Dow pulled back 39 lower, decliners barely ahead of advancers & NAZ dropped 66. The MLP index was fractionally lower to the 232s & the REIT index fell 1 to the 399s. Junk bond funds fluctuated & Treasuries were sold. Oil slid lower in the 55s & gold was off 7 to 1508.
AMJ (Alerian MLP Index tracking fund)
Stocks adding to recent gains
We have half a million fewer jobs than we thought
The markets are nervous. The yield curve inverted again (i.e. the yield on the 2 Treasury is above the yield on the 10 year Treasury) on fears the Fed won't save the economy from a recession. More speeches will be given at Jackson hole this week & they will likely add confusion about the future of interest rates. Safe haven gold remains in strong demand.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 55.91 | +0.23 | +0.4% |
| GC=F | Gold | 1,513.40 | -2.30 | -0.2% |
Stocks traded higher as consumers boost retail earnings.
The latest results from retailers
powered stocks higher. Kansas City Fed Pres, Esther George, said that the US economy is “doing well.” Investors hope to hear more about interest rate
strategy tomorrow when Fed Chair Jerome Powell gives an address to the
gathering. The minutes from the policymaker's Jul meeting showed a split over whether to cut rates. Ultimately, the central bank did cut rates by 0.25%. Initial claims for
state unemployment benefits fell by a more-than-expected 12K to a
seasonally adjusted 209K last week. Global growth concerns remain on investor's minds
as Euro zone business growth expectations fell to their weakest in more
than 6 years on trade war fears. In an appeal
to DC, China said to "meet each other halfway" &
settle a trade war instead of going ahead with planned tariff hikes
Beijing warned will trigger retaliation. Exporters are preparing for a Sep 1 increase in US duties in a fight over trade & technology. Those
are due to go ahead on more than $100B of Chinese goods despite
the Trump administration's decision to postpone some other planned
increases to mid-Dec. In Europe, London's FTSE 100 lost 0.9%, Frankfurt's DAX added 0.2% & France's CAC dropped 0.2%.
Stocks adding to recent gains
Kansas City Fed Pres, Esther George, said that the US ecnomy is “doing well” but she's not “blind” to the risk around it. “I think we have to be very vigilant,” she said. “What I'm watching for is, since the consumer is
essentially leading this economy right now, can it continue to do so?
And what could get in the way of that.” George forecasted 2% growth for this year
but believes business investments & exports are “holding back” that
segment of the economy. “Business
investment has flattened out and there are a variety of reasons for
that,” she added. “I think a very prominent one is the amount of
uncertainty businesses may have about their products and where they're
going manufacturing a strong dollar.” George was one of 2 Fed officials who dissented
in the last FOMC meeting for a rate cut in Jul. The Fed minutes
revealed that several members felt the rate should stay at 2-2.25%, however George said she based her
decision on the performance of the economy. “It had to do with how are we doing relative to our mandates from Congress around employment and price stability and in my view we have a very low
unemployment rate right now, the job market looks healthy, the consumer
seems to be healthy right now, and inflation is low and stable,” she
explained. But for now, Esther is keeping a mindful eye on consumer. “If that turns,” she said, “I'll have to recalibrate and think about my forecast.”
US ECONOMY 'DOING WELL' BUT THESE HEADWINDS MAY UNDO IT: KANSAS CITY FED PRESIDENT
The US labor market isn't as strong as initially believed, according to new figures just published. The Bureau of Labor Statistics publishes monthly employment statistics, but once a year, checks &
revises the estimates those numbers are based on, known as the
“benchmark revision.” The number, which is considered more precise, is
based on data from state unemployment tax records. This year's preliminary data, however, contained bad news for the economy: Employers added 501K fewer jobs than first estimated as of Mar 2019, its the biggest revision in almost a decade. About 2/3 of the downward revisions stemmed
from the retail, which had 146K fewer jobs, & leisure &
hospitality industries, which had 175K fewer workers. Other
industries, however, reported drops in employment as well.
Manufacturing, construction & mining & logging also lowered their
estimates. The updated data mean the 223K
average monthly job increase in 2018, the best since 2015 &
frequently touted by Pres Trump as evidence that his
administration's policies are helping the economy, dropped to about
181K. While not as robust, it still shows that job creation is expanding at a steady rate. The Labor Department will update these revisions next Feb.
We have half a million fewer jobs than we thought
Stocks extended an olive branch to the US in regards to the trade tensions, but issued a warning at the same time. In
an appeal to DC, China said to "meet each other halfway" &
settle a trade war instead of going ahead with planned tariff hikes
Beijing warned will trigger retaliation. Exporters
are preparing for a Sep 1 increase in US duties in a fight over
trade & technology. Those are due to go ahead on more than $100B of Chinese goods despite the Trump administration's decision to
postpone some other planned increases to mid-Dec. New
tariffs will "lead to an escalation of economic and trade
friction," a Ministry of Commerce spokesman, Gao Feng, said. The US is pressing China to narrow its
trade surplus & roll back plans for gov-led development of
global competitors in robotics & other technologies. Beijing's trading
partners say those plans violate its market-opening commitments. Some
American officials worry they might erode US industrial leadership. Negotiations
are deadlocked over how to enforce a deal. Beijing says punitive
tariffs imposed by Pres Trump on Chinese products must be lifted as
soon as an agreement takes effect. DC
has said along the way an interest in keeping some of the tariffs to
ensure Beijing carries out any promises it makes. China is the Pentagon's “number one priority,” & the United States is watching Beijing "very carefully" in order to safeguard America, Defense Secretary Mark Esper said. US & Chinese negotiators are due to meet in Sep in DC. The
last round of talks in Shanghai in Jul ended with no indication of
progress. Negotiators talked by phone Aug 13 & agreed to talk again within 2 weeks, Gao said. He gave no details of the conversation. Gao repeated a Chinese threat of unspecified "corresponding countermeasures" if Trump's tariff hike goes ahead. The
US has imposed 25% tariffs on $250B of Chinese
products. Beijing retaliated with its own penalties on $110B of
goods from the US. Trump
earlier announced plans to impose 10% duties on $300B of
Chinese goods, extending penalties to almost everything China sells the
US. He later postponed the tariff hike on about 60% of
those goods to Dec 15.
China warns US about escalating trade friction
The markets are nervous. The yield curve inverted again (i.e. the yield on the 2 Treasury is above the yield on the 10 year Treasury) on fears the Fed won't save the economy from a recession. More speeches will be given at Jackson hole this week & they will likely add confusion about the future of interest rates. Safe haven gold remains in strong demand.
Dow Jones Industrials
No comments:
Post a Comment