Dow shot up 372, advancers over decliners a relatively mild 2-1 & NAZ advanced 139. The MLP index rose fractionally to a depressed 231s & the REIT index gave back 3+ to the 407s. Junk bond funds fluctuated & Treasuries were heavily sold today. Oil was off pennies in the 56s & gold sank 33 to 1527 for its worst daily loss in years (more below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Trade war causing companies to flee China
Private sector hiring rebounds in August with 195,000 added
Gold prices dropped, posting their largest one-day $ loss in almost 3 years to settle at a 2-week low. News that the US & China agreed to work toward a fresh round of trade talks next month provided a boost to US & global stock markets & a stronger-than-expected private-sector employment data also helped to ease worries about a slowdown in the economy, damaging the metal's haven appeal. Gold for Dec fell $34.90 (2.2%) to settle at a 2-week nadir of $1525 an ounce, giving up the roughly 2% gain it scored over the past 2 trading sessions. Prices marked their biggest single-session percentage decline since Jun 2018 & largest daily $ loss since Nov 2016. US & Chinese negotiators will meet in early Oct, the Chinese Commerce Ministry said. The talks are aimed at ending a long-running trade war that has heightened worries about the global economic outlook & stoked recession fears. Those concerns & a number of other geopolitical worries, including the prospect of a messy UK exit from the EU, have been credited with lifting gold, a traditional haven that tends to appreciate during periods of rising uncertainty. Gold is up around 20% YTD & earlier this week hit the latest in a string of more-than-6-year highs. Rising trade optimism fed a rally in US stocks, drawing investor interest away from gold as the Dow moved sharply higher today. European & Asian benchmark stock indices finished mostly higher.
US service-sector activity in Aug grew more quickly than in Jul, according to the Institute for Supply Management's nonmanufacturing index. The report, based on a survey of purchasing managers, provides a sense of business conditions for the country's service providers, which include businesses like restaurants, banks & consulting firms.
The Dow jumped higher out of the gate today & never gave up that advance. Optimism about trade talks is running extremely high. If the talks won't be held until next month, that means there will be several weeks of waiting for developments. And that will include the big Fed meeting in a couple of weeks. The Dow is closing in on its mid Jul record but will need more help from additional good news to reach a new record..
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The more than yearlong trade war between the US & China is shaking up supply chains all over the world. An
analysis looked at a sample
of more than 50 manufacturers that have already left China in order to
avoid Pres Trump's tariffs & found the departures will have huge implications for the Chinese economy. Companies
leaving China, including manufacturers of electronics, apparel &
electrical equipment, are heading to neighboring Vietnam, Taiwan &
Thailand in droves. They're also reloacting in places like Mexico &
the US. It's not just foreign companies that are leaving
China. Local ones are leaving, too. The Huizhou-based electronics maker
TCL & the Zhejiang-based yarn producer Zhejiang Hailide New Material
are among the Chinese companies that are relocating factories to
Vietnam. Some companies, like Lite-On Technology, have cited the trade war morphing into a technology war as reason for leaving China. A continued exodus of companies will put further pressure on Beijing to reach a trade deal when talks start up again in Oct. Beijing
was already grappling with economic headwinds before the trade war
began when Pres Trump on Mar 1, 2018, announced tariffs on
imports of steel & aluminum. China's economy
grew in a tight range between 6.6-6.7% for the 2
years from mid-2016 to mid-2018, before slowing to a 6.2% growth
rate in Q2. The Chinese economy is expected to slow even further, especially if the trade war drags on.
Trade war causing companies to flee China
Private employers added 195K jobs in Aug, according to the latest ADP National Employment Report,
surging past expectations for 149K even as recession fears
continue to mount. Most hiring took place in
the service-providing sector, with 184K new jobs created.
Manufacturing hiring remained fairly steady, with 8K jobs added. It was the best month for private-sector hiring since Apr, which saw 255K new jobs added. The better-than-expected number could help to temper fears that the record-long economic expansion is coming to an end. “Businesses are holding firm on their payrolls
despite the slowing economy," Moody's Analytics chief economist Mark
Zandi said. "Hiring has moderated, but layoffs remain
low. As long as this continues recession will remain at bay.” Zandi estimated the economy
created 100K jobs per month on average. If the trade war does not
continue to weigh on the health of certain sectors, like agriculture &
transportation, the economy could avoid a recession. "If
nothing else goes off the rail, we should be in pretty good shape," he
said. "The expansion should continue on for the foreseeable future. We
should be fine." Pres Trump touted the number in a tweet, following the release of the data: "Really Good Jobs Numbers!"
Private sector hiring rebounds in August with 195,000 added
Gold prices dropped, posting their largest one-day $ loss in almost 3 years to settle at a 2-week low. News that the US & China agreed to work toward a fresh round of trade talks next month provided a boost to US & global stock markets & a stronger-than-expected private-sector employment data also helped to ease worries about a slowdown in the economy, damaging the metal's haven appeal. Gold for Dec fell $34.90 (2.2%) to settle at a 2-week nadir of $1525 an ounce, giving up the roughly 2% gain it scored over the past 2 trading sessions. Prices marked their biggest single-session percentage decline since Jun 2018 & largest daily $ loss since Nov 2016. US & Chinese negotiators will meet in early Oct, the Chinese Commerce Ministry said. The talks are aimed at ending a long-running trade war that has heightened worries about the global economic outlook & stoked recession fears. Those concerns & a number of other geopolitical worries, including the prospect of a messy UK exit from the EU, have been credited with lifting gold, a traditional haven that tends to appreciate during periods of rising uncertainty. Gold is up around 20% YTD & earlier this week hit the latest in a string of more-than-6-year highs. Rising trade optimism fed a rally in US stocks, drawing investor interest away from gold as the Dow moved sharply higher today. European & Asian benchmark stock indices finished mostly higher.
Gold logs biggest daily dollar loss in 3 years on China trade optimism, upbeat private-jobs data
US service-sector activity in Aug grew more quickly than in Jul, according to the Institute for Supply Management's nonmanufacturing index. The report, based on a survey of purchasing managers, provides a sense of business conditions for the country's service providers, which include businesses like restaurants, banks & consulting firms.
U.S. Service-Sector Activity Picked Up in August
The Dow jumped higher out of the gate today & never gave up that advance. Optimism about trade talks is running extremely high. If the talks won't be held until next month, that means there will be several weeks of waiting for developments. And that will include the big Fed meeting in a couple of weeks. The Dow is closing in on its mid Jul record but will need more help from additional good news to reach a new record..
Dow Jones Industrials
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