Dow fell 23, decliners barely ahead of advancers & NAZ pulled back 30. The MLP index dropped 1+ to the 214s (another multi year low) & the REIT index bounced back 1+ to the 403s after yesterday's decline. Junk bond funds declined & Treasuries were purchased again. Oil climbed higher in the 57s & gold recovered 5 to 1489.
AMJ (Alerian MLP Index tracking fund)
Stocks opened lower as markets look to continue their record run. Commodities were higher with West Texas Intermediate crude oil up 0.3% near $57.40 a barrel & gold stronger by 0.4% at $1489 an ounce. Treasuries reversed some of yesterday's losses, with modest buying pushing the yield on the 10-year note down 4.1 basis points to 1.825%. Meanwhile, global stock markets were mostly higher after reports that an incentive to get the "phase one" trade deal done between the US & China, some tariffs may be rolled back. A 15 % cut in tariffs on $111B in Chinese imports is reportedly being discussed. In Europe, Germany's DAX rose 0.2%, France's CAC 40 added 0.3% & London's FTSE was off a tad. Overnight, Tokyo's Nikkei gained 0.2%, Hong Kong's Hang Seng was flat & the Shanghai Composite declined 0.4%.
American workers were less efficient in the Q3, pushing down productivity for the first time since late 2015. The Labor Dept said that productivity, a measure of economic output for each hour worked, fell 0.3% in Q3. The drop comes after 2 qtrs of healthy gains. Still, productivity has increased just 1.4% in the past year, about 2/3 of its long-run average. Weak productivity growth has been a hallmark of the current economic expansion, now in its 11th year. It is a key reason the overall economy has expanded more slowly than in previous expansions. Greater productivity is a key ingredient in raising living standards. It enables companies to lift worker pay without raising prices on customers. Economists point to many different reasons for the current sluggish level of productivity growth. Some argue that new technologies, such as smartphones & mobile software, simply aren't that economically useful. Others say that innovations like search engines, which are free to users, aren't properly captured in gov data. The Trump administration promoted its 2017 corp tax cut as a policy that would raise productivity by encouraging businesses to invest in more computers, machinery & other equipment. Productivity did pick up in H1 after growing modestly in 2018, but it now appears to be dropping back to the slow growth that has occurred since the last ended. The gov report also shows that the low unemployment rate is driving up labor costs by forcing companies to pay more, a trend that could eventually raise inflation. For now, economists say that many corps are absorbing the higher costs by reducing their profit margins, rather than passing the costs on to customers. Labor costs rose at an annual rate of 3.6% in Q3 & are up 3.1% in the past year. The decline in productivity reflects slower economic growth combined with steady hiring. The economy grew just 1.9% in Q3, down from 2% in Q2 & a 3.1% pace in Q1.
Commerce Secretary Wilbur Ross said the US will invest & trade more in Asia as it rolls out an American plan to support "sustainable" projects in Asia as a counterpoint to China's multibillion-dollar "Belt and Road" infrastructure initiative. Ross is leading a high-powered trade mission in Asia and along with national security adviser Robert O'Brien attended meetings at a regional summit that wrapped up Mon on the outskirts of Thailand's capital. Like O'Brien, he sought to dispel suspicions that Pres Trump's administration is disengaging with the region, a sentiment that deepened when Trump sent his adviser to the annual summit, skipping it for a 2nd straight year in order to campaign. "We have no intention of vacating our military or geopolitical position," Ross said. He said many people had misinterpreted Trump's 2017 US decision to pull out of a regional trade deal, the Trans-Pacific Partnership, as a sign of waning interest. "We are here permanently, and we will be continuing to invest more here, and we will be continuing to have more bilateral trade, and I'm spending much more time in the region," Ross added. To illustrate that commitment, US officials launched the Trump administration's "Blue Dot Network" on Mon at a high-powered business conference attended by 1000, including more than 200 American business execs. O'Brien said the initiative would counter the trend toward what he said were projects that were not "high quality" that had led countries into debt traps — alluding to complaints by the US that the vast network of Chinese-backed projects under the "Belt and Road" are undermining the sovereignty & financial stability of the countries involved. But it's part of the administration's foreign policy vision focused on what it calls a "Free and Open Indo-Pacific," laid out when the pres traveled to a summit of the Association of Southeast Asian Nations in Manila, Philippines, 2 years ago that he ended up leaving early. According to US gov figures, trade with the region topped $1.9T in 2018 & helped support more than 3M US jobs.
Chicago Fed leader Charles Evans said that the central bank has moved interest-rate policy to a place where it's modestly supportive of the economy. After 3 rate cuts this year, “policy is not that far off neutral, I would say it’s accommodative,” Evans said. He noted that his assessment of what is likely a neutral central bank rate target has slid from around 2.75% & may be closer to 2% now.
Stocks are taking another pause with little going on the excite the bears or bulls. There is plenty excitement on the trade front, but working out details will take time. Meanwhile the popular averages are essentially at record highs & the volatility index is at a subdued 13.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 57.37 | +0.14 | +0.2% |
| GC=F | Gold | 1,489.30 | +5.60 | +0.4% |
Stocks opened lower as markets look to continue their record run. Commodities were higher with West Texas Intermediate crude oil up 0.3% near $57.40 a barrel & gold stronger by 0.4% at $1489 an ounce. Treasuries reversed some of yesterday's losses, with modest buying pushing the yield on the 10-year note down 4.1 basis points to 1.825%. Meanwhile, global stock markets were mostly higher after reports that an incentive to get the "phase one" trade deal done between the US & China, some tariffs may be rolled back. A 15 % cut in tariffs on $111B in Chinese imports is reportedly being discussed. In Europe, Germany's DAX rose 0.2%, France's CAC 40 added 0.3% & London's FTSE was off a tad. Overnight, Tokyo's Nikkei gained 0.2%, Hong Kong's Hang Seng was flat & the Shanghai Composite declined 0.4%.
Stocks slide as markets look to extend record run
American workers were less efficient in the Q3, pushing down productivity for the first time since late 2015. The Labor Dept said that productivity, a measure of economic output for each hour worked, fell 0.3% in Q3. The drop comes after 2 qtrs of healthy gains. Still, productivity has increased just 1.4% in the past year, about 2/3 of its long-run average. Weak productivity growth has been a hallmark of the current economic expansion, now in its 11th year. It is a key reason the overall economy has expanded more slowly than in previous expansions. Greater productivity is a key ingredient in raising living standards. It enables companies to lift worker pay without raising prices on customers. Economists point to many different reasons for the current sluggish level of productivity growth. Some argue that new technologies, such as smartphones & mobile software, simply aren't that economically useful. Others say that innovations like search engines, which are free to users, aren't properly captured in gov data. The Trump administration promoted its 2017 corp tax cut as a policy that would raise productivity by encouraging businesses to invest in more computers, machinery & other equipment. Productivity did pick up in H1 after growing modestly in 2018, but it now appears to be dropping back to the slow growth that has occurred since the last ended. The gov report also shows that the low unemployment rate is driving up labor costs by forcing companies to pay more, a trend that could eventually raise inflation. For now, economists say that many corps are absorbing the higher costs by reducing their profit margins, rather than passing the costs on to customers. Labor costs rose at an annual rate of 3.6% in Q3 & are up 3.1% in the past year. The decline in productivity reflects slower economic growth combined with steady hiring. The economy grew just 1.9% in Q3, down from 2% in Q2 & a 3.1% pace in Q1.
US productivity falls for first time in years
Commerce Secretary Wilbur Ross said the US will invest & trade more in Asia as it rolls out an American plan to support "sustainable" projects in Asia as a counterpoint to China's multibillion-dollar "Belt and Road" infrastructure initiative. Ross is leading a high-powered trade mission in Asia and along with national security adviser Robert O'Brien attended meetings at a regional summit that wrapped up Mon on the outskirts of Thailand's capital. Like O'Brien, he sought to dispel suspicions that Pres Trump's administration is disengaging with the region, a sentiment that deepened when Trump sent his adviser to the annual summit, skipping it for a 2nd straight year in order to campaign. "We have no intention of vacating our military or geopolitical position," Ross said. He said many people had misinterpreted Trump's 2017 US decision to pull out of a regional trade deal, the Trans-Pacific Partnership, as a sign of waning interest. "We are here permanently, and we will be continuing to invest more here, and we will be continuing to have more bilateral trade, and I'm spending much more time in the region," Ross added. To illustrate that commitment, US officials launched the Trump administration's "Blue Dot Network" on Mon at a high-powered business conference attended by 1000, including more than 200 American business execs. O'Brien said the initiative would counter the trend toward what he said were projects that were not "high quality" that had led countries into debt traps — alluding to complaints by the US that the vast network of Chinese-backed projects under the "Belt and Road" are undermining the sovereignty & financial stability of the countries involved. But it's part of the administration's foreign policy vision focused on what it calls a "Free and Open Indo-Pacific," laid out when the pres traveled to a summit of the Association of Southeast Asian Nations in Manila, Philippines, 2 years ago that he ended up leaving early. According to US gov figures, trade with the region topped $1.9T in 2018 & helped support more than 3M US jobs.
Trump admin hits at China with counter to 'Belt and Road' for Asia
Chicago Fed leader Charles Evans said that the central bank has moved interest-rate policy to a place where it's modestly supportive of the economy. After 3 rate cuts this year, “policy is not that far off neutral, I would say it’s accommodative,” Evans said. He noted that his assessment of what is likely a neutral central bank rate target has slid from around 2.75% & may be closer to 2% now.
Fed’s Evans: Fed Has Moved Policy to Slightly Accommodative Stance
Stocks are taking another pause with little going on the excite the bears or bulls. There is plenty excitement on the trade front, but working out details will take time. Meanwhile the popular averages are essentially at record highs & the volatility index is at a subdued 13.
Dow Jones Industrials
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