Dow droppeed 209, decliners over advancers 5-2 & NAZ pulled back 86. The MLP index fell 1+ to 231 & the REIT index was fractionally lower to 397. Junk bond funds barely budged in price & Treasuries were bid higher. Oil rose 1+ to the 54s & gold added 3 to 1512.
AMJ (Alerian MLP Index tracking fund)
Stocks giving back on slowing global economy
Pres Trump said the US will cut ties with Chinese telecom giant Huawei, but that could change if there's a trade deal with China. The move on Huawei came after China halted buying American agricultural products in retaliation for Trump's surprise tariffs threat last week. China also allowed its currency to drop against the $ to a key level unseen since 2008. Chip stocks took a big hit following the news. Earlier it was reported the US is delaying granting licenses for companies to restart sales to Huawei after China's retaliation. The administration blacklisted Huawei in May for national security concerns, preventing it from buying US chips. But Trump last month agreed to give “timely licensing decisions” to allow a slew of tech companies
Trump says US is not going to do business with Huawei, not ready to make a trade deal with China
US producer prices increased moderately in Jul, lifted by a rebound in the cost of energy products, while underlying producer inflation retreated, which could allow the Federal Reserve to cut interest rates again next month. The Labor Dept said on its producer price index (PPI) for final demand rose 0.2% last month after nudging up 0.1% in Jun. In the 12 months thru Jul the PPI increased 1.7% after advancing by the same margin in Jun. The forecast called for the PPI to rise 0.2% in Jul & increase 1.7% on a year-on-year basis. Excluding the volatile food, energy & trade services components, producer prices edged down 0.1% last month, the first decline since Oct 2015 & followed an unchanged reading in Jun. Core PPI increased 1.7% in the 12 months thru Jul after rising 2.1% in Jun. The Fed, which has a 2% inflation target, tracks the core personal consumption expenditures (PCE) price index for monetary policy. The core PCE price index increased 1.6% on a year-on-year basis in Jun & has undershot its target this year. Financial markets have fully priced in a rate cut following a recent escalation in the bitter trade war between the US & China, which led to an inversion of the Treasury yield curve & raised the risk of a recession. Muted inflation could boost expectations for a ½-percentage-point cut at the Feds Sep policy meeting. Worries about the trade war's impact on the US economic expansion, the longest on record, prompted the central bank to lower its short-term rate last week for the first time since 2008. US tariffs on Chinese goods so far have had a marginal impact on inflation as they have mostly been on capital goods. That could change after Pres Trump announced last week an additional 10% tariff on $300B worth of Chinese imports starting Sep 1. The new tariffs would affect mostly consumer goods. In Jul, wholesale energy prices rebounded 2.3% after falling 3.1% in the prior month. They were boosted by a 5.2% jump in gasoline prices. Goods prices increased 0.4% last month, reversing Jun's 0.4% decline. Energy prices accounted for more than 80% of the rebound in the cost of goods last month. Wholesale food prices rose 0.2% in Jul after advancing 0.6% in Jun. Core goods prices edged up 0.1% after being unchanged for 3 straight months.
US producer prices rise 0.2%; underlying inflation muted
China's Jul food prices jumped 9.1% from a year ago, data from the National Bureau of Statistics showed, as the country battles soaring pork prices amid the spread of African swine fever. In particular, pork prices rose 27% from a year ago in Jul while fresh fruit prices rose 39.1%. The Jul figures follow an 8.3% year-on-year jump in Jun. Non-food items in Jul were 1.3% higher. Chinese fruit supply has been hurt by severe weather that hurt crop production this year, sending prices of apples up sharply. China is the world's largest producer & a major consumer of the staple fruit. The official inflation data came after China confirmed it will be suspending imports of agricultural products from the US in response to Pres Trump's new tariffs. US exports of fruits to China have already been falling in the last year with fresh fruit exports falling to $123M from Jul 2018 to Jun 2019 — down by about ½ from $239M the previous year. The USDA said in a Jun report that the US remained China's top Northern Hemisphere supplier for apples even with a 50% tariff on the import of the fruit. Overall, China's Consumer Price Index (CPI) rose 2.8% from a year ago in Jul, slightly higher than the 2.7% expected. Producer Price Index fell 0.3% in Jul from a year ago, compared to the 0.1% decline expected. That was the first time China's PPI, a gauge of corp profitability, fell in 3 years, adding to concerns of deflationary risks in the world's 2nd largest economy. This comes as China & the US continue to be locked in a prolonged tariff battle that has dragged on for more than a year. Both countries have slapped additional levies on Bs of $s worth of each other's goods, & the escalating tensions have spooked world markets & hurt the global economic outlook.
China’s food prices jump 9.1% in July as the country battles African swine fever
Trade talks are getting more attention & they look gloomy after Trump said Sep talks may be cancelled. Never a dull moment after a year of talks which have gotten nowhere. As expected, demand for gold & Treasuries is on the rise once again.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 54.28 | +1.74 | +3.3% |
| GC=F | Gold | 1,509.00 | -0.50 | -0.0% |
Stocks are giving back some of the previous session's
gains after data showed the British economy contracted for the first
time since 2012. UK GDP fell
at a quarterly rate of 0.2, a poll expected a flat
reading. Year-on-year economic growth slid to 1.2% from 1.8% in Q1. In the prior session, the Dow & S&P
500 jumped over 1%, while the tech-heavy NAZ rose
over 2%. Safe havens such as gold rose above $1500, its highest in more than & years. US crude prices are higher by 1.4% to $53.25 per barrel. The
Labor Dept said its producer price index rose 0.2% last month, in line with expectations. In the 12 months thru
Jul, the PPI increased 1.7%, the same margin seen in Jun. Tech
stocks are under pressure after a report that the US was delaying a
decision about allowing some trade between US companies & China's
Huawei.
Stocks giving back on slowing global economy
Pres Trump said the US will cut ties with Chinese telecom giant Huawei, but that could change if there's a trade deal with China. The move on Huawei came after China halted buying American agricultural products in retaliation for Trump's surprise tariffs threat last week. China also allowed its currency to drop against the $ to a key level unseen since 2008. Chip stocks took a big hit following the news. Earlier it was reported the US is delaying granting licenses for companies to restart sales to Huawei after China's retaliation. The administration blacklisted Huawei in May for national security concerns, preventing it from buying US chips. But Trump last month agreed to give “timely licensing decisions” to allow a slew of tech companies
Trump says US is not going to do business with Huawei, not ready to make a trade deal with China
US producer prices increased moderately in Jul, lifted by a rebound in the cost of energy products, while underlying producer inflation retreated, which could allow the Federal Reserve to cut interest rates again next month. The Labor Dept said on its producer price index (PPI) for final demand rose 0.2% last month after nudging up 0.1% in Jun. In the 12 months thru Jul the PPI increased 1.7% after advancing by the same margin in Jun. The forecast called for the PPI to rise 0.2% in Jul & increase 1.7% on a year-on-year basis. Excluding the volatile food, energy & trade services components, producer prices edged down 0.1% last month, the first decline since Oct 2015 & followed an unchanged reading in Jun. Core PPI increased 1.7% in the 12 months thru Jul after rising 2.1% in Jun. The Fed, which has a 2% inflation target, tracks the core personal consumption expenditures (PCE) price index for monetary policy. The core PCE price index increased 1.6% on a year-on-year basis in Jun & has undershot its target this year. Financial markets have fully priced in a rate cut following a recent escalation in the bitter trade war between the US & China, which led to an inversion of the Treasury yield curve & raised the risk of a recession. Muted inflation could boost expectations for a ½-percentage-point cut at the Feds Sep policy meeting. Worries about the trade war's impact on the US economic expansion, the longest on record, prompted the central bank to lower its short-term rate last week for the first time since 2008. US tariffs on Chinese goods so far have had a marginal impact on inflation as they have mostly been on capital goods. That could change after Pres Trump announced last week an additional 10% tariff on $300B worth of Chinese imports starting Sep 1. The new tariffs would affect mostly consumer goods. In Jul, wholesale energy prices rebounded 2.3% after falling 3.1% in the prior month. They were boosted by a 5.2% jump in gasoline prices. Goods prices increased 0.4% last month, reversing Jun's 0.4% decline. Energy prices accounted for more than 80% of the rebound in the cost of goods last month. Wholesale food prices rose 0.2% in Jul after advancing 0.6% in Jun. Core goods prices edged up 0.1% after being unchanged for 3 straight months.
US producer prices rise 0.2%; underlying inflation muted
China's Jul food prices jumped 9.1% from a year ago, data from the National Bureau of Statistics showed, as the country battles soaring pork prices amid the spread of African swine fever. In particular, pork prices rose 27% from a year ago in Jul while fresh fruit prices rose 39.1%. The Jul figures follow an 8.3% year-on-year jump in Jun. Non-food items in Jul were 1.3% higher. Chinese fruit supply has been hurt by severe weather that hurt crop production this year, sending prices of apples up sharply. China is the world's largest producer & a major consumer of the staple fruit. The official inflation data came after China confirmed it will be suspending imports of agricultural products from the US in response to Pres Trump's new tariffs. US exports of fruits to China have already been falling in the last year with fresh fruit exports falling to $123M from Jul 2018 to Jun 2019 — down by about ½ from $239M the previous year. The USDA said in a Jun report that the US remained China's top Northern Hemisphere supplier for apples even with a 50% tariff on the import of the fruit. Overall, China's Consumer Price Index (CPI) rose 2.8% from a year ago in Jul, slightly higher than the 2.7% expected. Producer Price Index fell 0.3% in Jul from a year ago, compared to the 0.1% decline expected. That was the first time China's PPI, a gauge of corp profitability, fell in 3 years, adding to concerns of deflationary risks in the world's 2nd largest economy. This comes as China & the US continue to be locked in a prolonged tariff battle that has dragged on for more than a year. Both countries have slapped additional levies on Bs of $s worth of each other's goods, & the escalating tensions have spooked world markets & hurt the global economic outlook.
China’s food prices jump 9.1% in July as the country battles African swine fever
Trade talks are getting more attention & they look gloomy after Trump said Sep talks may be cancelled. Never a dull moment after a year of talks which have gotten nowhere. As expected, demand for gold & Treasuries is on the rise once again.
Dow Jones Industrials
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