Dow plunged 623 (finishing near the lows), decliners over advancers 5-1 & NAZ sank 239. The MLP index fell 4 to the 226s & the REIT index dropped 3+ to the 398s. Junk bond funds were a little lower & Treasuries soared, taking the yield on the 10 year Treasury under 1.53%. Oil dropped 1+ to 54 & gold surged 29 to 1538 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Pres Trump lashed out at China in a fiery tweetstorm, warning he will be responding later today to Beijing's most recent escalation of the trade war. Trump accused Beijing of stealing “vast amounts of wealth from the U.S.,” & ordered American companies to find alternatives to doing business with China. US equity markets sold off sharply. “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,” Trump tweeted. “I will be responding to China’s Tariffs this afternoon.” Beijing said it would slap tariffs of 5-10% on $75B of US goods, set go to into effect on Sep 1 & Dec 15. China also announced it would reinstate a 25% tariff on US cars & a 5% tariff on auto parts. The tariffs were a response to Trump's announcement earlier this month that new taxes would hit Chinese goods. Trump on Aug 1 said the US, beginning next month, would place a 10 percent tariff on $300B worth of Chinese goods, adding they could go "well beyond 25 percent" if necessary. Beijing responded by letting its currency, the yuan, weaken below 7 per $ for the first time in over a decade. The Trump administration then delayed the tariffs on about 60% of those goods until Dec 15. A further escalation of the trade war could zap investor confidence & roil markets, which have already been grappling with a slowing US economy. The US economy grew at a 2.1% annualized rate in Q2, down from 3.1% the prior qtr. Last week, the spread between the US 2-year & 10-year yields turned negative for the first time in over a decade. Such an event that has preceded every US recession of the past 50 years. “The risk here for China when it does things like this is simply to galvanize support even more the president,” Office of Trade & Manufacturing Director Peter Navarro said, adding that "we are all China hawks now."
Pres Trump ordered US shipping companies to block shipments of the opioid painkiller fentanyl into the country from China. "I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE all deliveries of Fentanyl from China (or anywhere else!)," Trump tweeted. "Fentanyl kills 100,000 Americans a year. President Xi said this would stop - it didn’t," he continued. "Our Economy, because of our gains in the last 2 1/2 years, is MUCH larger than that of China. We will keep it that way!" The comments come as China announced a new round of retaliatory tariffs on about $7B worth of US goods. Trump's director of trade & manufacturing policy, Peter Navarro, echoed the this message this morning. "He has absolutely galvanized the American people and Capitol Hill behind his China policy, and we know why," Navarro said of Trump. "China steals our stuff, they flood our communities with fentanyl and everything in between." China added fentanyl products to the country's list of narcotics subject to state control after Pres Xi Jinping met with Trump last Dec, but the White House says it has not seen substantial action on blocking major shipments. UPS responded to the tweets, saying it "follows all applicable laws and administrative orders of the governments in the countries where we do business." "We work closely with regulatory authorities to monitor for prohibited substances," UPS (UPS) added. FedEx (FDX) said it "already has extensive security measures in place to prevent the use of our networks for illegal purposes." "We follow the laws and regulations everywhere we do business and have a long history of close cooperation with authorities," the company said. "FedEx supported passage of the STOP Act and encourages accelerated implementation and enforcement of its provisions to protect the health and safety of the American people.”
Oil prices fell after China unveiled retaliatory tariffs against about $75B worth of US goods, marking another escalation of a protracted trade dispute between the world's 2 largest economies. Brent crude futures fell 50¢ (0.8%) to $59.40 a barrel & US West Texas Intermediate (WTI) crude futures fell $1.18 (2.1%) to settle at $54.17 a barrel. China's commerce ministry said it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the US, including agricultural products such as soybeans, crude oil & small aircraft. Investors also focused on a speech by Federal Reserve chair Jerome Powell in Jackson Hole, Wyoming. The US economy is in a “favorable place” & the Federal Reserve will “act as appropriate” to keep the current economic expansion on track, Powell said. The remarks gave few clues about whether the central bank will cut interest rates at its next meeting or not. Meanwhile, St Louis Federal Reserve Bank Pres James Bullard said policymakers will have a “robust debate” about cutting interest rates by ½ a percentage point at their next policy meeting in Sep. Exacerbating concern over the possibility of recession, US manufacturing industries registered their first month of contraction in almost a decade. Tensions in the Middle East have kept investors on edge as well. Iran's foreign minister said talks held today with French Pres Emmanuel Macron about a landmark 2015 nuclear deal were “productive.” Iran has said it will scale back compliance with the pact unless the Europeans find a solution enabling Tehran to sell its oil despite US sanctions.
Oil prices slide 2.1% as US-China trade war escalates
Loretta Mester says if economy stays like this, Fed should keep rates ‘where they are’
Gold futures rallied after China announced a round of retaliatory tariffs against US products, prompting the precious metal to move up for the week & post a 4th consecutive weekly climb. China said it was preparing to raise tariffs in 2 batches on $75B in US imports on Sep 1 & Dec 15, which would coincide with the dates that the US is slated to increase import duties on $300B of Beijing goods. Pres Trump responded with a series of tweets, in which he said he “hereby ordered” US companies to begin looking for alternatives to China & said further measures would be announced later. Dec gold climbed by a huge $29.10 (1.9%) to settle at $1537 an ounce, flipping its weekly performance away from a loss to a rise of 0.9% for the most-active contract. The settlement was the highest since Apr 2013. The escalation of the tariff battle squelched risk appetite & overshadowed bullish comments from St Louis Federal Reserve Pres James Bullard who said that further insurance cuts are needed to combat economic weakness outside of the US.
No shortage of excitement coming from the White House. China trade talks have dragged on, seemingly forever, & this reaction has to be expected. Even the speeches at Jackson Hole played 2nd fiddle to the trade story. After buying this week, the Dow sank in the 2nd hour of trading today & finished down 260 for the week. For the month, the Dow is down 1200. Gold & Treasuries remain in heavy demand with a fuzzy outlook for the US & global economies. Next week, typically a slow, semi-vacation week for stocks, will another wild time for investors.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Pres Trump lashed out at China in a fiery tweetstorm, warning he will be responding later today to Beijing's most recent escalation of the trade war. Trump accused Beijing of stealing “vast amounts of wealth from the U.S.,” & ordered American companies to find alternatives to doing business with China. US equity markets sold off sharply. “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,” Trump tweeted. “I will be responding to China’s Tariffs this afternoon.” Beijing said it would slap tariffs of 5-10% on $75B of US goods, set go to into effect on Sep 1 & Dec 15. China also announced it would reinstate a 25% tariff on US cars & a 5% tariff on auto parts. The tariffs were a response to Trump's announcement earlier this month that new taxes would hit Chinese goods. Trump on Aug 1 said the US, beginning next month, would place a 10 percent tariff on $300B worth of Chinese goods, adding they could go "well beyond 25 percent" if necessary. Beijing responded by letting its currency, the yuan, weaken below 7 per $ for the first time in over a decade. The Trump administration then delayed the tariffs on about 60% of those goods until Dec 15. A further escalation of the trade war could zap investor confidence & roil markets, which have already been grappling with a slowing US economy. The US economy grew at a 2.1% annualized rate in Q2, down from 3.1% the prior qtr. Last week, the spread between the US 2-year & 10-year yields turned negative for the first time in over a decade. Such an event that has preceded every US recession of the past 50 years. “The risk here for China when it does things like this is simply to galvanize support even more the president,” Office of Trade & Manufacturing Director Peter Navarro said, adding that "we are all China hawks now."
Trump demands US companies 'start looking for an alternative to China'
Pres Trump ordered US shipping companies to block shipments of the opioid painkiller fentanyl into the country from China. "I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE all deliveries of Fentanyl from China (or anywhere else!)," Trump tweeted. "Fentanyl kills 100,000 Americans a year. President Xi said this would stop - it didn’t," he continued. "Our Economy, because of our gains in the last 2 1/2 years, is MUCH larger than that of China. We will keep it that way!" The comments come as China announced a new round of retaliatory tariffs on about $7B worth of US goods. Trump's director of trade & manufacturing policy, Peter Navarro, echoed the this message this morning. "He has absolutely galvanized the American people and Capitol Hill behind his China policy, and we know why," Navarro said of Trump. "China steals our stuff, they flood our communities with fentanyl and everything in between." China added fentanyl products to the country's list of narcotics subject to state control after Pres Xi Jinping met with Trump last Dec, but the White House says it has not seen substantial action on blocking major shipments. UPS responded to the tweets, saying it "follows all applicable laws and administrative orders of the governments in the countries where we do business." "We work closely with regulatory authorities to monitor for prohibited substances," UPS (UPS) added. FedEx (FDX) said it "already has extensive security measures in place to prevent the use of our networks for illegal purposes." "We follow the laws and regulations everywhere we do business and have a long history of close cooperation with authorities," the company said. "FedEx supported passage of the STOP Act and encourages accelerated implementation and enforcement of its provisions to protect the health and safety of the American people.”
TRUMP ORDERS US COMPANIES TO BLOCK ALL FENTANYL SHIPMENTS FROM CHINA
Oil prices fell after China unveiled retaliatory tariffs against about $75B worth of US goods, marking another escalation of a protracted trade dispute between the world's 2 largest economies. Brent crude futures fell 50¢ (0.8%) to $59.40 a barrel & US West Texas Intermediate (WTI) crude futures fell $1.18 (2.1%) to settle at $54.17 a barrel. China's commerce ministry said it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the US, including agricultural products such as soybeans, crude oil & small aircraft. Investors also focused on a speech by Federal Reserve chair Jerome Powell in Jackson Hole, Wyoming. The US economy is in a “favorable place” & the Federal Reserve will “act as appropriate” to keep the current economic expansion on track, Powell said. The remarks gave few clues about whether the central bank will cut interest rates at its next meeting or not. Meanwhile, St Louis Federal Reserve Bank Pres James Bullard said policymakers will have a “robust debate” about cutting interest rates by ½ a percentage point at their next policy meeting in Sep. Exacerbating concern over the possibility of recession, US manufacturing industries registered their first month of contraction in almost a decade. Tensions in the Middle East have kept investors on edge as well. Iran's foreign minister said talks held today with French Pres Emmanuel Macron about a landmark 2015 nuclear deal were “productive.” Iran has said it will scale back compliance with the pact unless the Europeans find a solution enabling Tehran to sell its oil despite US sanctions.
Oil prices slide 2.1% as US-China trade war escalates
Cleveland Federal Reserve Pres Loretta Mester believes
that if the US economy continues to grow at its current pace, she's
unlikely to support further reductions to interest rates. “At
this point, if the economy continues where it is, I would probably say
we should keep things the way they are,” she said at Jackson Hole. “But, I am very attuned to the downside
risks to this economy and I want to make sure we’re always focused on
our dual-mandate goals.” Mester,
who isn't a current voting member of the FOMC,
added that she didn’t advocate for the Fed's qtr-point interest
rate cut back in Jul. “I supported leaving rates the same and
looking for more data and letting things play out a little bit longer so
that we would have a better view of whether we’re in the weak-growth
scenario or the trend-growth scenario,” she said. “You
have to take a signal from what’s going on with U.S. yields. I think the
signal is probably not as strong as it has been in the past because
there’s other factors affecting the long end of the curve,” Mester said.
“Bond investors, obviously, have a more pessimistic view of the U.S.
economy than some economists do ... that’s one piece of information that
you take into account.”
Loretta Mester says if economy stays like this, Fed should keep rates ‘where they are’
Gold futures rallied after China announced a round of retaliatory tariffs against US products, prompting the precious metal to move up for the week & post a 4th consecutive weekly climb. China said it was preparing to raise tariffs in 2 batches on $75B in US imports on Sep 1 & Dec 15, which would coincide with the dates that the US is slated to increase import duties on $300B of Beijing goods. Pres Trump responded with a series of tweets, in which he said he “hereby ordered” US companies to begin looking for alternatives to China & said further measures would be announced later. Dec gold climbed by a huge $29.10 (1.9%) to settle at $1537 an ounce, flipping its weekly performance away from a loss to a rise of 0.9% for the most-active contract. The settlement was the highest since Apr 2013. The escalation of the tariff battle squelched risk appetite & overshadowed bullish comments from St Louis Federal Reserve Pres James Bullard who said that further insurance cuts are needed to combat economic weakness outside of the US.
Gold rallies back to highest finish since 2013 as U.S.-China trade fight sparks haven bid
No shortage of excitement coming from the White House. China trade talks have dragged on, seemingly forever, & this reaction has to be expected. Even the speeches at Jackson Hole played 2nd fiddle to the trade story. After buying this week, the Dow sank in the 2nd hour of trading today & finished down 260 for the week. For the month, the Dow is down 1200. Gold & Treasuries remain in heavy demand with a fuzzy outlook for the US & global economies. Next week, typically a slow, semi-vacation week for stocks, will another wild time for investors.
Dow Jones Industrials
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