Dow slipped back 8 after being in the red most of the day, advancers slightly ahead of the decliners & NAZ added 39. The MLP index was about even in the 141s & the REIT index went up 1+ to the 322s. Junk bond funds did little & Treasuries remained in demand while stocks were weak. Oil slumped to the 33s & gold rose 12 to 1734 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Under leader Xi Jinping, China has established itself as an increasingly assertive global player, pushing back forcefully against challenges at home and abroad. But even as Beijing tightens its grip on Hong Kong & steps up its rhetoric against the US, senior leaders bowed to the inevitable, acknowledging the scope of the challenges facing the economy -- the bedrock of much of the country's recent strength. Premier Li Keqiang abandoned the country's annual GDP target for the first time in more than a qtr-century, citing "factors that are difficult to predict" -- most notably the coronavirus pandemic & uncertainties around trade. Mr Li & his fellow Chinese policymakers are portraying the decision as a liberating one. He said the lack of a growth target would enable them to focus on ensuring stability & security. There is an element of truth there. China"s economy is slowly plateauing after an extended run of world-beating growth & leaders have in recent years de-emphasized explicit growth targets anyway, increasingly regarding them as burdensome. In Mar, Mr Li called on officials to prioritize employment over raw GDP growth, underscoring the senior leadership's concerns about social instability. "As long as employment is stable this year, it's not that big of a deal whether the economic growth rate is a bit higher or lower, " he said. Even so, dropping the GDP target for the year, long the lodestar of Chinese economic policy, is a humbling moment, forcing Mr Xi to give up on one of the Chinese leadership's most vaunted political goals: to double the economy's size from a decade earlier ahead of next year's centennial of the Chinese Communist Party's founding. Officials have already begun to lower expectations. He Lifeng, the head of China's main economic-planning body, said that even meager GDP growth this year of 1% would expand overall GDP by 1.9 times from a decade earlier -- not quite double, but close enough.
China's plan to impose national security legislation in Hong Kong is expected to lead to the flight of capital & talent from the Asian financial hub, bankers & headhunters said. The proposed legislation, which prompted concerns over freedoms in the semi-autonomous city, comes after large-scale & often violent pro-democracy demonstrations last year, which had already pushed some wealthy individuals to scout for investment options elsewhere. Globally, Hong Kong ranked 2nd in wealth per adult after Switzerland in mid-2019 & the city ranked 10th in terms of the number of ultra-high net worth individuals or those with more than $50M in assets. Hong Kong competes fiercely with Singapore to be considered Asia's premier financial centre. Global private banks as well as Asian wealth managers have their regional operations in the 2 hubs. The American Chamber of Commerce (AmCham) in Hong Kong said the enactment of the law could “jeopardize future prospects” for international business, particularly if details are not spelled out. “No one wins if the foundation for Hong Kong’s role as a prime international business and financial centre is eroded,” Robert Grieves, chairman of AmCham in Hong Kong said. Hong Kong's vaunted rule of law is widely seen as a major factor for global financial institutions that make the former British colony their regional home and use it as their main trade & other dispute-resolution center. Pro-democracy activists & politicians in Hong Kong have for years opposed the idea of having to adhere to Chinese national security laws, arguing they could erode the city's high degree of autonomy, guaranteed under the “one country, two systems” handover agreement reached in 1997.
Oil futures fell, with US prices set to break the longest winning streak in more than a year over worries about China growth & fresh friction between DC & Beijing. Jul West Texas Intermediate oil fell 76¢ (2.2%) to $33.16 a barrel. On Thurs, the contract posted a gain for a sixth straight session—the longest since Feb 2019. Prices rose 1.3% yesterday to settle at $33.91, the highest since Mar 10, based on the front-month contracts. For the week, the US benchmark traded more than 12% higher. Global benchmark Brent crude for Jul dropped $1.08 (3%) to $34.98 a barrel, with prices set for a weekly climb of nearly 8%. The contract rose 0.9% to settle at $36.06 a barrel yesterday, the highest settlement since Mar 10. Investors were rattled by concerns of fresh unrest in Hong Kong after news the Chinese gov is considering a sweeping national security law that could curtail the territory's autonomy. Pres Trump said that the US would react “strongly” toward those moves on Hong Kong. Last year saw increasingly violent protests in the financial hub, though the coronavirus outbreak slowed some of that activity. China's top economic official said that the country won’t set a growth target for 2020 & pledged to spend more to repair economic damage from the coronavirus outbreak.
Oil prices settle lower on fears about China turbulence, but score a weekly gain
Some traders began their holiday weekends early, not much action in the stock market. There is growing attention to the goings on in China & its economy. Maybe more information will come out next week. The Dow was up 300 this week, about 650 in Msy but down over 4K YTD. Have a good holiday weekend.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Under leader Xi Jinping, China has established itself as an increasingly assertive global player, pushing back forcefully against challenges at home and abroad. But even as Beijing tightens its grip on Hong Kong & steps up its rhetoric against the US, senior leaders bowed to the inevitable, acknowledging the scope of the challenges facing the economy -- the bedrock of much of the country's recent strength. Premier Li Keqiang abandoned the country's annual GDP target for the first time in more than a qtr-century, citing "factors that are difficult to predict" -- most notably the coronavirus pandemic & uncertainties around trade. Mr Li & his fellow Chinese policymakers are portraying the decision as a liberating one. He said the lack of a growth target would enable them to focus on ensuring stability & security. There is an element of truth there. China"s economy is slowly plateauing after an extended run of world-beating growth & leaders have in recent years de-emphasized explicit growth targets anyway, increasingly regarding them as burdensome. In Mar, Mr Li called on officials to prioritize employment over raw GDP growth, underscoring the senior leadership's concerns about social instability. "As long as employment is stable this year, it's not that big of a deal whether the economic growth rate is a bit higher or lower, " he said. Even so, dropping the GDP target for the year, long the lodestar of Chinese economic policy, is a humbling moment, forcing Mr Xi to give up on one of the Chinese leadership's most vaunted political goals: to double the economy's size from a decade earlier ahead of next year's centennial of the Chinese Communist Party's founding. Officials have already begun to lower expectations. He Lifeng, the head of China's main economic-planning body, said that even meager GDP growth this year of 1% would expand overall GDP by 1.9 times from a decade earlier -- not quite double, but close enough.
China concedes severity of economic obstacles by dropping growth target
China's plan to impose national security legislation in Hong Kong is expected to lead to the flight of capital & talent from the Asian financial hub, bankers & headhunters said. The proposed legislation, which prompted concerns over freedoms in the semi-autonomous city, comes after large-scale & often violent pro-democracy demonstrations last year, which had already pushed some wealthy individuals to scout for investment options elsewhere. Globally, Hong Kong ranked 2nd in wealth per adult after Switzerland in mid-2019 & the city ranked 10th in terms of the number of ultra-high net worth individuals or those with more than $50M in assets. Hong Kong competes fiercely with Singapore to be considered Asia's premier financial centre. Global private banks as well as Asian wealth managers have their regional operations in the 2 hubs. The American Chamber of Commerce (AmCham) in Hong Kong said the enactment of the law could “jeopardize future prospects” for international business, particularly if details are not spelled out. “No one wins if the foundation for Hong Kong’s role as a prime international business and financial centre is eroded,” Robert Grieves, chairman of AmCham in Hong Kong said. Hong Kong's vaunted rule of law is widely seen as a major factor for global financial institutions that make the former British colony their regional home and use it as their main trade & other dispute-resolution center. Pro-democracy activists & politicians in Hong Kong have for years opposed the idea of having to adhere to Chinese national security laws, arguing they could erode the city's high degree of autonomy, guaranteed under the “one country, two systems” handover agreement reached in 1997.
Hong Kong bankers worry that new laws could lead to capital flight
Gold prices ended higher as testiness between the US & China fed risk-off sentiment, drawing investors into assets considered to be havens, including gov debt & the Japanese ¥. However, analysts said continuing plans to reopen economies that have been frozen by the COVID-19 pandemic & hope for remedies for the virus have limited the upside in precious metals, sending gold lower for the week. Gold for Jun rose $13 (0.8%) to settle at $1735 an ounce, after the yellow metal dropped 1.7% yesterday marking its first decline in 3 sessions. Front-month contract prices saw a weekly loss of 1.2%. China moved to impose new national-security laws on Hong Kong. The proposed laws would challenge the semiautonomous country's governance & appeared to draw a swift rebuke from the US. It was reported that US senators were introducing a bipartisan bill that would sanction Chinese officials & entities who enforce the new Hong Kong laws & penalize banks that do business with the entities. The bill proposal comes amid heightened friction between the Trump administration & the China, with Beijing being blamed for mishandling the coronavirus, which was first identified in Wuhan in Dec & has infected more than 5.1M globally.Gold prices end higher amid U.S.-China tensions, but post a weekly decline
Oil futures fell, with US prices set to break the longest winning streak in more than a year over worries about China growth & fresh friction between DC & Beijing. Jul West Texas Intermediate oil fell 76¢ (2.2%) to $33.16 a barrel. On Thurs, the contract posted a gain for a sixth straight session—the longest since Feb 2019. Prices rose 1.3% yesterday to settle at $33.91, the highest since Mar 10, based on the front-month contracts. For the week, the US benchmark traded more than 12% higher. Global benchmark Brent crude for Jul dropped $1.08 (3%) to $34.98 a barrel, with prices set for a weekly climb of nearly 8%. The contract rose 0.9% to settle at $36.06 a barrel yesterday, the highest settlement since Mar 10. Investors were rattled by concerns of fresh unrest in Hong Kong after news the Chinese gov is considering a sweeping national security law that could curtail the territory's autonomy. Pres Trump said that the US would react “strongly” toward those moves on Hong Kong. Last year saw increasingly violent protests in the financial hub, though the coronavirus outbreak slowed some of that activity. China's top economic official said that the country won’t set a growth target for 2020 & pledged to spend more to repair economic damage from the coronavirus outbreak.
Oil prices settle lower on fears about China turbulence, but score a weekly gain
Some traders began their holiday weekends early, not much action in the stock market. There is growing attention to the goings on in China & its economy. Maybe more information will come out next week. The Dow was up 300 this week, about 650 in Msy but down over 4K YTD. Have a good holiday weekend.
Dow Jones Industrials
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