Dow sank 235, decliners over advancers 2-1 & NAZ dropped 48. The MLP index slid back 2+ to the 214s, another multi year low, & the REIT index was fractionally lower to the 413s. Junk bond funds puled back & Treasuries rose in price. Oil fell 1+ to the 53s & gold jumped 18 to 1515 on news of postponement for the US-China trade deal..
AMJ (Alerian MLP Index tracking fund)
Stocks opened lower after Beijing raised doubts about the prospects of a long-term trade deal with the US. Chinese officials have warned they won't budge on some of the most contentious issues between the 2 countries. They remain concerned about Pres Trump's impulsive nature & the risk he may back out of even the limited agreement both sides say they want to sign in the coming weeks. The S&P 500 closed at a record on high yesterday after investors welcomed the Fed's 3rd rate cut of the year, to 1.5-1.75%, as the central bank looks to shore up economic growth amid a bruising US-China trade war. The Fed indicated it won't cut rates again unless the outlook worsens. Also, the Commerce Dept said the US economy grew at a 1.9% rate in Q3, a stronger performance than expected. The next big economic indicator comes tomorrow when the gov releases the monthly nonfarm payroll report. Overnight, a monthly gauge of Chinese factory activity declined more than expected for Oct amid weak consumer demand & a tariff war with DC, sending China's Shanghai Composite down 0.3%. Hong Kong lsid into recession for the first time in a decade in Q3. The economy shrank 3.2% from the preceding period, contracting for a 2nd straight qtr & meeting the technical definition of a recession, according to preliminary gov data. Tokyo's Nikkei ended the day up 0.4% & Hong Kong's Hang Seng finished the session with a 1% gain. In European markets, London's FTSE fell 1%, Germany's DAX dropped 0.6% & France's CAC slipped 0.5%.
Stocks slip as China throws a wrench in Trump's trade war plans
Pres Trump said the US & China will announce a new site soon for the signing of the "phase one" trade deal that the 2 countries agreed to earlier this month. The 2 sides had planned to sign the deal at the Asia-Pacific Economic Cooperation summit in mid-Nov, but Chile announced yesterday it will no longer host the event because of massive protests of gov policy. It is unclear where & when the event will be held now. "China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled do to unrelated circumstances," Trump tweeted. "The new location will be announced soon. President Xi and President Trump will do signing!" White House Deputy Press Secretary Hogan Gidley said that deputy-level talks are happening every day. "While APEC was canceled yesterday, it has not negatively impacted our conversations with China at all," Gidley said. "In fact, I spoke with the trade team this morning, the great Larry Kudlow ... and he just told me, these talks are going very smoothly." Chinese Vice Premier Liu He is expected to speak by phone with Trade Representative Robert Lighthizer & Treasury Secretary Steve Mnuchin tomorrow, Gidley said. Trump said yesterday that the 2 countries are "ahead of schedule" on signing the agreement, & Beijing said on Sat that phase one was "basically complete." Trump's tweet indicated that the "phase one" agreement is around 60% of the total deal with China. White House trade official Peter Navarro has previously said there would be 3 phases in the total deal.
The US-China trade war is taking a toll on the Chinese economy, but a long-term deal may be elusive as long as Pres Trump occupies the White House, according to a report. Beijing is reluctant to give in on some of the biggest stumbling blocks due to Pres Trump's unpredictability and the possibility that he would back out of any deal, according to people familiar with the matter. It should be noted, however, that it was Beijing that reneged on a deal earlier this year. While not named, key US issues in the trade dispute, which Trump ignited with tariffs on Bs in Chinese imports, include intellectual property theft, greater access to Chinese markets & the trade imbalance between the 2 countries. Hesitance in Beijing, which has called for the removal of all US levies, follows a fiery speech from Secretary of State Mike Pompeo yesterday. He said the US must “confront challenges” from Beijing “head-on,” adding that China is engaging in unfair & predatory economic tactics. The US & China remain in close contact, & leaders will hold a call on Fri as negotiators hammer out the details of a 'phase one' trade agreement, which both sides hope to sign next month at the Asia-Pacific Economic Cooperation summit. Trump has said a comprehensive trade deal might require 2 or 3 phases. The summit was planned in Santiago, Chile, but the country's gov pulled out because of massive protests of gov policy. It is unclear where & when the event will be held now. The longer Beijing waits to give in on key issues, the more damage will be done to the Chinese economy. China's GDP grew at a 6% rate in Q3, the weakest in 26 years. Manufacturing activity, which accounts for about 40% of China's GDP, showed further deterioration in a report released today. The Purchasing Managers Index fell deeper into contraction, with a print of 49.3 in Oct, as new export orders fell for a 17th straight month. It was the 6th straight month the sector has shrunk. Total new orders fell back into contraction after a brief spurt of expansion in Sep, signaling domestic weakness as well. Additionally, Hong Kong, an entry point into the Chinese market for many global investors, has slipped into recesson with GDP contracting by 3.2% in Q3 amid the trade war & pro-democracy protests. Weakness is expected to persist at least thru the end of the year. The US today put forth an olive branch to Beijing by extending exemptions on the 2nd batch of tariffs – 25% on $34B of Chinese goods – that were enacted in Jul 2018. As part of the framework of the phase one deal, the US agreed to not raise existing duties on $250B goods from 25% to 30% on Oct 15. A decision has not yet been made on tariffs on $160B scheduled for Dec 15.
Pres Trump said a new location for signing the “phase one” US-China trade deal will be announced soon after the initial gathering in Chile was canceled due to protests. “China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled do to unrelated circumstances,” Trump tweeted. “The new location will be announced soon. President Xi and President Trump will do signing!” Trump said in his tweet that the “phase one” trade deal represents the majority of a long-term agreement. His comment came after a reported today said that China is doubtful about reaching a comprehensive trade deal with the US due to Trump’s “impulsive nature.” Earlier this month, Trump said the US has come to a “very substantial phase one deal” with China, adding phase 2 will start “almost immediately” after the first phase is signed. Trump had said the agreement would address issues such as intellectual property & financial services & include a pledge for China to buy $40-50B in American agricultural products. The limited deal also includes a pause in tariff escalation as the US ditched a planned tariff hike on $250B in Chinese goods set to take effect Oct 15. However, many experts had said the “phase one” deal represents a much smaller portion of what Trump originally set out to pursue.
Trump says new location for signing of ‘phase one’ of US-China trade deal will be announced soon
Excitement about the interest rate cut by the Fed is over & trade issues are on the front burner. Markets are trading much lower & the outlook is glum with cancellation of China trade talks. However, earnings are generally looking good & the US economy is doing well under the circumstances which is keeping the stock indices very close to record highs.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 54.44 | -0.62 | -1.1% |
| GC=F | Gold | 1,512.20 | +15.50 | +1.0% |
Stocks opened lower after Beijing raised doubts about the prospects of a long-term trade deal with the US. Chinese officials have warned they won't budge on some of the most contentious issues between the 2 countries. They remain concerned about Pres Trump's impulsive nature & the risk he may back out of even the limited agreement both sides say they want to sign in the coming weeks. The S&P 500 closed at a record on high yesterday after investors welcomed the Fed's 3rd rate cut of the year, to 1.5-1.75%, as the central bank looks to shore up economic growth amid a bruising US-China trade war. The Fed indicated it won't cut rates again unless the outlook worsens. Also, the Commerce Dept said the US economy grew at a 1.9% rate in Q3, a stronger performance than expected. The next big economic indicator comes tomorrow when the gov releases the monthly nonfarm payroll report. Overnight, a monthly gauge of Chinese factory activity declined more than expected for Oct amid weak consumer demand & a tariff war with DC, sending China's Shanghai Composite down 0.3%. Hong Kong lsid into recession for the first time in a decade in Q3. The economy shrank 3.2% from the preceding period, contracting for a 2nd straight qtr & meeting the technical definition of a recession, according to preliminary gov data. Tokyo's Nikkei ended the day up 0.4% & Hong Kong's Hang Seng finished the session with a 1% gain. In European markets, London's FTSE fell 1%, Germany's DAX dropped 0.6% & France's CAC slipped 0.5%.
Stocks slip as China throws a wrench in Trump's trade war plans
Pres Trump said the US & China will announce a new site soon for the signing of the "phase one" trade deal that the 2 countries agreed to earlier this month. The 2 sides had planned to sign the deal at the Asia-Pacific Economic Cooperation summit in mid-Nov, but Chile announced yesterday it will no longer host the event because of massive protests of gov policy. It is unclear where & when the event will be held now. "China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled do to unrelated circumstances," Trump tweeted. "The new location will be announced soon. President Xi and President Trump will do signing!" White House Deputy Press Secretary Hogan Gidley said that deputy-level talks are happening every day. "While APEC was canceled yesterday, it has not negatively impacted our conversations with China at all," Gidley said. "In fact, I spoke with the trade team this morning, the great Larry Kudlow ... and he just told me, these talks are going very smoothly." Chinese Vice Premier Liu He is expected to speak by phone with Trade Representative Robert Lighthizer & Treasury Secretary Steve Mnuchin tomorrow, Gidley said. Trump said yesterday that the 2 countries are "ahead of schedule" on signing the agreement, & Beijing said on Sat that phase one was "basically complete." Trump's tweet indicated that the "phase one" agreement is around 60% of the total deal with China. White House trade official Peter Navarro has previously said there would be 3 phases in the total deal.
Trump reveals progress on China trade deal and one major hangup
The US-China trade war is taking a toll on the Chinese economy, but a long-term deal may be elusive as long as Pres Trump occupies the White House, according to a report. Beijing is reluctant to give in on some of the biggest stumbling blocks due to Pres Trump's unpredictability and the possibility that he would back out of any deal, according to people familiar with the matter. It should be noted, however, that it was Beijing that reneged on a deal earlier this year. While not named, key US issues in the trade dispute, which Trump ignited with tariffs on Bs in Chinese imports, include intellectual property theft, greater access to Chinese markets & the trade imbalance between the 2 countries. Hesitance in Beijing, which has called for the removal of all US levies, follows a fiery speech from Secretary of State Mike Pompeo yesterday. He said the US must “confront challenges” from Beijing “head-on,” adding that China is engaging in unfair & predatory economic tactics. The US & China remain in close contact, & leaders will hold a call on Fri as negotiators hammer out the details of a 'phase one' trade agreement, which both sides hope to sign next month at the Asia-Pacific Economic Cooperation summit. Trump has said a comprehensive trade deal might require 2 or 3 phases. The summit was planned in Santiago, Chile, but the country's gov pulled out because of massive protests of gov policy. It is unclear where & when the event will be held now. The longer Beijing waits to give in on key issues, the more damage will be done to the Chinese economy. China's GDP grew at a 6% rate in Q3, the weakest in 26 years. Manufacturing activity, which accounts for about 40% of China's GDP, showed further deterioration in a report released today. The Purchasing Managers Index fell deeper into contraction, with a print of 49.3 in Oct, as new export orders fell for a 17th straight month. It was the 6th straight month the sector has shrunk. Total new orders fell back into contraction after a brief spurt of expansion in Sep, signaling domestic weakness as well. Additionally, Hong Kong, an entry point into the Chinese market for many global investors, has slipped into recesson with GDP contracting by 3.2% in Q3 amid the trade war & pro-democracy protests. Weakness is expected to persist at least thru the end of the year. The US today put forth an olive branch to Beijing by extending exemptions on the 2nd batch of tariffs – 25% on $34B of Chinese goods – that were enacted in Jul 2018. As part of the framework of the phase one deal, the US agreed to not raise existing duties on $250B goods from 25% to 30% on Oct 15. A decision has not yet been made on tariffs on $160B scheduled for Dec 15.
US-China trade deal: Beijing's doubts about 'unpredictable' Trump snarl prospects
Pres Trump said a new location for signing the “phase one” US-China trade deal will be announced soon after the initial gathering in Chile was canceled due to protests. “China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled do to unrelated circumstances,” Trump tweeted. “The new location will be announced soon. President Xi and President Trump will do signing!” Trump said in his tweet that the “phase one” trade deal represents the majority of a long-term agreement. His comment came after a reported today said that China is doubtful about reaching a comprehensive trade deal with the US due to Trump’s “impulsive nature.” Earlier this month, Trump said the US has come to a “very substantial phase one deal” with China, adding phase 2 will start “almost immediately” after the first phase is signed. Trump had said the agreement would address issues such as intellectual property & financial services & include a pledge for China to buy $40-50B in American agricultural products. The limited deal also includes a pause in tariff escalation as the US ditched a planned tariff hike on $250B in Chinese goods set to take effect Oct 15. However, many experts had said the “phase one” deal represents a much smaller portion of what Trump originally set out to pursue.
Trump says new location for signing of ‘phase one’ of US-China trade deal will be announced soon
Excitement about the interest rate cut by the Fed is over & trade issues are on the front burner. Markets are trading much lower & the outlook is glum with cancellation of China trade talks. However, earnings are generally looking good & the US economy is doing well under the circumstances which is keeping the stock indices very close to record highs.
Dow Jones Industrials
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