Dow plunged 590, decliners over advancers a huge 10-1 & NAZ sank 234. The MLP index lost a very big 6+ to the 235s & the REIT index was off 7 to the 383s. Junk bond funds declined while Treasuries were in heavy demand, bringing the yield on the 10 year Treasury down 9 basis points to 1.76%. Oil dropped to the 54s & gold soared 23 to 1481, yet another multi year high.
AMJ (Alerian MLP Index tracking fund)
China isn't backing down in its trade war with the US. Beijing responded to Pres Trump's threat to place new tariffs on Chinese goods today by letting its currency, the Chinese yuan, sink to the weakest level in over a decade & ordering state-owned companies to reportedly halt their purchases of US agricultural products. The onshore Chinese yuan weakened to worse than 7 per $, hitting its lowest level since 2008, as Beijing looks to cushion the blow from Trump's tariffs. A weaker yuan makes Chinese goods cheaper for overseas buyers, which may be necessary as China just lost its spot as the US's biggest trading partner. Trade data released Fri showed US imports from China fell by 12% in the first 6 months of the year, allowing Mexico to supplant it as the US's biggest trade partner. "China dropped the price of their currency to an almost a historic low," Trump tweeted. "It’s called “currency manipulation.” Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!" Last week, Trump said beginning Sep 1 the US would place a 10% tariff on the remaining $300B of Chinese goods. He went ahead with the announcement despite objections from his advisers. The pres warned he could "always do much more" with respect to tariffs, adding the 10% tax could go "well beyond 25 percent" if necessary. Earlier this year, the administration placed a 25% tariff on $250B worth of Chinese goods. Weakening the yuan isn't the only form of retaliation Beijing took on today. It also ordered state-owned enterprises to stop purchases of US agricultural products, according to leakers.
China just threw its next punch in the trade war
Trump’s China tariffs not affecting US consumer: White House trade adviser
China has allowed its yuan to break thru 7 against the $ for the first time since 2008, but it insisted the move is not “competitive devaluation.” “As a responsible big country, China will abide by the spirit of the G20 leaders’ summit on the exchange rate issue, adhere to the market-determined exchange rate system, not engage in competitive devaluation, & not use the exchange rate for competitive purposes & not use the exchange rate as a tool to deal with external disturbances such as trade disputes,” The People's Bank of China governor Yi Gang said. The onshore Chinese yuan changed hands at 7.0304 against the $, while the offshore yuan traded at 7.0807 against the greenback. The Chinese currency last breached the 7 level against the $ during the global financial crisis in 2008. The yuan’s breakthrough came after Pres Trump abruptly heated up the trade war with China on Thurs, announcing the US is putting 10% tariffs on another $300B worth of Chinese goods, effective Sep 1. He claimed that China failed to buy US agricultural products “in large quantities” as it promised. “This fluctuation is driven and determined by the market,” Yi said. “Whether it is from the fundamentals of the Chinese economy or from the balance of market supply and demand, the current RMB exchange rate is at an appropriate level. Although the RMB exchange rate has fluctuated due to recent external uncertainties, I am confident that the RMB will continue to be a strong currency,” Yi said. In a separate statement from the Chinese central bank, it linked the yuan's move to “unilateralism, trade protectionism measures and the increase of tariffs on China.” Trump accused China of manipulating its currency following the yuan’s action today. “China dropped the price of their currency to an almost a historic low. It’s called ‘currency manipulation.’ Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!” Trump tweeted. It became obvious to many analysts that by allowing yuan's free fall, China has weaponized its currency in the intensified trade war with the US.
China’s central bank denies it’s devaluing country’s currency to counter tariffs
There was enormous selling at the opening & that's continuing. Meanwhile, as expected, gold & Treasuries are soaring. Quiet Aug is shaping up as a rough time for stocks. Not much else to say but watch & try to understand this confusing situation.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 54.66 | -1.00 | -1.8% |
| GC=F | Gold | 1,476.50 | +19.00 | +1.3% |
Stocks continued their decline, wih the Dow
falling 400, as Trump slams China for “currency manipulation”
following the weakening of the yuan the country. Last week, China threatened to retaliate if Pre Trump's planned tariff hikes go ahead. China allowed its yuan to sink to an 11-year low, fueling concern Beijing might use its currency as a weapon in the tariff war. Market benchmarks in London & Paris fell 2% while Tokyo closed down 1.6%. Hong Kong declined 2.9% & Frankfurt, Shanghai & Sydney also retreated. Trump
ratcheted things up last week with a surprise announcement of 10% tariffs on $300B of Chinese imports, effective Sep 1. Trump's
announcement surprised investors after the White House said Beijing
promised to buy more farm goods. It came as their latest trade talks
ended in Shanghai with no sign of a deal. Talks are expected to resume
in Sep. It will be another busy week for earnings. On the economic
agenda, investors will get a measure of the services sector today & inflation-related reports during the week.
DOW PLUNGES 400 POINTS AS US-CHINA TRADE WAR DEEPENS
China isn't backing down in its trade war with the US. Beijing responded to Pres Trump's threat to place new tariffs on Chinese goods today by letting its currency, the Chinese yuan, sink to the weakest level in over a decade & ordering state-owned companies to reportedly halt their purchases of US agricultural products. The onshore Chinese yuan weakened to worse than 7 per $, hitting its lowest level since 2008, as Beijing looks to cushion the blow from Trump's tariffs. A weaker yuan makes Chinese goods cheaper for overseas buyers, which may be necessary as China just lost its spot as the US's biggest trading partner. Trade data released Fri showed US imports from China fell by 12% in the first 6 months of the year, allowing Mexico to supplant it as the US's biggest trade partner. "China dropped the price of their currency to an almost a historic low," Trump tweeted. "It’s called “currency manipulation.” Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!" Last week, Trump said beginning Sep 1 the US would place a 10% tariff on the remaining $300B of Chinese goods. He went ahead with the announcement despite objections from his advisers. The pres warned he could "always do much more" with respect to tariffs, adding the 10% tax could go "well beyond 25 percent" if necessary. Earlier this year, the administration placed a 25% tariff on $250B worth of Chinese goods. Weakening the yuan isn't the only form of retaliation Beijing took on today. It also ordered state-owned enterprises to stop purchases of US agricultural products, according to leakers.
China just threw its next punch in the trade war
White House trade adviser Peter Navarro said that the Trump administration's tariffs on China are not affecting consumer prices. “China
has strategically gained the tariffs by slashing their prices and by
devaluing their currency,” Navarro said. “Since the
tariffs were put in place back in 2018, the Chinese yuan fell by almost
10 percent, so they have offset virtually all these tariffs and the
consumers are not seeing any price hikes in any significant way … We
could have a bigger question about whether tariffs, in general, might
cause rising consumer prices, but not in this case.” As trade talks with China continue, Pres Trump announced Aug 1 that the
US would impose another 10% tariff on $300B worth of
Chinese goods, beginning Sep 1, noting in a tweet that Beijing failed
to fulfill its promise to buy agricultural products from the US in
“large quantities.” Trump added that Chinese Pres Xi Jinping said
he would stop the sale of fentanyl – a type of opioid – to the US, but
failed to do so. “Trade
talks are continuing, and during the talks the U.S. will start, on
September 1st, putting a small additional Tariff of 10% on the remaining
300 Billion Dollars of goods and products coming from China into our
Country,” Trump tweeted. “This does not include the 250 Billion Dollars
already Tariffed at 25%.” While Navarro said
the administration is not seeing the resulting impact from China tariffs
show in the data, other groups disagree. The Consumer Technology
Association previously noted that an increase in tariffs on Chinese goods means prices for laptops, tablets & smartphones would rise. The Tax Foundation said the latest round of tariffs will cost a typical family of 4
$350 a year in addition to $850 from the current tariffs on China.
Trump’s China tariffs not affecting US consumer: White House trade adviser
China has allowed its yuan to break thru 7 against the $ for the first time since 2008, but it insisted the move is not “competitive devaluation.” “As a responsible big country, China will abide by the spirit of the G20 leaders’ summit on the exchange rate issue, adhere to the market-determined exchange rate system, not engage in competitive devaluation, & not use the exchange rate for competitive purposes & not use the exchange rate as a tool to deal with external disturbances such as trade disputes,” The People's Bank of China governor Yi Gang said. The onshore Chinese yuan changed hands at 7.0304 against the $, while the offshore yuan traded at 7.0807 against the greenback. The Chinese currency last breached the 7 level against the $ during the global financial crisis in 2008. The yuan’s breakthrough came after Pres Trump abruptly heated up the trade war with China on Thurs, announcing the US is putting 10% tariffs on another $300B worth of Chinese goods, effective Sep 1. He claimed that China failed to buy US agricultural products “in large quantities” as it promised. “This fluctuation is driven and determined by the market,” Yi said. “Whether it is from the fundamentals of the Chinese economy or from the balance of market supply and demand, the current RMB exchange rate is at an appropriate level. Although the RMB exchange rate has fluctuated due to recent external uncertainties, I am confident that the RMB will continue to be a strong currency,” Yi said. In a separate statement from the Chinese central bank, it linked the yuan's move to “unilateralism, trade protectionism measures and the increase of tariffs on China.” Trump accused China of manipulating its currency following the yuan’s action today. “China dropped the price of their currency to an almost a historic low. It’s called ‘currency manipulation.’ Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!” Trump tweeted. It became obvious to many analysts that by allowing yuan's free fall, China has weaponized its currency in the intensified trade war with the US.
China’s central bank denies it’s devaluing country’s currency to counter tariffs
There was enormous selling at the opening & that's continuing. Meanwhile, as expected, gold & Treasuries are soaring. Quiet Aug is shaping up as a rough time for stocks. Not much else to say but watch & try to understand this confusing situation.
Dow Jones Industrials
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