.1% in Q2, down from 3.1% in Q1. And recession bells rang last week when the spread between the US 2-year & 10-year yield turned negative for the first time in over a decade. Such an event has occurred ahead of every US recession in the past 50 years. The slowing economy has caught the attention of Trump, who today lashed out at the Federal Reserve & called for a “big” rate cut. A day earlier, Trump said he was considering several options to jumpstart the economy, including a temporary payroll tax cut & indexing capital gains to inflation.
Traders liked the Fed minutes, but the CBO assessment on the economy & deficit was not encouraging. The Dow started the day up 200+ & stayed there, but is down over 600 in Aug. The NAZ slid back a bit in the PM, but manged to hold above 8K. The bulls are happy, but enthusiasm is a volstile emotion.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
FED MINUTES REVEAL MEMBERS SAW RATE CUT AS 'MID-CYCLE ADJUSTMENT'
The US made an 11th-hour agreement with Mexico over dumping tomatoes on the US market. The agreement means there will be price stability for tomatoes for multiple years to come, Commerce Secretary Wilbur Ross said. “This never would have happened if the president did not threaten tariffs,” Ross said, adding, "The real objective of the administration is not tariffs, but free trade, and this proves that point.” Under the multi-year deal, tomatoes coming into the US from Mexico are duty-free. There will be a set price at 31¢ per pound for roma & round tomatoes. The range tops out at 59¢ per pound for specialty tomatoes. Organic tomatoes can be up to 40% more than this because of added growing costs. Mexican tomatoes account for 50% of US consumption & about 400K jobs for Mexico. “This means they won’t be dumping tomatoes in our market," he said. The Commerce Dept, according to Ross, was prepared to make permanent 25% tariffs on tomatoes starting Wed. On May 7, the US announced the suspension of a 2013 agreement. That suspension reinstated tariffs of 25%. Under the new agreement, Mexican farmers can recoup the tariff they have paid since May 7. “This result is good news because it will keep the market open for our tomato exports to the United States,” Mexican Economy Minister Graciela Marquez Colin said. Negotiations have been going on since that date. The talks intensified over the past 2 weeks with about 20 meetings between the 2 trade teams. “The President will make sure other countries will not take advantage of US farmers,” Ross warned. The agreement, in draft form, is expected to be signed Sep 19.
US strikes Mexican tomato trade deal in win for consumers
The Congressional Budget Office (CBO) had some bad news when it comes to the federal deficit. The
deficit for 2019 is expected to be $63B more than what it
estimated in May & $809B more over the
next 10 years, compared to its May estimate. The CBO blamed 2 things for the 2019 deficit increase: the bipartisan spending agreement that Congress passed & Trump signed Aug 2 & supplemental appropriations for disaster relief & border security. The
CBO routinely gives its prediction about what federal debt, deficit,
spending & revenues will look like for the existing year & over the
course of the next decade. The deficit is expected to be $960B this year & will be $1.2T, on average, over the next 10 years. Deficits
will "fluctuate between 4.4 percent and 4.8 percent of gross domestic
product (GDP), well above the average over the past 50 years," the CBO
wrote. "Although both revenues and outlays grow faster than GDP over the
next 10 years in CBO’s baseline projections, the gap between the two
persists." The CBO now anticipates that the
debt will increase "from 79 percent of GDP in 2019 to 95 percent in
2029, its highest level since just after World War II." As
for the economy, the CBO had some good news, at least in the short
term, stating that real GDP is expected to grow by 2.3% for 2019,
"supporting strong labor market conditions that feature low unemployment
and rising wages." After 2019 however, as a result of slowing consumer
spending & a lesser rate of purchasing at all levels of gov,
the CBO said it expected real GDP to grow by 1.8% thru 2029, which
would be "less than the long-term historical average" for the last 5
of those years, from 2024 to 2029.
The Congressional Budget Office is sounding the alarm on Pres Trump's trade war, saying tariffs will have a material impact on the US economy. “CBO expects the changes in U.S. and foreign trade policies since January 2018 to reduce the level of real U.S. GDP by about 0.3 percent by 2020,” the CBO said in its updated budget & economic outlook for 2019-2029. “Tariffs reduce domestic GDP chiefly by raising domestic prices, which reduces the purchasing power of U.S. consumers and increases the cost of business investment.” The report also said real income for the average US household would fall by 0.4% during that time. While the CBO sees the US economy growing at a 2.3% pace in 2019, it expects growth to slow to an average of 1.8% in 2020-2023. Since Jan 2018, the Trump administration has placed tariffs on $250B worth of Chinese goods & threated tariffs on another $300B of goods. The taxes have drawn the ire of Beijing, which has responded by escalating the dispute into a tit-for-tat trade war. The trade war may already be having an impact on the US economy. GDP grew at an annualized rate of 2.1% in Q2, down from 3.1% in Q1. And recession bells rang last week when the spread between the US 2-year & 10-year yield turned negative for the first time in over a decade. Such an event has occurred ahead of every US recession in the past 50 years. The slowing economy has caught the attention of Trump, who today lashed out at the Federal Reserve & called for a “big” rate cut. A day earlier, Trump said he was considering several options to jumpstart the economy, including a temporary payroll tax cut & indexing capital gains to inflation.
Trump's China tariffs to take bite out of U.S. economy, CBO warns
Traders liked the Fed minutes, but the CBO assessment on the economy & deficit was not encouraging. The Dow started the day up 200+ & stayed there, but is down over 600 in Aug. The NAZ slid back a bit in the PM, but manged to hold above 8K. The bulls are happy, but enthusiasm is a volstile emotion.
Dow Jones Industrials
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