Dow sank 192, decliners over advancers about 4-1 & NAZ edged up 6. The MLP index slid back 2+ to the 127s & the REIT index retreated 3+ to the 326s. Junk bond funds were weak & Treasuries slid lower in price. Oil was even in the 24s & gold fell 15 to 1698.
AMJ (Alerian MLP Index tracking fund)
Economic recovery from the coronavirus will be a "multi-year period" that changes American industry relationship with China, White House trade adviser Peter Navarro said. "I see, for example, a rebirth of our textile industry for the first time in 30 years, because what we're doing now is having that industry make our masks, our gowns and things like that," Navarro said." "This is going to be a multi-year period as we go through, and I think that's why it's important to have somebody in the White House who actually understands economics and the economy," he added. Before the pandemic, the US & China embarked on a multi-phase trade deal to address issues like unfair trade practices that were "gutting" US manufacturing, in Navarro's words. Now, US-China tensions caused by the coronavirus outbreak may throw off such dealings. "The recovery has already begun," Navarro said. "$10 trillion is flooding in now. We are getting back to work, but we're also going to have to tend to these structural issues, and that's what the president is focused on."
Rising tensions between the US & China had an effect on China’s direct investment in the US last year. Investment fell to its lowest level since the last recession, even before the coronavirus pandemic shut down much of global commerce. A report from the National Committee on US-China Relations & the Rhodium Group consultancy found that China's direct investment in the US dropped from $5.4B in 2018 to $5B last year. That is the lowest level since 2009. Direct investment includes mergers, acquisitions & investments in things like offices & factories, but not financial investments like purchases of stocks & bonds. The report found that Chinese direct investment in the US virtually vanished, to $200M, from Jan-Mar this year as the coronavirus pandemic hammered the world economy US investment in China ticked up last year — to $14B from $13B in 2018. But that increase largely reflected previously announced projects, including Tesla's (TSLA) factory in Shanghai. The 2 countries have also sparred over US charges that China uses abusive tactics, including forcing foreign companies to hand over trade secrets & outright cyber-theft, in its effort to surpass American technological dominance. Pres Trump has imposed tariffs on about $360B worth of Chinese goods. The Trump administration & Beijing reached an interim trade agreement in Jan intended to ease the tension. But the pact was quickly overtaken by the pandemic.
Treasury Secretary Steve Mnuchin said the administration is unfazed with the federal gov's historic $3T in spending to combat the impact of the coronavirus thanks to the nation's very low interest rates. “One of the reasons I do feel comfortable with us spending all this money is because interest rates are very low. And we’re taking advantage of long-term rates,” he added. “Between 10 years, 20 years & 30 years, we're borrowing an awful lot of money long term so that we can lock in this $3T for a very, very long period of time.” Mnuchin said the Treasury would stop short of an actual refinancing where it bought back existing debt. He said the White House wants to seize the opportunity afforded by low interest rates in a sort-of “refinancing” without repurchasing existing Treasury notes from the marketplace. “We obviously don’t want to disturb the markets too much, but we’re going to take advantage of refinancing all of our debt to make sure that we have very low rates. I think that’s something that’s a great opportunity for us,” he said. “I don’t think we need to buy back debt. ... I think we have tremendous opportunities without having to buy back debt.” His comments came on the heels of historic gov spending & emergency funding to help US businesses cope with the fallout from the coronavirus pandemic. Pres Trump in Mar signed an unprecedented $2.2T piece of legislation known as the CARES Act that included hundreds of Bs of $ in emergency funding for small businesses struggling through state-imposed commerce closures. Long-term Treasury interest rates are trading near their lowest levels on record. The 10-year note yield was at 0.68%, down from 1.87% in Dec & north of 3% in 2018. The 30-year note yield traded at 1.38%, down from 4.5% in 2011. The combination of a significant spike in federal deficit spending & reduced tax revenues has forced the Treasury to think of new ways to help foster appetite for US bonds. It announced last week that it will launch a new 20-year bond this month in an effort to fund a record $3T in borrowing this qtr.
Mnuchin says he’s comfortable spending so much because of very low rates
Stocks are drifting lower without significant news to bring back buyers. Reopening parts of the economy involves a lot of stumbling & will take time, probably months at a minimum. Meanwhile trade relations with China are fuzzy & major changes are coming to make the US more self reliant. The Dow remains near 24K where it has been for a month.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 25.16 | +0.42 | +1.7% |
| GC=F | Gold | 1,700.60 | -13.30 | -0.8% |
Economic recovery from the coronavirus will be a "multi-year period" that changes American industry relationship with China, White House trade adviser Peter Navarro said. "I see, for example, a rebirth of our textile industry for the first time in 30 years, because what we're doing now is having that industry make our masks, our gowns and things like that," Navarro said." "This is going to be a multi-year period as we go through, and I think that's why it's important to have somebody in the White House who actually understands economics and the economy," he added. Before the pandemic, the US & China embarked on a multi-phase trade deal to address issues like unfair trade practices that were "gutting" US manufacturing, in Navarro's words. Now, US-China tensions caused by the coronavirus outbreak may throw off such dealings. "The recovery has already begun," Navarro said. "$10 trillion is flooding in now. We are getting back to work, but we're also going to have to tend to these structural issues, and that's what the president is focused on."
Coronavirus recovery will be 'multi-year period': Navarro
Rising tensions between the US & China had an effect on China’s direct investment in the US last year. Investment fell to its lowest level since the last recession, even before the coronavirus pandemic shut down much of global commerce. A report from the National Committee on US-China Relations & the Rhodium Group consultancy found that China's direct investment in the US dropped from $5.4B in 2018 to $5B last year. That is the lowest level since 2009. Direct investment includes mergers, acquisitions & investments in things like offices & factories, but not financial investments like purchases of stocks & bonds. The report found that Chinese direct investment in the US virtually vanished, to $200M, from Jan-Mar this year as the coronavirus pandemic hammered the world economy US investment in China ticked up last year — to $14B from $13B in 2018. But that increase largely reflected previously announced projects, including Tesla's (TSLA) factory in Shanghai. The 2 countries have also sparred over US charges that China uses abusive tactics, including forcing foreign companies to hand over trade secrets & outright cyber-theft, in its effort to surpass American technological dominance. Pres Trump has imposed tariffs on about $360B worth of Chinese goods. The Trump administration & Beijing reached an interim trade agreement in Jan intended to ease the tension. But the pact was quickly overtaken by the pandemic.
Chinese investment in US drops to lowest level in years
Treasury Secretary Steve Mnuchin said the administration is unfazed with the federal gov's historic $3T in spending to combat the impact of the coronavirus thanks to the nation's very low interest rates. “One of the reasons I do feel comfortable with us spending all this money is because interest rates are very low. And we’re taking advantage of long-term rates,” he added. “Between 10 years, 20 years & 30 years, we're borrowing an awful lot of money long term so that we can lock in this $3T for a very, very long period of time.” Mnuchin said the Treasury would stop short of an actual refinancing where it bought back existing debt. He said the White House wants to seize the opportunity afforded by low interest rates in a sort-of “refinancing” without repurchasing existing Treasury notes from the marketplace. “We obviously don’t want to disturb the markets too much, but we’re going to take advantage of refinancing all of our debt to make sure that we have very low rates. I think that’s something that’s a great opportunity for us,” he said. “I don’t think we need to buy back debt. ... I think we have tremendous opportunities without having to buy back debt.” His comments came on the heels of historic gov spending & emergency funding to help US businesses cope with the fallout from the coronavirus pandemic. Pres Trump in Mar signed an unprecedented $2.2T piece of legislation known as the CARES Act that included hundreds of Bs of $ in emergency funding for small businesses struggling through state-imposed commerce closures. Long-term Treasury interest rates are trading near their lowest levels on record. The 10-year note yield was at 0.68%, down from 1.87% in Dec & north of 3% in 2018. The 30-year note yield traded at 1.38%, down from 4.5% in 2011. The combination of a significant spike in federal deficit spending & reduced tax revenues has forced the Treasury to think of new ways to help foster appetite for US bonds. It announced last week that it will launch a new 20-year bond this month in an effort to fund a record $3T in borrowing this qtr.
Mnuchin says he’s comfortable spending so much because of very low rates
Stocks are drifting lower without significant news to bring back buyers. Reopening parts of the economy involves a lot of stumbling & will take time, probably months at a minimum. Meanwhile trade relations with China are fuzzy & major changes are coming to make the US more self reliant. The Dow remains near 24K where it has been for a month.
Dow Jones Industrials
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