Dow shot up 223 (but off 100 from the opening), advancers over decliners 5-1 & NAZ gained 91. The MLP index rose 3+ to the 231s & the REIT index went up 2+ to the 402s (record territory). Junk bond funds inched higher & Treasuries pulled back after the recent rally. Oil rose to the 56s & gold was about even at 1549 (still elevated).
AMJ (Alerian MLP Index tracking fund)
The US economy grew somewhat more slowly in the spring than initially thought, according to revised data. The Commerce Dept said the economy expanded at an annualized rate of 2% in Q2, down from the dept's original estimate of 2.1%. Strong consumer spending (the gov increased its estimate to 4.7% from 4.4%, the strongest in more than 4 years) was offset by decreases in state & local gov spending, exports & private inventory investments. Economists expect the 11-year economic expansion in the US to continue to moderate, a result of heightened tensions in the year-long trade war between the US & China. Last week, during the Jackson Hole Symposium, Federal Reserve Chair Jerome Powell said the economic outlook remains strong but promised the central bank will "act as appropriate" to sustain the record economic expansion. Most traders are pricing in a 2nd 25 basis point interest rate cut during the Fed's Sept meeting. The gov will revise GDP once more at the end of Sep before it releases Q3.
US growth slowed to 2% in second quarter
With Federal Reserve members meeting in Sep to consider the next move on interest rates, one member says she is in a "watch and see" mode. San Francisco Federal Reserve Pres Mary Daly said she is assessing the need for another US interest-rate cut. Daly reiterated what others members including Chairman Jerome Powell, who have said the economy is strong, but there are headwinds to consider. Among those issues are an overall global growth slowdown & the impact of the trade war going on between the US & China. Among the issues that she is watching are consumer confidence & consumer spending as well as inflation. Daly supported last month's interest rate cut.
China brought excitement to the stock market when it said it wants "calm" in the trade war. However negotiations have dragged on for more than a year & it's hard to believe that calm will be the main emotion going forward. As a results, stocks are already selling off from the bullish gut reaction in the stock market. The Dow is down 600 in Aug. Safe haven investments have seen only limited selling. Gold is flattish, reflecting nervous investors are still nervous.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 56.46 | +0.68 | +1.2% |
| GC=F | Gold | 1,547.90 | -1.20 | -0.1% |
Stocks are sharply higher after China's
commerce ministry said Beijing won't retaliate when the Trump
administration raises tariffs. "We are
resolutely opposed to the escalation of the trade war and are willing to
resolve the issue through consultation and cooperation in a calm
attitude," Gao Feng, spokesman for China’s Ministry of Commerce, said. These comments come after the Trade Representative's office said that $300B worth
of Chinese goods would see tariffs raised 5% on a list of
Chinese imports on Sun. All 3 of the major market averages gained over 1% with the Dow tacking on 300 points at the open. The Commerce Dept released the 2nd
estimate of Q2 GDP, which showed the economy grew at a 2% pace. That was in line with the expectations & just below the advance
estimate of 2.1%. In Europe, stocks were rallying as trade tensions eased, with France's
CAC leading the way. Overnight, Hong Kong's Hang Seng led a mixed
session in Asia, closing up 0.3%.
US stocks jump as China blinks in trade war
The US economy grew somewhat more slowly in the spring than initially thought, according to revised data. The Commerce Dept said the economy expanded at an annualized rate of 2% in Q2, down from the dept's original estimate of 2.1%. Strong consumer spending (the gov increased its estimate to 4.7% from 4.4%, the strongest in more than 4 years) was offset by decreases in state & local gov spending, exports & private inventory investments. Economists expect the 11-year economic expansion in the US to continue to moderate, a result of heightened tensions in the year-long trade war between the US & China. Last week, during the Jackson Hole Symposium, Federal Reserve Chair Jerome Powell said the economic outlook remains strong but promised the central bank will "act as appropriate" to sustain the record economic expansion. Most traders are pricing in a 2nd 25 basis point interest rate cut during the Fed's Sept meeting. The gov will revise GDP once more at the end of Sep before it releases Q3.
US growth slowed to 2% in second quarter
China indicated that it might not move forward with the latest round of tariffs on the US, instead stressing the need for the 2 large
economies to de-escalate the more than year-long trade war with a “calm
attitude." “China has ample means for
retaliation, but thinks the question that should be discussed now is
about removing the new tariffs to prevent escalation of the trade war,”
Ministry of Commerce spokesman Gao Feng said. “China is lodging solemn representations with the U.S. on the
matter.” Gao’s comments come amid heightened tensions between DC & Beijing. Both countries, in recent weeks, have
announced additional tariffs on each other's goods; the Trade
Representative's office confirmed yesterday the US will move forward
with a 5% import duty on $300B worth of Chinese goods,
beginning Sep 1. Last week, China responded in kind, announcing its own higher tariffs. That prompted Pres Trump to lift the existing tariffs on $250B in imports to 30% from 25%. Gao would not
explicitly say whether Beijing won't retaliate for that latest
escalation, but said the country is “willing to solve the problem
through consultation and cooperation with a calm attitude. The
escalation of the trade war is not conducive to China, or to the United
States, and is not conducive to the interests of the people of the
world." "China’s counter-measures are
sufficient," he said. "However, under the current situation, we believe
that the issue that should be discussed is to lift further tariffs on
US$550 billion of Chinese goods and prevent trade wars from continuing
to escalate." The Chinese economy is beginning
to take a hit from the slew of tariffs: In mid-Aug, Beijing's
industrial output fell to a 17-year low, spurring fears of a potential
slowdown.
China may pull punches in trade war
With Federal Reserve members meeting in Sep to consider the next move on interest rates, one member says she is in a "watch and see" mode. San Francisco Federal Reserve Pres Mary Daly said she is assessing the need for another US interest-rate cut. Daly reiterated what others members including Chairman Jerome Powell, who have said the economy is strong, but there are headwinds to consider. Among those issues are an overall global growth slowdown & the impact of the trade war going on between the US & China. Among the issues that she is watching are consumer confidence & consumer spending as well as inflation. Daly supported last month's interest rate cut.
Fed's Mary Daly talks interest rate specifics
China brought excitement to the stock market when it said it wants "calm" in the trade war. However negotiations have dragged on for more than a year & it's hard to believe that calm will be the main emotion going forward. As a results, stocks are already selling off from the bullish gut reaction in the stock market. The Dow is down 600 in Aug. Safe haven investments have seen only limited selling. Gold is flattish, reflecting nervous investors are still nervous.
Dow Jones Industrials
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