Dow advanced 125 (but well off opening highs), advancers over decliners 2-1 & NAZ went up 49. The MLP index was fractionally higher into the 225s (but still very depressed) & the REIT index added 1+ to the 398s. Junk bond funds went up & Treasuries were purchased again. Oil rose in the 54s & gold gained 7 to 1544.
AMJ (Alerian MLP Index tracking fund)
A deal is all but sealed with Japan. Pres Trump isconfirming, "it’s a very big transaction and we’ve agreed in principle," while speaking beside Prime Minister Shinzo Abe in France. Trump said the prime minister agreed to purchase some of US farmers' corn, blaming China for the excess product on farmers' hands. He expects the B$ deal to be sealed by the time the UN General Assembly meets in mid-Sep. “This is a tremendous deal for the United States, really a tremendous deal for our farmers and agriculture,” along with e-commerce, per the pres. Abe called the deal a “win-win,” describing the talks thru a translator as a "series of intensive negotiations." "We still have some remaining work that has to be done at the working level, to finalize the wording & content in the deal," he explained. The Japanese prime minister noted their country was experiencing an insect problem on certain agricultural products,& that the private sector would be purchasing corn products to offset the issue. He said an emergency may need to be declared to accelerate the buy. Trade Representative Robert Lighthizer broke down the agreement into 3 parts:
G-7 summit: Trump strikes 'billion-dollar' trade deal with Japan
Treasury's Mnuchin says no recession on horizon, China will ultimately pay for tariffs
Pres Trump said that China is ready to come back to the negotiating table & the 2 countries will start talking very seriously. Speaking at the G-7 summit in France, Trump praised Chinese Pres Xi Jinping & welcomed his desire for a deal “China called last night our top trade people and said ‘let’s get back to the table’ so we will be getting back to the table and I think they want to do something. They have been hurt very badly but they understand this is the right thing to do and I have great respect for it. This is a very positive development for the world,” Trump said. “I think we are going to have a deal,” he added. “They have supply chains that are unbelievably intricate and people are all leaving and they are going to other countries, including the United States by the way, we are going to get a lot of them too.” Meanwhile in Beijing, Foreign Ministry spokesman Geng Shuang said he was not aware that a phone call between the 2 sides had taken place. When pressed on the details of the call, Trump said he didn't want to elaborate & reiterated that the US had multiple calls at the highest levels with the Chinese. “I don’t want to talk about calls. We have had calls at the highest level but I don’t want to talk about that. The vice chairman put out a statement last night that was a statement and saying that he wants to make a deal and he wants calm,” Trump added. “Our economy is phenomenal, best it has ever been and that’s despite the trade deals. When we get these deals done our country will be transformed, it will be monetarily transformed. It is such a difference from the horrible, horrible one-sided deals that we had in the past. And frankly, past administrations should be ashamed of themselves for allowing that,” Trump said. Trump also said the US & China were getting along very well & were talking. “Actually we are getting along very well with China right now, we are talking. I think they want to make a deal much more than I do. I’m getting a lot of money in tariffs its coming in by the billions. We’ve never gotten 10 cents from China, so we will see what happens,” Trump said Before leaving for the G-7, Trump said he would raise existing duties on $250B in Chinese products to 30% from 25% on Oct 1. Additionally, he said, tariffs on another $300B of Chinese goods, which start to take effect on Sep 1, will now be 15% instead of 10%. At the G-7, Trump said he could declare the escalating US-China trade war as a national emergency if he wanted to. “In many ways this is an emergency,” Trump said of the ongoing trade battle. “I could declare a national emergency, I think when they steal and take out and intellectual property theft anywhere from $300 billion to $500 billion a year and when we have a total lost of almost a trillion dollars a year for many years,” Trump said, adding that he had no plan right now to call for a national emergency. Treasury Secretary Steve Mnuchin doubled down on the White House's latest punch in the trade war by calling out Beijing for unfair trade practices. “We do not have free trade with them,” Mnuchin said Sunday on the sidelines of the G-7 meeting in France. “It’s a one way street: They have free entrance into our markets, our investments, our companies and we do not have the same thing there. That’s the only reason why we are in this situation with China. If China would agree to a fair and balanced relationship, we would sign that deal in a second,” he added.
Trump on trade war: China wants to negotiate and we will be ‘getting back to the table’
After Fri's selloff, this is hardly an impressive recovery. Already, the Dow is off 100+ from the opening. Gold & Treasuries continue to be in demand. The Japan deal sounds good, but China negotiations are only talk. Generally, the week prior to Labor Day is quiet. But with Trump constantly making news, this could become an eventful week.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 54.82 | +0.65 | +1.2% |
| GC=F | Gold | 1,543.60 | +6.00 | +0.4% |
Stocks are rallying after positive news on the trade front emerged from the G-7 meetings in France. Stocks
gained after Pres Trump said that talks with Beijing are
continuing despite last week's escalation of the trade war. Over the
weekend, Trump reached a “billion-dollar” trade deal with Japan. “Great respect for the fact that President Xi & his Representatives want ‘calm resolution,’” Trump tweeted.
“So impressed that they are willing to come out & state the facts
so accurately. This is why he is a great leader & representing a
great country. Talks are continuing!" The early gains have helped restore some investor confidence after the Dow plunged more than 600 on Fri following both the US & China escalating their more than year-long trade war. Trump on Fri ordered US companies to start “ looking for an alternative to China” after Beijing announced it would slap tariffs on $75B worth of US goods & reinstated taxes on others. Trump responded by hitting Chinese goods with even bigger tariffs. On the data front, durable goods orders rose 2.1% in Jul, topping the 1.1% advance that was expected. Gold & West Texas Intermediate crude oil were
higher, trading around $1541 an ounce & $55.10 a barrel,
respectively. Treasuries were also gaining, pushing the 10-year
yield down 1.1 basis points at 1.527%. The
US open is a sharp reversal from the losses suffered overnight in
Asia. Japan’s Nikkei fell 2.2% while China’s Shanghai Composite & Hong Kong's Hang Seng lost 1.9% & 1.17%,
respectively, after Fri's escalation of the trade war.
STOCKS JUMP ON US TRADE PROGRESS AT G-7
A deal is all but sealed with Japan. Pres Trump isconfirming, "it’s a very big transaction and we’ve agreed in principle," while speaking beside Prime Minister Shinzo Abe in France. Trump said the prime minister agreed to purchase some of US farmers' corn, blaming China for the excess product on farmers' hands. He expects the B$ deal to be sealed by the time the UN General Assembly meets in mid-Sep. “This is a tremendous deal for the United States, really a tremendous deal for our farmers and agriculture,” along with e-commerce, per the pres. Abe called the deal a “win-win,” describing the talks thru a translator as a "series of intensive negotiations." "We still have some remaining work that has to be done at the working level, to finalize the wording & content in the deal," he explained. The Japanese prime minister noted their country was experiencing an insect problem on certain agricultural products,& that the private sector would be purchasing corn products to offset the issue. He said an emergency may need to be declared to accelerate the buy. Trade Representative Robert Lighthizer broke down the agreement into 3 parts:
- Agriculture
- Reduction of industrial tariffs
- Digital trade
“From
our point of view it is extremely important for our farmers and
ranchers and those who work in the digital space,” he said, noting Japan
is “our third largest advocate to market.” Already the island imports
$14B in agricultural products, & Lighthizer said the agreement
would open up $7B more. Within
agriculture, the USTR official said it will be huge for the beef, pork,
wheat, dairy products, wine, ethanol “and a variety of other products.” The
US sells more than $2B in beef to Japan, & Lighthizer said a
reduction in tariffs will “allow us to do so with lower tariffs & to
compete more effectively with people” in Trans-Pacific Partnership (TPP)
countries & Europe.
G-7 summit: Trump strikes 'billion-dollar' trade deal with Japan
Treasury Secretary Steve Mnuchin said the Trump administration doesn't see a recession in the near future & that a large portion of tariffs in the escalating trade war will be paid for by China. “We don’t see a recession on the horizon,” Mnuchin said. “I
don’t think the yield curve reflects a recession. I think the yield
curve reflects the fact that it anticipates the Fed is going to lower
short-term rates.” Mnuchin, speaking from the G-7,
said despite growing fears of an economic slowdown, the American
economy was still the “bright spot” of the world & talk of the town
among participants at the annual summit. “People
are now talking about doing tax cuts and cutting regulations in Europe,
so people are looking at the Trump economic policies and wanting to
replicate them because that’s the reason we have all this growth,” he added. To those with concerns about a looming
slowdown or recession, Mnuchin said to look at data quarterly, adding
that the only uncertainty in the current climate is trade. He noted the
administration expects the US-Mexico-Canada trade agreement (USMCA)
that was crafted to replace NAFTA to pass in “the next month or two.”
Congress, currently in its Aug recess, will return to session the
week after Labor Day. “That’s going to add a significant amount to U.S. growth and growth in
Mexico and in Canada,” the Treasury secretary said. “We have the Korea
deal done. There’s three or four other major agreements that Amb.
Lighthizer is working on. So these trading relationships are going to
add significantly to growth.” Meanwhile, Mnuchin reiterated the administration's
view that US taxpayers are not bearing the brunt of the tariffs on
China. Trump announced on Fri that the tariffs on the remaining $300B of goods from China, set to go into effect on Sep 1 at a 10% rate, would now be taxed at 15%. “As it relates to prices going up, going forward we have seen China depreciate their currency,” Mnuchin added. “That’s
going to mean that a significant amount of the tariffs are paid for by
China. We haven’t seen any inflation yet. We haven’t seen prices go up.
We will have some exceptions for the rare circumstances where we have
problems and Amb. Lighthizer is running that. So I don’t think there’s
any mischaracterization on the tariff issue.”
Treasury's Mnuchin says no recession on horizon, China will ultimately pay for tariffs
Pres Trump said that China is ready to come back to the negotiating table & the 2 countries will start talking very seriously. Speaking at the G-7 summit in France, Trump praised Chinese Pres Xi Jinping & welcomed his desire for a deal “China called last night our top trade people and said ‘let’s get back to the table’ so we will be getting back to the table and I think they want to do something. They have been hurt very badly but they understand this is the right thing to do and I have great respect for it. This is a very positive development for the world,” Trump said. “I think we are going to have a deal,” he added. “They have supply chains that are unbelievably intricate and people are all leaving and they are going to other countries, including the United States by the way, we are going to get a lot of them too.” Meanwhile in Beijing, Foreign Ministry spokesman Geng Shuang said he was not aware that a phone call between the 2 sides had taken place. When pressed on the details of the call, Trump said he didn't want to elaborate & reiterated that the US had multiple calls at the highest levels with the Chinese. “I don’t want to talk about calls. We have had calls at the highest level but I don’t want to talk about that. The vice chairman put out a statement last night that was a statement and saying that he wants to make a deal and he wants calm,” Trump added. “Our economy is phenomenal, best it has ever been and that’s despite the trade deals. When we get these deals done our country will be transformed, it will be monetarily transformed. It is such a difference from the horrible, horrible one-sided deals that we had in the past. And frankly, past administrations should be ashamed of themselves for allowing that,” Trump said. Trump also said the US & China were getting along very well & were talking. “Actually we are getting along very well with China right now, we are talking. I think they want to make a deal much more than I do. I’m getting a lot of money in tariffs its coming in by the billions. We’ve never gotten 10 cents from China, so we will see what happens,” Trump said Before leaving for the G-7, Trump said he would raise existing duties on $250B in Chinese products to 30% from 25% on Oct 1. Additionally, he said, tariffs on another $300B of Chinese goods, which start to take effect on Sep 1, will now be 15% instead of 10%. At the G-7, Trump said he could declare the escalating US-China trade war as a national emergency if he wanted to. “In many ways this is an emergency,” Trump said of the ongoing trade battle. “I could declare a national emergency, I think when they steal and take out and intellectual property theft anywhere from $300 billion to $500 billion a year and when we have a total lost of almost a trillion dollars a year for many years,” Trump said, adding that he had no plan right now to call for a national emergency. Treasury Secretary Steve Mnuchin doubled down on the White House's latest punch in the trade war by calling out Beijing for unfair trade practices. “We do not have free trade with them,” Mnuchin said Sunday on the sidelines of the G-7 meeting in France. “It’s a one way street: They have free entrance into our markets, our investments, our companies and we do not have the same thing there. That’s the only reason why we are in this situation with China. If China would agree to a fair and balanced relationship, we would sign that deal in a second,” he added.
Trump on trade war: China wants to negotiate and we will be ‘getting back to the table’
After Fri's selloff, this is hardly an impressive recovery. Already, the Dow is off 100+ from the opening. Gold & Treasuries continue to be in demand. The Japan deal sounds good, but China negotiations are only talk. Generally, the week prior to Labor Day is quiet. But with Trump constantly making news, this could become an eventful week.
Dow Jones Industrials
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