Dow went up 66, advancers over decliners better than 3-2 & NAZ gained 32. The MLP index inched higher from a depressed 224 & the REIT index added 2 to the 402s (record territory). Junk bond funds were little changed & Treasuries went up, taking the yield on the 10 year Treasury down to 1.5%. Oil rose to the 54s & gold gained 5 to 1542, another 6+ year high.
AMJ (Alerian MLP Index tracking fund)
Global markets mixed on trade uncertainty
China insists it is unaware of calls to Trump and says tariffs are ‘not constructive at all’
Former NY Fed Pres Bill Dudley is calling on the central bank not to help Pres Trump fight his trade war with China. In a sharply worded commentary to his one-time colleagues, Dudley urged Fed officials not to lower interest rates simply as a backstop while the pres continues his tit-for-tat tariff battle with the Chinese that has escalated in recent days. “Central bank officials face a choice: enable the Trump administration to continue down a disastrous path of trade war escalation, or send a clear signal that if the administration does so, the president, not the Fed, will bear the risks — including the risk of losing the next election,” he wrote. Dudley went so far as to suggest the Fed could, & should, try to influence the next election against Trump. “After all, Trump’s reelection arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives,” he wrote. “If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020.” Trump has taken on the Fed repeatedly. The pres is demanding sharply lower interest rates that he says are needed to keep the economic expansion going & to help fight the trade war. Dudley said the Fed should “refuse to play along” & could “go further” than Powell's inference last week that monetary policy might not be effective in staving off the economic damage from tariffs. “Officials could state explicitly that the central bank won’t bail out an administration that keeps making bad choices on trade policy, making it abundantly clear that Trump will own the consequences of his actions,” he wrote. Doing so would send a signal that the Fed won't be complicit in the trade war while also preserving “much-needed ammunition” for rate cuts down the road that might be needed to combat economic downturns, Dudley said.
Dudley encourages the Fed not ‘to play along’ with Trump’s trade war
US stock markets took a big hit in Aug & business leaders fretted after the US trade war with China intensified, but consumers still have a lot of confidence in the economy. The consumer confidence index fell slightly to 135.1 in Aug from a revised 135.8 in Jul, the Conference Board said, but it remains close to an 19-year high. The post 2008 recession peak is 137.9, set last Oct. The forecast said the index would fall to 127.8 in the wake of an escalating US trade war with China that slammed stocks earlier in the month & sent interest rates plunging. Pres Trump announced he would increase tariffs, triggering retaliatory duties by China. A relatively unchanged reading in Aug was a big surprise. After all, confidence took a dive in Jun when Pres Trump threatened higher tariffs on both China & Mexico. The present situation index, a measure of how consumers view the economy right now, rose to 177.2 from 170.9. Another index that looks out over the next 6 months, however, appeared to reflect somewhat more worry. The expectations index slipped to 107 from 112.4. Some analysts question whether Americans have become acclimated to the constant threats of tariffs by Trump or have simply tuned out during the summer vacation months. Whatever the case, it’' goods news for the economy. As long as consumers remain confident & continue to spend, the US is likely to expand fast enough to keep the economy out of recession. Consumer spending accounts for almost 70% of economic activity.
With confusing messages from China on US-China trade talks, stocks are rising cautiously. But stocks are sliding lower after a strong opening. Meanwhile demand for safe haven gold & Treasuries remains strong from investors who are nervous about owning stocks.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 54.25 | +0.61 | +1.1% |
| GC=F | Gold | 1,542.70 | +5.50 | +0.4% |
Investors are cautious due to uncertainty surrounding the trade war between the US & China. US equity futures are pointing to a higher open after the rally which to started the week Stocks got a boost early yesterday after Pres Trump said his negotiators had received
encouraging calls from China on Sun, though China's foreign ministry
denied knowledge of any such calls. European markets traded lower today after a report from Germany showed GDP contracted in Q2. Germany GDP came in down 0.1%, which matched expectations. London's FTSE returned to trading following the Mon holiday & moved 0.5% lower. Asian shares traded mostly higher today, following the US rally. Japan's benchmark Nikkei ended
the day up 1%, Hong Kong's Hang Seng finished the
session off a tad & China's Shanghai Composite closed with a
gain of 1.4% as a report showed China's industrial firms returned
to profit in Jul.
Global markets mixed on trade uncertainty
One day later, China is still insisting no phone
calls took place over the weekend that Pres Trump claimed
showed its willingness to talk again. “I have not heard of this
situation regarding the two calls that the U.S. mentioned in the
weekend,” Chinese Foreign Ministry spokesman Geng Shuang said at press
conference. He had denied on Mon that the calls had taken
place. “Regretfully, the U.S. has further increased the tax rate on China’s
exports to the U.S. This extreme pressure is purely harmful to both
sides and not constructive at all,” Geng said. Yesterday, Trump said at the G-7 summit that China in recent phone conversations expressed its desire for a
deal. His comment renewed hopes for a resolution between the world's 2
largest economies, pushing the market higher as the Dow gained more than 250. Trump
abruptly ended the tariff cease-fire earlier this month by slapping
more tariffs on Chinese goods, & China retaliated with imposing duties
on $75B more of US goods & resumed auto tariffs. Trump also said he's ordering US companies to immediately start looking for an alternative to China. “We hope that the U.S. can maintain calm, return to rationality, stop
wrong practices, and create conditions for the two sides to conduct
consultations on the basis of mutual respect, equality and mutual
benefit,” Geng said today. Chinese state-run media Xinhua is also sticking to its tough stance on the trade war. “China did not and will not surrender,” Xinhua said. “Playing the old tricks of bullying and maximum pressure, the
U.S. administration has escalated the trade tensions repeatedly and
tried to coerce China into accepting its irrational demands.” Xinhua had called Trump's move to order companies to leave China “ridiculous at best.”
China insists it is unaware of calls to Trump and says tariffs are ‘not constructive at all’
Former NY Fed Pres Bill Dudley is calling on the central bank not to help Pres Trump fight his trade war with China. In a sharply worded commentary to his one-time colleagues, Dudley urged Fed officials not to lower interest rates simply as a backstop while the pres continues his tit-for-tat tariff battle with the Chinese that has escalated in recent days. “Central bank officials face a choice: enable the Trump administration to continue down a disastrous path of trade war escalation, or send a clear signal that if the administration does so, the president, not the Fed, will bear the risks — including the risk of losing the next election,” he wrote. Dudley went so far as to suggest the Fed could, & should, try to influence the next election against Trump. “After all, Trump’s reelection arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives,” he wrote. “If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020.” Trump has taken on the Fed repeatedly. The pres is demanding sharply lower interest rates that he says are needed to keep the economic expansion going & to help fight the trade war. Dudley said the Fed should “refuse to play along” & could “go further” than Powell's inference last week that monetary policy might not be effective in staving off the economic damage from tariffs. “Officials could state explicitly that the central bank won’t bail out an administration that keeps making bad choices on trade policy, making it abundantly clear that Trump will own the consequences of his actions,” he wrote. Doing so would send a signal that the Fed won't be complicit in the trade war while also preserving “much-needed ammunition” for rate cuts down the road that might be needed to combat economic downturns, Dudley said.
Dudley encourages the Fed not ‘to play along’ with Trump’s trade war
US stock markets took a big hit in Aug & business leaders fretted after the US trade war with China intensified, but consumers still have a lot of confidence in the economy. The consumer confidence index fell slightly to 135.1 in Aug from a revised 135.8 in Jul, the Conference Board said, but it remains close to an 19-year high. The post 2008 recession peak is 137.9, set last Oct. The forecast said the index would fall to 127.8 in the wake of an escalating US trade war with China that slammed stocks earlier in the month & sent interest rates plunging. Pres Trump announced he would increase tariffs, triggering retaliatory duties by China. A relatively unchanged reading in Aug was a big surprise. After all, confidence took a dive in Jun when Pres Trump threatened higher tariffs on both China & Mexico. The present situation index, a measure of how consumers view the economy right now, rose to 177.2 from 170.9. Another index that looks out over the next 6 months, however, appeared to reflect somewhat more worry. The expectations index slipped to 107 from 112.4. Some analysts question whether Americans have become acclimated to the constant threats of tariffs by Trump or have simply tuned out during the summer vacation months. Whatever the case, it’' goods news for the economy. As long as consumers remain confident & continue to spend, the US is likely to expand fast enough to keep the economy out of recession. Consumer spending accounts for almost 70% of economic activity.
Consumers still very confident in the U.S. economy despite festering China trade war
With confusing messages from China on US-China trade talks, stocks are rising cautiously. But stocks are sliding lower after a strong opening. Meanwhile demand for safe haven gold & Treasuries remains strong from investors who are nervous about owning stocks.
Dow Jones Industrials
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