Dow dropped 276, decliners over advancers a big 4-1 & NAZ sank 96. The MLP index
& the REIT index fell 3+ to the 405s. Junk bond funds inched higher & Treasuries rose in price. Oil pulled back in the 52s & gold gained 5 to 1510 while stocks were being sold.
AMJ (Alerian MLP Index tracking fund)
The global economy is decaying amid uncertainties surrounding trade, Brexit & other geopolitical tensions, Kristalina Georgieva, the new chief of the IMF, warned in a speech. “We have spoken in the past about the dangers of trade disputes,” she said in her first speech since she was appointed to head the organization. “Now, we see that they are actually taking a toll. Global trade growth has come to a near standstill.” In the “curtain-raiser” speech previewing the global outlook, Georgieva said the IMF now expects growth this year to fall to its lowest rate since the beginning of the decade. The global monetary body also anticipates a slowdown in nearly 90% of the world. “There is a serious risk that services and consumption could soon be affected,” she added. “And the fractures are spreading.” In total, she said, the cumulative effects of trade conflicts could mean a loss of $700B by 2020, or about 0.8% of the total GDP. That's about the size of Switzerland's entire economy. And because of historically low, or even negative interest rates, the IMF sees investors taking increased risks across the globe, creating even more financial vulnerabilities. If the slowdown evolves into a major downturn, corp debt at risk of default would spike to $19T, above levels seen during the financial crisis. That represents about 40% of the total debt in 8 major economies. “Monetary and financial policies cannot do the job alone,” she said. “Fiscal policy must play a central role. Georgieva's speech comes on the heels of a slew of bad economic data in the US last week, including the worst manufacturing reading in 10 years, a signal that generally precedes recessions. Despite that, Federal Reserve Chair Jerome Powell maintained that, despite some long-term risks such as low inflation, the US economy remains healthy. "While not everyone fully shares economic opportunities and the economy faces some risks, overall it is -- as I like to say -- in a good place," Powell said. "Our job is to keep it there as long as possible."
US producer prices unexpectedly fell in Sep, leading to the smallest annual increase in nearly 3 years, which could give the Federal Reserve room to cut interest rates again later this month. The weak producer inflation readings reported by the Labor Dept came against the backdrop of a slowing economy amid trade tensions & cooling growth overseas. The Fed cut rates in Sep after reducing borrowing costs in Jul for the first time since 2008, to keep the longest economic expansion on record, now in its 11th year, on track. The producer price index (PPI) for final demand dropped 0.3% last month, weighed down by decreases in the costs of goods & services, the gov said. That was the largest decline since Jan & followed a 0.1% gain in Aug. In the 12 months thru Sep the PPI increased 1.4%, the smallest gain since Nov 2016, after rising 1.8% in Aug. The forecast called for the PPI nudging up 0.1% in Sep & advancing 1.8% on a year-on-year basis. Excluding the volatile food, energy & trade services components, producer prices were unchanged last month after jumping 0.4% in Aug. Core PPI increased 1.7% in the 12 months thru Sep after climbing 1.9% in Aug. The Fed, which has a 2% annual inflation target, tracks the core personal consumption expenditures (PCE) price index for monetary policy. The core PCE price index rose 1.8% on a year-on-year basis in Aug & has undershot its target this year. Some economists expect the central bank could cut rates at its Oct 29-30 policy meeting amid signs that the Trump administration's 15-month trade war with China, which has weighed on business investment & pushed manufacturing into recession, was impacting the broader economy. While the unemployment rate dropped to near a 50-year low of 3.5% in Sep, hiring slowed significantly, with the 3-month average gain in private payrolls falling to 119K jobs, the smallest since 2012, from 135K in Aug. In addition, private services industry growth slowed to a 3-year low in Sep. US financial markets were little moved by the producer inflation data. In Sep, wholesale energy prices fell 2.5%, matching the Aug decline. They were pulled down by a 7.2% decline in gasoline prices, which followed a 6.6% drop in Aug. Gasoline accounted for ¾ of the 0.4% drop in goods prices last month. Goods prices decreased 0.5% in Aug. In the 12 months thru Sep, goods prices dropped 0.5%, the most since Aug 2016.
US producer prices post the biggest decline in eight months in September
China tempers optimism for a trade deal, says ‘stay tuned’ for blacklist retaliation
Timid investors were not happy to hear negative thoughts about a US-China trade deal. It looks like China is not serious about a trade following more than a year of negotiations. China's unhappiness with the US basketball team sends a message that a final deal is far down the road. The glum outlook for the global economy at the IMF adds to negative thinking about the future. A little buying by bargain hunters just took stocks off session lows, but sellers remain in command. Month to date, the Dow is down almost 400 in a month that is remembered for some to the worst days in the stock market.
Dow Jones Industrials
& the REIT index fell 3+ to the 405s. Junk bond funds inched higher & Treasuries rose in price. Oil pulled back in the 52s & gold gained 5 to 1510 while stocks were being sold.
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 52.11 | -0.64 | -1.2% |
| GC=F | Gold | 1,511.80 | +7.40 | +0.5% |
The global economy is decaying amid uncertainties surrounding trade, Brexit & other geopolitical tensions, Kristalina Georgieva, the new chief of the IMF, warned in a speech. “We have spoken in the past about the dangers of trade disputes,” she said in her first speech since she was appointed to head the organization. “Now, we see that they are actually taking a toll. Global trade growth has come to a near standstill.” In the “curtain-raiser” speech previewing the global outlook, Georgieva said the IMF now expects growth this year to fall to its lowest rate since the beginning of the decade. The global monetary body also anticipates a slowdown in nearly 90% of the world. “There is a serious risk that services and consumption could soon be affected,” she added. “And the fractures are spreading.” In total, she said, the cumulative effects of trade conflicts could mean a loss of $700B by 2020, or about 0.8% of the total GDP. That's about the size of Switzerland's entire economy. And because of historically low, or even negative interest rates, the IMF sees investors taking increased risks across the globe, creating even more financial vulnerabilities. If the slowdown evolves into a major downturn, corp debt at risk of default would spike to $19T, above levels seen during the financial crisis. That represents about 40% of the total debt in 8 major economies. “Monetary and financial policies cannot do the job alone,” she said. “Fiscal policy must play a central role. Georgieva's speech comes on the heels of a slew of bad economic data in the US last week, including the worst manufacturing reading in 10 years, a signal that generally precedes recessions. Despite that, Federal Reserve Chair Jerome Powell maintained that, despite some long-term risks such as low inflation, the US economy remains healthy. "While not everyone fully shares economic opportunities and the economy faces some risks, overall it is -- as I like to say -- in a good place," Powell said. "Our job is to keep it there as long as possible."
Global hits a scary new low, IMF’s new chief says
US producer prices unexpectedly fell in Sep, leading to the smallest annual increase in nearly 3 years, which could give the Federal Reserve room to cut interest rates again later this month. The weak producer inflation readings reported by the Labor Dept came against the backdrop of a slowing economy amid trade tensions & cooling growth overseas. The Fed cut rates in Sep after reducing borrowing costs in Jul for the first time since 2008, to keep the longest economic expansion on record, now in its 11th year, on track. The producer price index (PPI) for final demand dropped 0.3% last month, weighed down by decreases in the costs of goods & services, the gov said. That was the largest decline since Jan & followed a 0.1% gain in Aug. In the 12 months thru Sep the PPI increased 1.4%, the smallest gain since Nov 2016, after rising 1.8% in Aug. The forecast called for the PPI nudging up 0.1% in Sep & advancing 1.8% on a year-on-year basis. Excluding the volatile food, energy & trade services components, producer prices were unchanged last month after jumping 0.4% in Aug. Core PPI increased 1.7% in the 12 months thru Sep after climbing 1.9% in Aug. The Fed, which has a 2% annual inflation target, tracks the core personal consumption expenditures (PCE) price index for monetary policy. The core PCE price index rose 1.8% on a year-on-year basis in Aug & has undershot its target this year. Some economists expect the central bank could cut rates at its Oct 29-30 policy meeting amid signs that the Trump administration's 15-month trade war with China, which has weighed on business investment & pushed manufacturing into recession, was impacting the broader economy. While the unemployment rate dropped to near a 50-year low of 3.5% in Sep, hiring slowed significantly, with the 3-month average gain in private payrolls falling to 119K jobs, the smallest since 2012, from 135K in Aug. In addition, private services industry growth slowed to a 3-year low in Sep. US financial markets were little moved by the producer inflation data. In Sep, wholesale energy prices fell 2.5%, matching the Aug decline. They were pulled down by a 7.2% decline in gasoline prices, which followed a 6.6% drop in Aug. Gasoline accounted for ¾ of the 0.4% drop in goods prices last month. Goods prices decreased 0.5% in Aug. In the 12 months thru Sep, goods prices dropped 0.5%, the most since Aug 2016.
US producer prices post the biggest decline in eight months in September
China poured cold water on hopes for a trade deal,
signaling it would retaliate against the US threat to put Chinese
tech companies on a blacklist, just 2 days ahead of the
highly-anticipated trade talks in DC. Chinese Foreign
Ministry spokesman Geng Shuang said “stay tuned,” when asked
whether China would retaliate over the blacklist over alleged human
rights violations against Muslim minorities. “We
urge the U.S. to immediately correct its mistake, withdraw the relevant
decision and stop interfering in China’s internal affairs,” Geng said
at a press conference. “China will continue to take firm and forceful
measures to resolutely safeguard national sovereignty, security and
development interests.” The comments deepened the tensions between
the 2 economic superpowers before they resume high-level trade talks
on Thurs. The White House is also reportedly discussing blocking gov pension funds
from investing in China, further dimming the expectations for a
resolution. White House trade policy director Peter Navarro denied the
reports however, calling them “fake news.” China’s
delegation led by Vice Premier Liu He may cut short their planned stay
in DC & depart on Fri instead of Sat to remove the
possibility to extend the talks into Fri evening, the South China Morning Post reported, citing a source briefed on preparations for the trade talks. “There’s
not much optimism,” the source told the paper, which is run by Alibaba
but often criticized for being biased in favor of the state. This
time, Liu will not carry the title of “special envoy,” which empowered
him to negotiate on behalf of Pres Xi Jinping in May. This could be
an indication that Xi has not given Liu any instructions for the
negotiation. Deputy-level
talks took place yesterday & principle-level negotiations are planned
for Thurs & Fri. The Trump administration has imposed tariffs
on more than $500B of Chinese goods, with another round of
tariffs set to go into effect later this month. A
blog, Taoran Notes, on Chinese social media WeChat, followed by
analysts covering China & market participants for cues on the trade
battle, is also toning down expectations for a deal, a reversal from its
post last month predicting “new developments.” “Some people may
ask, if the U.S. raises tariffs further, is it still necessary to
continue the talks … the answer is that it’s as necessary to take
countermeasures as to continue the talks,” a blog post last evening evening
reads, adding the talks will be a continuation of “talking while
fighting.” Run by a state-owned newspaper called Economic Daily,
the blog has been cited by US media for
additional color from the China side.
China tempers optimism for a trade deal, says ‘stay tuned’ for blacklist retaliation
Timid investors were not happy to hear negative thoughts about a US-China trade deal. It looks like China is not serious about a trade following more than a year of negotiations. China's unhappiness with the US basketball team sends a message that a final deal is far down the road. The glum outlook for the global economy at the IMF adds to negative thinking about the future. A little buying by bargain hunters just took stocks off session lows, but sellers remain in command. Month to date, the Dow is down almost 400 in a month that is remembered for some to the worst days in the stock market.
Dow Jones Industrials
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