Dow dropped 155, decliners over advancers better than 2-1 & NAZ lost 105. The MLP index dipped slightly to go under 201 & the REIT index fell 4 to the 401s. Junk bond funds fluctuated & Treasuries were sold. Oil climbed to the 56s & gold like stocks was also sold, down 5 to 1467.
AMJ (Alerian MLP Index tracking fund)
One-qtr of multinational companies have no contingency plans should the US-China trade war drag on, according to a survey that gathered more than 260 anonymous responses from businesses. "When asked about how many months’ worth of contingency plans their organization has in place to cope with the effects of the trade war, the answers showed that companies were still falling short in terms of risk mitigation planning," wrote the authors of the study, which was conducted by German logistics company DHL. 25% of respondents said they had no contingency plans, 20.4% said they had plans for up to 6 months & 34% said they had prepared for 6-18 months out. The companies represented industries including health care, technology & technology, automotive, energy, retail, chemicals & more. The least prepared sectors were engineering & manufacturing (47.6% had no contingency plans) & automotive & mobility (40% had no plans). Even though a big chunk of firms surveyed said they had no contingency plans, more than 2/3 reported being impacted by US-China trade tensions. China expects the US to roll back some tarifss on its exports as part of a trade deal, an official newspaper said oday, reiterating Beijing's insistence that Pres Trump's administration can be "flexible" & "reasonable." The comments come amid negotiations on a preliminary "phase one" agreement aimed at resolving the tariff war between the 2 large economies. New US tariffs are set to kick in on many Chinese-made products as of Dec 15. A preliminary deal could avert that.
China expects the US to roll back some tariffs on its exports as part of a trade deal, an official newspaper said, reiterating Beijing's insistence that Pres Trump's administration be “flexible” & “reasonable.” The Communist Party newspaper Global Times ran several articles today that emphasized there would be no deal without a promise to phase out the tariffs imposed by DC. It cited officials saying that China will buy American farm products & the amount “could be substantial, but it cannot promise a specific number in the deal because the amount must be based on market demands.” The comments come amid negotiations on a preliminary “Phase 1” agreement aimed at resolving the 18-month-old tariff war between the 2 economies. “Rolling back tariffs is a must. The China-US trade war (was) instigated by the US with tariffs, so the tariffs have to be cut first,” the newspaper quoted Wei Jianguo, a former Chinese commerce minister as saying. It said China was already addressing issues such as protection of intellectual property, foreign investment regulations & opening of its financial markets independently of the trade talks. Chinese officials earlier said the US side had agreed to gradually phase out the tariffs as progress is made on ending the dispute over trade & technology. The US side did not confirm that. Last week, both sides suggested that they were close to striking a deal. Chinese Vice Premier Liu He said he had invited senior US officials to Beijing for further talks. Trump said the talks were in their “final throes” of negotiations. That was before China reacted with outrage to Trump's decision to sign legislation supporting human rights in Hong Kong. Officials have not yet specified how or if Beijing will follow through on threats of “countermeasures.” New US tariffs are set to kick in on many Chinese-made products as of Dec 15. A preliminary deal could avert that. But promising to not implement the next tranche of tariffs would not suffice, the Global Times said. It said there was a “reasonable choice” for Trump to roll back some tariffs for the first deal & leave others for later, to “save the optics of the deal in the U.S. political climate and save the phase one deal.”
Manufacturing activity continued to lag in Nov amid a lag in inventories & new orders, according to the latest ISM Manufacturing reading. The reading came in at 48.1 vs. an expectation of 49.4 & the previous month’s reading of 48.3. Though the ISM reading is usually reported as a simple number, it actually denotes the percentage of manufacturers planning to expand operations. A reading below 50 represents contraction; Nov was the 4th straight month below the expansion level. Stocks fell on the report. New orders slumped to 47.2, down 1.9 percentage points from Oct's 49.1. Inventories, which are a key input for GDP, came in at 45.5, down 3.4 points from the previous month. The numbers come amid speculation about the pace of US growth. Recession worries have ebbed from earlier in the year, when the Treasury yield curve was inverted & flashing what has been a reliable 12-month recession indicator for the past 50 years. GDP growth has averaged around 2.4% in 2019, with Q3 coming in at 2.1%. However, most forecasters expect Q4 to come in under 2%. Manufacturing is considered a reliable bellwether for how the rest of the economy is doing, though it comprises only about 1/5 of GDP. Nearly all of the key ISM indicators were at contraction levels in Nov. Employment was at 46.6, down 1.1 point for the month, while export orders fell 2.5 points to 47.9 as the US & China continue to look for a resolution to a trade dispute that began more than a year & a ½ ago. Supplier deliveries was one of the few metrics in expansion, rising 2.5 points to 52. In a related release, the Markit manufacturing reading, known as the Purchasing Managers Index, indicated expansion, coming in at 52.6, just above expectations & a bit better than the 51.3 Oct reading. The Markit PMI growth reflected an uptick in production & new orders as well as strength in employment indicators. It was the strongest reading in 7 months.
A key manufacturing index shows the US remains in contraction territory
Gloomy news on manufacturing data sent stocks lower. More economic data is coming this week, highlighted by the big jobs report on Fri. Traders are nervous. Additional stumbling on the trade negotiations are not helping stocks.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 56.09 | +0.92 | +1.7% |
| GC=F | Gold | 1,467.90 | -4.80 | -0.3% |
One-qtr of multinational companies have no contingency plans should the US-China trade war drag on, according to a survey that gathered more than 260 anonymous responses from businesses. "When asked about how many months’ worth of contingency plans their organization has in place to cope with the effects of the trade war, the answers showed that companies were still falling short in terms of risk mitigation planning," wrote the authors of the study, which was conducted by German logistics company DHL. 25% of respondents said they had no contingency plans, 20.4% said they had plans for up to 6 months & 34% said they had prepared for 6-18 months out. The companies represented industries including health care, technology & technology, automotive, energy, retail, chemicals & more. The least prepared sectors were engineering & manufacturing (47.6% had no contingency plans) & automotive & mobility (40% had no plans). Even though a big chunk of firms surveyed said they had no contingency plans, more than 2/3 reported being impacted by US-China trade tensions. China expects the US to roll back some tarifss on its exports as part of a trade deal, an official newspaper said oday, reiterating Beijing's insistence that Pres Trump's administration can be "flexible" & "reasonable." The comments come amid negotiations on a preliminary "phase one" agreement aimed at resolving the tariff war between the 2 large economies. New US tariffs are set to kick in on many Chinese-made products as of Dec 15. A preliminary deal could avert that.
Survey shows real danger to US business from China trade war
China expects the US to roll back some tariffs on its exports as part of a trade deal, an official newspaper said, reiterating Beijing's insistence that Pres Trump's administration be “flexible” & “reasonable.” The Communist Party newspaper Global Times ran several articles today that emphasized there would be no deal without a promise to phase out the tariffs imposed by DC. It cited officials saying that China will buy American farm products & the amount “could be substantial, but it cannot promise a specific number in the deal because the amount must be based on market demands.” The comments come amid negotiations on a preliminary “Phase 1” agreement aimed at resolving the 18-month-old tariff war between the 2 economies. “Rolling back tariffs is a must. The China-US trade war (was) instigated by the US with tariffs, so the tariffs have to be cut first,” the newspaper quoted Wei Jianguo, a former Chinese commerce minister as saying. It said China was already addressing issues such as protection of intellectual property, foreign investment regulations & opening of its financial markets independently of the trade talks. Chinese officials earlier said the US side had agreed to gradually phase out the tariffs as progress is made on ending the dispute over trade & technology. The US side did not confirm that. Last week, both sides suggested that they were close to striking a deal. Chinese Vice Premier Liu He said he had invited senior US officials to Beijing for further talks. Trump said the talks were in their “final throes” of negotiations. That was before China reacted with outrage to Trump's decision to sign legislation supporting human rights in Hong Kong. Officials have not yet specified how or if Beijing will follow through on threats of “countermeasures.” New US tariffs are set to kick in on many Chinese-made products as of Dec 15. A preliminary deal could avert that. But promising to not implement the next tranche of tariffs would not suffice, the Global Times said. It said there was a “reasonable choice” for Trump to roll back some tariffs for the first deal & leave others for later, to “save the optics of the deal in the U.S. political climate and save the phase one deal.”
China repeats demand for rollback of US tariffs for deal
Manufacturing activity continued to lag in Nov amid a lag in inventories & new orders, according to the latest ISM Manufacturing reading. The reading came in at 48.1 vs. an expectation of 49.4 & the previous month’s reading of 48.3. Though the ISM reading is usually reported as a simple number, it actually denotes the percentage of manufacturers planning to expand operations. A reading below 50 represents contraction; Nov was the 4th straight month below the expansion level. Stocks fell on the report. New orders slumped to 47.2, down 1.9 percentage points from Oct's 49.1. Inventories, which are a key input for GDP, came in at 45.5, down 3.4 points from the previous month. The numbers come amid speculation about the pace of US growth. Recession worries have ebbed from earlier in the year, when the Treasury yield curve was inverted & flashing what has been a reliable 12-month recession indicator for the past 50 years. GDP growth has averaged around 2.4% in 2019, with Q3 coming in at 2.1%. However, most forecasters expect Q4 to come in under 2%. Manufacturing is considered a reliable bellwether for how the rest of the economy is doing, though it comprises only about 1/5 of GDP. Nearly all of the key ISM indicators were at contraction levels in Nov. Employment was at 46.6, down 1.1 point for the month, while export orders fell 2.5 points to 47.9 as the US & China continue to look for a resolution to a trade dispute that began more than a year & a ½ ago. Supplier deliveries was one of the few metrics in expansion, rising 2.5 points to 52. In a related release, the Markit manufacturing reading, known as the Purchasing Managers Index, indicated expansion, coming in at 52.6, just above expectations & a bit better than the 51.3 Oct reading. The Markit PMI growth reflected an uptick in production & new orders as well as strength in employment indicators. It was the strongest reading in 7 months.
A key manufacturing index shows the US remains in contraction territory
Gloomy news on manufacturing data sent stocks lower. More economic data is coming this week, highlighted by the big jobs report on Fri. Traders are nervous. Additional stumbling on the trade negotiations are not helping stocks.
Dow Jones Industrials
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