Dow dropped 193, decliners slightly ahead of advancers & NAZ lost 81. The MLP index added 2 to the 127s & the REIT index fell 5 to 299. Junk bond funds were weak & Treasuries drifted lower, bringing higher yields. Oil rose 1 to the 28s & gold advanced 10 to 1751.
AMJ (Alerian MLP Index tracking fund)
American industry recorded the biggest drop on record last month as factories, mines & utilities were all battered by the economic fallout from the coronavirus pandemic. The Federal Reserve said that its industrial production index plunged a record 11.2% in Apr. Manufacturing output also posted a record drop — 13.7% — as production of cars, trucks & auto parts plummeted more than 70%. Output dropped 6.1% at mines & 0.9% at utilities.
US-China tensions rise as Trump administration moves to cut Huawei off from global chip suppliers
The economic data today was extremely dreary. The charts show trend lines fell off a cliff in Apr. Germany reported that its economy (the largest in Europe) contracted, putting in into a recession. And US trade tensions with China are going from bad to worse. However, the chart below for the Dow shows it has been able to hold up for the last 6 weeks. The challenge is for the bulls to keep the averages at these levels as more disappointing economic data comes in. Meanwhile gold is getting nearer to record levels around 1900.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 28.84 | +1.28 | +4.6% |
| GC=F | Gold | 1,750.10 | +9.20 | +0.5% |
American industry recorded the biggest drop on record last month as factories, mines & utilities were all battered by the economic fallout from the coronavirus pandemic. The Federal Reserve said that its industrial production index plunged a record 11.2% in Apr. Manufacturing output also posted a record drop — 13.7% — as production of cars, trucks & auto parts plummeted more than 70%. Output dropped 6.1% at mines & 0.9% at utilities.
Industrial production plunges unprecedented 11.2% in April
Consumer spending tumbled a record 16.4% in Apr
as the backbone of the US economy retrenched amid the coronavirus
pandemic, according to a gov report. The forecast called for the retail sales number to fall
12.3% after Mar's reported 8.3% dive already had set a record for data
going back to 1992. The Mar numbers were revised to be not as bad as
the 8.7% initially reported. Some
68% of the nation's $21.5T economy comes from personal
consumption expenditures, which tumbled 7.6% in Q1 just
as social distancing measures aimed at containing the coronavirus began
to take effect. The data showed that the slowdown continued
into the first part of Q2 as layoffs began to mount &
consumers went into lockdown. Clothing stores
took the biggest hit with a 78.8% tumble. Other big losers were
electronics & appliances (-60.6%), furniture & home furnishing
(-58.7%) sporting goods (-38%), & bars & restaurants (-29.5%).
Nonstore retailers rose 8.4%. Total spending amounted to $404B, with the biggest factor in the downturn being a collapse in
clothing & accessories that amounted to a 78.8% fall. Retail trade
overall saw a 15.1% drop from Mar & a 17.8% slide from Apr 2019. The
retail industry, particularly brick & mortar stores, already had been
in a state of peril, & the coronavirus measures have only added to
the misery.
Retail sales plunge a record 16.4% in April, far worse than predicted
The Trump administration moved to block
shipments of semiconductors to Huawei Technologies from global
chipmakers, in an action that could ramp up tensions with China. The
Commerce Dept said it was amending an export rule to
“strategically target Huawei’s acquisition of semiconductors that are
the direct product of certain U.S. software and technology.” The dept added the “announcement cuts off Huawei’s efforts to undermine U.S. export controls.” The
rule change is a blow to Huawei, the world’s #2 smartphone maker, as
well as to Taiwan's TSMC, a major producer of chips for Huawei's
HiSilicon unit as well as mobile phone rivals Apple (AAPL), a Dow stock, & Qualcomm (QCOM). Huawei,
which needs semiconductors for its widely used smartphones & telecoms
equipment, is at the heart of a battle for global technological
dominance between the US & China. The US
is trying to convince allies to exclude Huawei gear from next-generation
5G networks on grounds its equipment could be used by China for spying.
Huawei has repeatedly denied the claim. Huawei has continued to
use US software & technology to design semiconductors, the Commerce
Dept said, despite being placed on a US economic blacklist in
May 2019. Under
the rule change, foreign companies that use US chipmaking equipment
will be required to obtain a US license before supplying certain chips
to Huawei, or an affiliate like HiSilicon. In order for Huawei to
continue to receive some chipsets or use some semiconductor designs
tied to certain US software & technology, it would need to receive
licenses from the Commerce Dept. The
rule change is to “prevent U.S. technologies from enabling malign
activities contrary to U.S. national security and foreign policy
interests,” Commerce Secretary Wilbur Ross said, adding
Huawei & its affiliates “have stepped-up efforts to undermine these
national security-based restrictions.”
US-China tensions rise as Trump administration moves to cut Huawei off from global chip suppliers
The economic data today was extremely dreary. The charts show trend lines fell off a cliff in Apr. Germany reported that its economy (the largest in Europe) contracted, putting in into a recession. And US trade tensions with China are going from bad to worse. However, the chart below for the Dow shows it has been able to hold up for the last 6 weeks. The challenge is for the bulls to keep the averages at these levels as more disappointing economic data comes in. Meanwhile gold is getting nearer to record levels around 1900.
Dow Jones Industrials
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