Markets fall after Trump criticizes China in UN speech

Dow dropped 142 (closing near the lows), decliners over advancers more than 2-1 & NAZ tumbled 118.  The MLP index declined 2+ to the 236s & the REIT index gave back 1+ to the 406s.  Junk bond funds rose in price & Treasuries were heavily purchased.  Oil fell 1+ to the 57s & gold jumped up 9 to 1540 (more on both below).

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Pres Trump used the world stage today to criticize China & its trade practices, calling for drastic change at the World Trade Organization while vowing to defend American interests.  Trump, while delivering his 3rd address before the UN General Assembly, noted that when the WTO admitted China in 2001, American leaders hoped it would be a catalyst for Beijing to liberalize its economy & follow the rule of law. Instead, Trump said, China continued to flout those rules.  “Not only has China declined to adopt promise reforms, it has embraced an economic model dependent on massive market barriers, heavy state subsidies, currency manipulation, product dumping, forced technology transfers and the theft of IP, and trade secrets on a grand scale,” he said during the speech.  But Trump, who has made negotiating a trade deal with China a pinnacle of his presidency, said he intends to put an end to those practices with the slew of tariffs he has in place on more than $300B of Chinese goods. (By mid-Dec, barring any last-minute changes, that number will climb to $500B).  The world's 2 largest economies have remained embroiled in tariff war for more than a year.  Trade talks are expected to resume in 2 weeks in DC, according to Treasury Secretary Steve Mnuchin.  “The American people are definitely committed to restoring balance to our relationship with China,” Trump said.  “Hopefully we can reach an agreement that will be beneficial to both countries. But as I have made very clear, I will not accept a bad deal for the American people.”

Trump bashes China for 'gaming the system'

Gold prices rose to their highest level in more than 2 weeks , buoyed by weaker US economic data & news that House Dems plan to discuss the impeachment of President Trump.  Gold for Dec was up 0.6% to $1540 a troy ounce, its highest since Sep 5 and approaching a 6-year high reached earlier this month.  A measure of US consumer confidence from the Conference Board eased in Sep from the prior month & a gauge of manufacturing activity across mid-Atlantic states softened this month, data showed on Tues.  The numbers bolstered the case for the Federal Reserve to continue easing rates in coming months—a tailwind for gold, which struggles to compete with yield-bearing investments when rates rise.  Political uncertainty is also giving gold a boost. House Democratic leaders plan to hold an all-caucus meeting to discuss impeachment of Pres Trump following reports that he pressed Ukraine to investigate Dem presidential candidate Joe Biden & his son.  Trump has denied any wrongdoing related to Ukraine.  Gold is a popular destination for nervous investors, who believe the metal will hold its value better than other assets during turbulent times.  Other haven investments, such as Treasuries and the Japanese ¥, also strengthened.

Gold Climbs to Highest Point in More Than Two Weeks

Home price growth is continuing to lose momentum, a boon to buyers who are also benefiting from falling mortgage rates & a trend that could help sustain the recent pickup in home sales.  Average national home prices grew 3.2% in the year ending in Jul, according to the S&P CoreLogic Case-Shiller National Home Price Index, unchanged from the prior month.  The gain in the 20-city index slowed to 2% from 2.2% the prior month.

U.S. Home Price Growth Loses Momentum

Oil futures settled lower, pressured by signs that Saudi Arabia is making progress in restoring production following attacks on processing facilities, as well as concerns over the global demand picture.  Also contributing to declines in oil prices, Iranian Pres Hassan Rouhani said he was open to discuss small changes to the 2015 nuclear deal if the US lifted sanctions on his country.  West Texas Intermediate crude for Nov, the US benchmark, lost $1.35 (2.3%) to settle at $57.29 a barrel.  Nov Brent, the global benchmark, fell $1.67 (2.6%) to $63.10 a barrel.  Both benchmarks logged the lowest front-month contract finish since Sep 13.  Prices fell toward the session’s lows when Pres Trump spoke at the UN.  He turned up pressure on China as DC & Beijing continue to seek a trade deal, & said all nations have a duty to act on Iran.  Traders have also been weighing conflicting assessments over Saudi Arabia’s progress in restoring production after attacks on processing facilities on Sep 14 cut the country's output by about 5.7B barrels a day.  Leakers have reported that Saudi Arabia had reported more than 75% of crude output & expected to return to full volumes by early next week.  Also yesterday, it was reported that it would take Saudi Arabian Oil (Aramco) several months to fully restore operations.  Analysts said talk of rapid progress in restoring output would likely be taken with some skepticism, citing the planned IPO of Aramco.

Oil futures end at their lowest in over a week

More than ½ of the super-rich around the world are already preparing for a recession.  That is according to a UBS survey of 360 global family offices with an average family wealth of $1.2B.  Results showed 55% of family offices see a recession by 2020, & to mitigate risks, 45% are already adjusting their portfolios, including shifting to bonds & real estate, while 42% are increasing their cash reserves.  “We are very cautious, even now with the market we don’t feel very comfortable,” said a survey respondent who is a managing partner at a multifamily office in North America.  An escalated trade war between the US & China has deepened fears of a recession, while the so-called yield curve inversion, a bond market phenomenon that's historically predictive of an economic downturn, also intensified the concerns.  Many notable investors & economists have recently warned of heightened recession risks.  “Who knows what will happen with Brexit, what will happen in the EU, and what will happen between the U.S. and China,” said another survey respondent, a CEO of a single family office in Europe.  “There are so many open questions, and this could have a dramatic impact on the market. In general, we think we have reached our peak.”  The survey also revealed a 1/5 of family offices are reducing their leverage exposure within their investments in response to their expectations for a recession next year.  The ultra-wealthy's prediction of a recession came as many Dem presidential candidates have proposed wealth taxes to cut income inequality.  Elizabeth Warren & Bernie Sanders have both unveiled proposals that would tax the richest Americans' assets.

Most of the ultra-wealthy see a recession next year and are hunkering down, says UBS survey

Stocks ran into more headwinds as the bulls had their eyes on a new record.  The Dow began the day with an advance.  Then sellers started selling & did not let up for the rest of the day until that last ½ hour when buying pared earlier losses.  Trump's speech criticizing China had a chilling affect on traders hoping for a deal.  Then impeachment talk was not welcomed by investors.  Dow currently has a modest gain in Sep, the market's toughest month.  But Oct is coming up & that is remembered by investors as having some the market's ugliest days.  Interesting survey above covering the ultra rich.

Dow Jones Industrials