Dow surged 301, closing at session highs but short of a new record, advancers over decliners 5-2 & NAZ rose 94. The MLP index recovered 1+ to the 216s (still depressed) & the REIT index was off 1+ to the 411s. Junk bond funds fluctuated & Treasuries remained weak while stocks were being purchased. Oil shot up 2 to the 56s & gold was steady at 1514 (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)
The US & China have reached a "consensus on principles" for the first phase of a trade deal. While full details haven't been disclosed, Beijing is said to be making concessions on financial services & agriculture as part of the pact. The US has agreed not to raise existing duties on $250B of Chinese goods from 25% to 30% on Oct 15. A decision has not yet been made on tariffs on $160B scheduled for Dec 15. "The two sides conducted serious and constructive discussions on properly addressing their core concerns and reached consensus on principles," the Chinese Ministry of Commerce said in a statement after a phone call between negotiators today. "The two sides discussed the next consultation arrangements." Trade Representative Robert Lightheizer said that today's call with China was "constructive" & that the 2 sides "made progress in a variety of areas and are in the process of resolving outstanding issues." Pres Trump has suggested a comprehensive trade deal will have 2 or 3 phases. While phase 1 is not yet done, the 2 sides are close to having something on paper. Earlier today, White House economic adviser Larry Kudlow said the phase one deal was progressing nicely. "“The agriculture chapter is virtually completed,” he said, adding that the financial services & currency stability parts were "virtually wrapped up." Talks involving forced transfer of technology have seen "some progress," but that will likely be part of phase 2, Kudlow added. Trump & Chinese Pres Xi Jinping were hoping to sign a phase one deal next month at the Asia Pacific Economic Cooperation, but the event was canceled due to unrest in Chile. "It was nice having the natural deadline of the Chilean conference, because that made everybody focus on a finite date,” Commerce Secretary Wilbut Ross said. “Hopefully we can resurrect a date right in that range 'cause we know there's a gap in President Trump's calendar. We know there's a gap in President Xi's. So the question ought to be where, not when.”
The World Trade Organization (WTO) said that China can impose tariffs on up to $3.6B worth of US goods over the American gov's failure to abide by anti-dumping rules with regard to Chinese Products. The move hands China its first such payout at the trade body at a time when it is engaged in a big dispute with the US that has bypassed the WTO altogether & resulted in tariffs on hundreds of Bs of $s worth of goods. The announcement from a WTO arbitrator centers on a case with origins long before the current trade standoff: a Chinese complaint filed nearly 6 years ago seeking over $7B in retaliation. The decision means China can impose higher tariffs against the US than China is currently allowed under WTO rules & will be given leeway as to the US products & sectors it would like to target. Parts of a WTO ruling in May 2017 went in favor of China in its case against some 40 US anti-dumping rulings, involving trade limits on Chinese products that the US says are or were sold below market value. However, the WTO arbitrator honed down the award to base it on some 25 Chinese products — including diamond sawblades, furniture, shrimp, solar panels, automotive tires & a series of steel products — that were affected by US anti-dumping measures. That explains why the award was less than the sum China had sought. The decision comes as the US is fresh off a high-profile WTO award against the EU over subsidies given to European plane maker Airbus, which has let the US slap tariffs on $7.5B worth of EU goods including Italian cheese, Scottish whiskey & olives from Spain. While these tariffs are allowed by the WTO under intl trade law, the Trump administration has in its disputes with China & other commercial partners exchanged tariffs unilaterally, without any green light from the WTO. The US & China have filed a number of complaints with the WTO against each others' tariffs, but dispute resolution can take years.
Pres Trump wants the middle class to have more money, according to White House economic adviser Larry Kudlow. Kudlow is currently working “informally” inside the administration on a middle-class tax cut plan, he said. “The president would love to see another round of lower taxes to help middle income for workers and wage earners -- give them as much disposable income as possible,” Kudlow added. Pres Trump's tax cuts 2.0 will be announced during the 2020 presidential campaign, he said. Any tax-law changes would have to be enacted by Congress, which would likely prove difficult in an election year. The last cuts, at the end of 2017, were criticized by Dems, who said they helped wealthy taxpayers & corps at the expense of the middle class & the federal budget. A chronic US revenue shortfall, wiped out during the Clinton administration, reappeared during the George W Bush administration & peaked during the 2008 financial crisis. The Congressional Budget Office predicts it will widen to $1.2T during the 2020s.
Larry Kudlow said the first phase of a US trade deal with China is progressing nicely, despite a news report suggesting wariness in Beijing. Although the pact is not entirely complete, Pres Trump has been optimistic & top US & China trade officials are in the process of negotiating, he said. “The agriculture chapter is virtually completed,” Kudlow said, adding that “it also will open up and reduce a lot of barriers and onerous regulations.” Kudlow said the financial services section, which gives American companies the ability to get to 100% ownership of operations in the country & the currency stability portion are “virtually wrapped up.” There’s been “some progress” on forced transfer of technology, he said, but that will slip into the 2nd phase of trade talks. A complete agreement may take 3 phases, according to the pres, who initiated a trade fight with China by imposing duties on Bs of $s worth of the country's imports in hopes of forcing talks & a trade treaty. Trump has tweeted that he's looking forward to completing phase one & finding a new venue for a signing ceremony with President Xi Jinping after Chile scrapped the economic summit to be held there
Gold futures settled modestly lower but notched a weekly gain, as a closely watched report on US employment came in better than expected, perhaps affirming the perception that the Federal Reserve will likely hold off on further interest rate cuts after delivering its third reduction in a row on Wed. However, weakness in manufacturing activity & lower bond yields capped gold's slide. Gold for Dec fell $3.40 (0.2%) to $1511 an ounce, after gaining 1.2% yesterday, which then marked the highest most-active contract finish since Sep 26 & largest one-day $ % climb since Oct 2. For the week, the precious metal notched a 0.4% advance based on the most-active contracts finish from a week ago. The US created 128K new jobs in Oct, with hiring stronger at the end of summer than previously reported, easily topping the 75K forecast & suggesting the economy is still holding up better than expected despite trade turbulence & a slowdown in global growth. On top of that, job gains for previous months were raised. The gov lifted the increase in new jobs in Sep to 180,K from 136K & Aug's gain were raised to 219K from 168K. The upbeat US employment report is a negative for gold that has prospered on the prospect of a weakening economic outlook. Prices for precious metals also have enjoyed gains amid doubts about the US's ability to secure a substantial trade resolution with China. Earlier this week a news report that said China officials have doubts over prospects for a long-term trade deal with the US fed declines in US stocks & haven demand for gold. Meanwhile, outlays for US construction projects rose 0.5% in Sep at a seasonally adjusted annual rate of $1.29T, the Commerce Dept reported. The forecast called for growth of 0.3%.
Gold ends off 5-week high but tallies weekly gain in a period focused on jobs and Fed
Federal Reserve Vice Chair Richard Clarida said he’s “very happy” with the stance of monetary policy, suggesting the hurdle for more interest rate cuts is high. He was optimistic about the outlook & poked a bit of fun at economists who have been forecasting an economic slowdown. “How many speculations did we see of a terrible labor market report,” Clarida added. Instead, the Oct employment report & the initial reading of Q3 GDP both surprised on the upside this week. “That’s a good thing,” Clarida said. “The economy is very resilient. The consumer has never been in better shape,” Clarida said. On Wed, the Fed cut interest rates by a qtr-point for the 3rd meeting in a row & Fed Chair Jerome Powell signaled the central bank intends to pause to see how the economy fares in the face of a global slowdown & the US-China ongoing trade war. Boston Fed Pres Eric Rosengren, who voted against this week's rate cut, said that fiscal & monetary policy were already accommodative, suggesting the easing was unnecessary. But Clarida said the 3 rate cuts were “appropriate.” “I would be less optimistic about the economy if we had not made those,” 3 rate cuts, he added. Clarida expects to see some improvement in interest-sensitive sectors, particularly in orders for durable goods. The Fed vice chair had one word of caution, saying that the risks to the outlook remains “somewhat” on the downside. Clarida said he wasn't worried about wage inflation. Dallas Federal Reserve Bank Pres Robert Kaplan also said the central bank now has monetary policy at a “roughly” appropriate setting & should leave interest rates where they are for the time being.
The very strong jobs report along with the favorable outlook on the US-China trade deal brought out stock buyers. The Dow closed at session highs & the S&P 500 reached a new record high. Mon is a long way away for some traders, but today's buying is an encouraging signal for the new month.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The US & China have reached a "consensus on principles" for the first phase of a trade deal. While full details haven't been disclosed, Beijing is said to be making concessions on financial services & agriculture as part of the pact. The US has agreed not to raise existing duties on $250B of Chinese goods from 25% to 30% on Oct 15. A decision has not yet been made on tariffs on $160B scheduled for Dec 15. "The two sides conducted serious and constructive discussions on properly addressing their core concerns and reached consensus on principles," the Chinese Ministry of Commerce said in a statement after a phone call between negotiators today. "The two sides discussed the next consultation arrangements." Trade Representative Robert Lightheizer said that today's call with China was "constructive" & that the 2 sides "made progress in a variety of areas and are in the process of resolving outstanding issues." Pres Trump has suggested a comprehensive trade deal will have 2 or 3 phases. While phase 1 is not yet done, the 2 sides are close to having something on paper. Earlier today, White House economic adviser Larry Kudlow said the phase one deal was progressing nicely. "“The agriculture chapter is virtually completed,” he said, adding that the financial services & currency stability parts were "virtually wrapped up." Talks involving forced transfer of technology have seen "some progress," but that will likely be part of phase 2, Kudlow added. Trump & Chinese Pres Xi Jinping were hoping to sign a phase one deal next month at the Asia Pacific Economic Cooperation, but the event was canceled due to unrest in Chile. "It was nice having the natural deadline of the Chilean conference, because that made everybody focus on a finite date,” Commerce Secretary Wilbut Ross said. “Hopefully we can resurrect a date right in that range 'cause we know there's a gap in President Trump's calendar. We know there's a gap in President Xi's. So the question ought to be where, not when.”
US-China trade talks reach 'consensus on principles'
The World Trade Organization (WTO) said that China can impose tariffs on up to $3.6B worth of US goods over the American gov's failure to abide by anti-dumping rules with regard to Chinese Products. The move hands China its first such payout at the trade body at a time when it is engaged in a big dispute with the US that has bypassed the WTO altogether & resulted in tariffs on hundreds of Bs of $s worth of goods. The announcement from a WTO arbitrator centers on a case with origins long before the current trade standoff: a Chinese complaint filed nearly 6 years ago seeking over $7B in retaliation. The decision means China can impose higher tariffs against the US than China is currently allowed under WTO rules & will be given leeway as to the US products & sectors it would like to target. Parts of a WTO ruling in May 2017 went in favor of China in its case against some 40 US anti-dumping rulings, involving trade limits on Chinese products that the US says are or were sold below market value. However, the WTO arbitrator honed down the award to base it on some 25 Chinese products — including diamond sawblades, furniture, shrimp, solar panels, automotive tires & a series of steel products — that were affected by US anti-dumping measures. That explains why the award was less than the sum China had sought. The decision comes as the US is fresh off a high-profile WTO award against the EU over subsidies given to European plane maker Airbus, which has let the US slap tariffs on $7.5B worth of EU goods including Italian cheese, Scottish whiskey & olives from Spain. While these tariffs are allowed by the WTO under intl trade law, the Trump administration has in its disputes with China & other commercial partners exchanged tariffs unilaterally, without any green light from the WTO. The US & China have filed a number of complaints with the WTO against each others' tariffs, but dispute resolution can take years.
China beats US in WTO case, can hit America with $3.5B sanctions
Pres Trump wants the middle class to have more money, according to White House economic adviser Larry Kudlow. Kudlow is currently working “informally” inside the administration on a middle-class tax cut plan, he said. “The president would love to see another round of lower taxes to help middle income for workers and wage earners -- give them as much disposable income as possible,” Kudlow added. Pres Trump's tax cuts 2.0 will be announced during the 2020 presidential campaign, he said. Any tax-law changes would have to be enacted by Congress, which would likely prove difficult in an election year. The last cuts, at the end of 2017, were criticized by Dems, who said they helped wealthy taxpayers & corps at the expense of the middle class & the federal budget. A chronic US revenue shortfall, wiped out during the Clinton administration, reappeared during the George W Bush administration & peaked during the 2008 financial crisis. The Congressional Budget Office predicts it will widen to $1.2T during the 2020s.
Trump wants more money in middle America's wallets: Kudlow
Larry Kudlow said the first phase of a US trade deal with China is progressing nicely, despite a news report suggesting wariness in Beijing. Although the pact is not entirely complete, Pres Trump has been optimistic & top US & China trade officials are in the process of negotiating, he said. “The agriculture chapter is virtually completed,” Kudlow said, adding that “it also will open up and reduce a lot of barriers and onerous regulations.” Kudlow said the financial services section, which gives American companies the ability to get to 100% ownership of operations in the country & the currency stability portion are “virtually wrapped up.” There’s been “some progress” on forced transfer of technology, he said, but that will slip into the 2nd phase of trade talks. A complete agreement may take 3 phases, according to the pres, who initiated a trade fight with China by imposing duties on Bs of $s worth of the country's imports in hopes of forcing talks & a trade treaty. Trump has tweeted that he's looking forward to completing phase one & finding a new venue for a signing ceremony with President Xi Jinping after Chile scrapped the economic summit to be held there
Larry Kudlow breaks down first phase of China trade deal
Gold futures settled modestly lower but notched a weekly gain, as a closely watched report on US employment came in better than expected, perhaps affirming the perception that the Federal Reserve will likely hold off on further interest rate cuts after delivering its third reduction in a row on Wed. However, weakness in manufacturing activity & lower bond yields capped gold's slide. Gold for Dec fell $3.40 (0.2%) to $1511 an ounce, after gaining 1.2% yesterday, which then marked the highest most-active contract finish since Sep 26 & largest one-day $ % climb since Oct 2. For the week, the precious metal notched a 0.4% advance based on the most-active contracts finish from a week ago. The US created 128K new jobs in Oct, with hiring stronger at the end of summer than previously reported, easily topping the 75K forecast & suggesting the economy is still holding up better than expected despite trade turbulence & a slowdown in global growth. On top of that, job gains for previous months were raised. The gov lifted the increase in new jobs in Sep to 180,K from 136K & Aug's gain were raised to 219K from 168K. The upbeat US employment report is a negative for gold that has prospered on the prospect of a weakening economic outlook. Prices for precious metals also have enjoyed gains amid doubts about the US's ability to secure a substantial trade resolution with China. Earlier this week a news report that said China officials have doubts over prospects for a long-term trade deal with the US fed declines in US stocks & haven demand for gold. Meanwhile, outlays for US construction projects rose 0.5% in Sep at a seasonally adjusted annual rate of $1.29T, the Commerce Dept reported. The forecast called for growth of 0.3%.
Gold ends off 5-week high but tallies weekly gain in a period focused on jobs and Fed
Federal Reserve Vice Chair Richard Clarida said he’s “very happy” with the stance of monetary policy, suggesting the hurdle for more interest rate cuts is high. He was optimistic about the outlook & poked a bit of fun at economists who have been forecasting an economic slowdown. “How many speculations did we see of a terrible labor market report,” Clarida added. Instead, the Oct employment report & the initial reading of Q3 GDP both surprised on the upside this week. “That’s a good thing,” Clarida said. “The economy is very resilient. The consumer has never been in better shape,” Clarida said. On Wed, the Fed cut interest rates by a qtr-point for the 3rd meeting in a row & Fed Chair Jerome Powell signaled the central bank intends to pause to see how the economy fares in the face of a global slowdown & the US-China ongoing trade war. Boston Fed Pres Eric Rosengren, who voted against this week's rate cut, said that fiscal & monetary policy were already accommodative, suggesting the easing was unnecessary. But Clarida said the 3 rate cuts were “appropriate.” “I would be less optimistic about the economy if we had not made those,” 3 rate cuts, he added. Clarida expects to see some improvement in interest-sensitive sectors, particularly in orders for durable goods. The Fed vice chair had one word of caution, saying that the risks to the outlook remains “somewhat” on the downside. Clarida said he wasn't worried about wage inflation. Dallas Federal Reserve Bank Pres Robert Kaplan also said the central bank now has monetary policy at a “roughly” appropriate setting & should leave interest rates where they are for the time being.
Fed’s Clarida says he is ‘very happy’ with stance of interest-rate policy
The very strong jobs report along with the favorable outlook on the US-China trade deal brought out stock buyers. The Dow closed at session highs & the S&P 500 reached a new record high. Mon is a long way away for some traders, but today's buying is an encouraging signal for the new month.
Dow Jones Industrials
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