Dow fell 36, advancers over decliners 5-4& NAZ lost 17. The MLP index was fractionally higher to the 223s & the REIT index fell 1+ to 407. Junk bond funds hardly budged in price & Treasuries were bid higher. Oil crawled up to 53 & gold added 3 to 1486.
AMJ (Alerian MLP Index tracking fund)
China's promise to buy $50B a year in US crops isn't one the world's 2nd-largest economy expects to keep overnight. “Many things” need to happen before the purchases -- which Pres Trump has called a key part of a "phase one" trade deal between the 2 countries -- can begin, China's Ministry of Rural Affairs said. Speaking at a rally on Fri, Trump said farmers would need to buy more land & equipment to meet the surge in demand for American agriculture. Reaching the $50B benchmark, however, may take up to 2 years & require the US to lift tariffs on Chinese imports as a goodwill gesture. Even if a deal is signed, China could have trouble living up to its end of the bargain. Customs data show China imported $124.7B of agriculture products in 2017 & $136.7B last year. The US & China announced the framework last week for the first phase of a trade deal that would see Beijing raise its agricultural purchases to as much as $50B from $8-16B in addition to reforming intellectual property practices. In return, the US agreed to not raise tariffs on Chinese products from 25% to 30% yesterday. A decision has not yet been made on the tariff increase scheduled for Dec 15. While there's hope that Trump & Chinese Pres Xi Jinping will sign an agreement next month at the Asia-Pacific Economic Cooperation conference in Chile, an op-ed in the state-run China Daily warned against celebrating until the 2 leaders put pen to paper.
US retail sales fell for the first time in 7 months in Sep, according to new figures, suggesting a weak manufacturing sector is beginning to drag on the broader economy. The Commerce Dept said that retail sales shrank by 0.3% in Sep, well below expectations for 0.3% growth. August data meanwhile was revised upward to 0.6%, from the initially reported 0.4%. Auto sales fell almost 1%, dealers said, marking the steepest drop in 8 months after accelerating 1.8% in Aug. Sales at gas stations also slumped 0.7%, likely reflecting cheaper gas prices. The sudden pullback in spending suggests the economy is softer than initially believed, amid concerns the US-China trade war -- & the hundreds of Bs of $s of tariffs -- are beginning to weigh on recession-weary American consumers. Consumer spending contributes a big chunk to the US. GDP, & a slowdown in spending could lend way to a sluggish economy overall. The latest retail sales come on the heels of a slew of bad economic data in the US, including the biggest manufacturing contraction in more than a decade as well as a disappointing services sector reading.
US homebuilders are loving today's lower mortgage rates, which are bringing buyers back & boosting sales. Builder confidence in the single-family market jumped 3 points in Oct to 71 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). That is the highest level since Feb 2018 & up from 68 in Oct of last year. Anything above 50 is considered positive sentiment. “The housing rebound that began in the spring continues, supported by low mortgage rates, solid job growth and a reduction in new home inventory,” said NAHB Chairman Greg Ugalde. Of the index's 3 components, current sales conditions rose 3 points to 78, sales expectations over the next 6 months jumped 6 points to 76 & buyer traffic rose 4 points to 54. “The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months,” said NAHB Chief Economist Robert Dietz. “However, builders continue to remain cautious due to ongoing supply side constraints and concerns about a slowing economy.” Sentiment may be high, but single-family housing starts are rising very slowly. Builders continue to point to higher costs for land, labor, materials & especially regulatory compliance for their slow production as well as for their focus on the move-up & luxury markets. Housing supply is incredibly low, especially at the entry level, & builders are not doing much to replenish that inventory. Regionally, on a 3-month moving average, builder sentiment in the Northeast posted a one-point gain to 60. It was also up one point to 58 in the Midwest & in the South it increased 3 points to 73. The West region also saw a 3-point gain to 78.
Homebuilder confidence hits highest level in nearly two years, thanks to lower mortgage rates
The bulls are relaxing after yesterday's big gains. Everybody was reminded today that the US-China trade deal is a work in progress & there will be many bumps along the way before a final deal is signed. Home builders are feeling better, but retail sales data is bigger & that sent a negative signal. The Dow is around 27K & the bulls may have to work to keep it above that important psychological level.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 53.04 | +0.23 | +0.4% |
| GC=F | Gold | 1,490.30 | +6.80 | +0.5% |
China's promise to buy $50B a year in US crops isn't one the world's 2nd-largest economy expects to keep overnight. “Many things” need to happen before the purchases -- which Pres Trump has called a key part of a "phase one" trade deal between the 2 countries -- can begin, China's Ministry of Rural Affairs said. Speaking at a rally on Fri, Trump said farmers would need to buy more land & equipment to meet the surge in demand for American agriculture. Reaching the $50B benchmark, however, may take up to 2 years & require the US to lift tariffs on Chinese imports as a goodwill gesture. Even if a deal is signed, China could have trouble living up to its end of the bargain. Customs data show China imported $124.7B of agriculture products in 2017 & $136.7B last year. The US & China announced the framework last week for the first phase of a trade deal that would see Beijing raise its agricultural purchases to as much as $50B from $8-16B in addition to reforming intellectual property practices. In return, the US agreed to not raise tariffs on Chinese products from 25% to 30% yesterday. A decision has not yet been made on the tariff increase scheduled for Dec 15. While there's hope that Trump & Chinese Pres Xi Jinping will sign an agreement next month at the Asia-Pacific Economic Cooperation conference in Chile, an op-ed in the state-run China Daily warned against celebrating until the 2 leaders put pen to paper.
US-China trade war: Beijing won't buy $50B of crops overnight
US retail sales fell for the first time in 7 months in Sep, according to new figures, suggesting a weak manufacturing sector is beginning to drag on the broader economy. The Commerce Dept said that retail sales shrank by 0.3% in Sep, well below expectations for 0.3% growth. August data meanwhile was revised upward to 0.6%, from the initially reported 0.4%. Auto sales fell almost 1%, dealers said, marking the steepest drop in 8 months after accelerating 1.8% in Aug. Sales at gas stations also slumped 0.7%, likely reflecting cheaper gas prices. The sudden pullback in spending suggests the economy is softer than initially believed, amid concerns the US-China trade war -- & the hundreds of Bs of $s of tariffs -- are beginning to weigh on recession-weary American consumers. Consumer spending contributes a big chunk to the US. GDP, & a slowdown in spending could lend way to a sluggish economy overall. The latest retail sales come on the heels of a slew of bad economic data in the US, including the biggest manufacturing contraction in more than a decade as well as a disappointing services sector reading.
Retail sales falter in September, posting first decline in 7 months
US homebuilders are loving today's lower mortgage rates, which are bringing buyers back & boosting sales. Builder confidence in the single-family market jumped 3 points in Oct to 71 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). That is the highest level since Feb 2018 & up from 68 in Oct of last year. Anything above 50 is considered positive sentiment. “The housing rebound that began in the spring continues, supported by low mortgage rates, solid job growth and a reduction in new home inventory,” said NAHB Chairman Greg Ugalde. Of the index's 3 components, current sales conditions rose 3 points to 78, sales expectations over the next 6 months jumped 6 points to 76 & buyer traffic rose 4 points to 54. “The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months,” said NAHB Chief Economist Robert Dietz. “However, builders continue to remain cautious due to ongoing supply side constraints and concerns about a slowing economy.” Sentiment may be high, but single-family housing starts are rising very slowly. Builders continue to point to higher costs for land, labor, materials & especially regulatory compliance for their slow production as well as for their focus on the move-up & luxury markets. Housing supply is incredibly low, especially at the entry level, & builders are not doing much to replenish that inventory. Regionally, on a 3-month moving average, builder sentiment in the Northeast posted a one-point gain to 60. It was also up one point to 58 in the Midwest & in the South it increased 3 points to 73. The West region also saw a 3-point gain to 78.
Homebuilder confidence hits highest level in nearly two years, thanks to lower mortgage rates
The bulls are relaxing after yesterday's big gains. Everybody was reminded today that the US-China trade deal is a work in progress & there will be many bumps along the way before a final deal is signed. Home builders are feeling better, but retail sales data is bigger & that sent a negative signal. The Dow is around 27K & the bulls may have to work to keep it above that important psychological level.
Dow Jones Industrials
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