Dow fell 72, advancers slightly ahead of decliners & NAZ crawled up 5. The MLP index was flattish on the 248s & the REIT index lost 1+ to the 366s. Junk bond funds fluctuated & Treasuries declined, bringing higher yields. Oil rose 1+ to the high 56s & gold was steady at 1321.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
American companies want Pres Trump's negotiations with Beijing to win them real improvements in their access to Chinese markets, not just a smaller overall US trade deficit, a business group said. Companies said last week they want an end to Chinese pressure to hand over technology, unequal enforcement of laws & other chronic problems, said Tim Stratford, chairman of the American Chamber of Commerce in China. If not, he said, their losses in a tariff war “will be a tremendous waste.” The comments appear to reflect support for US officials including Trade Representative Robert Lighthizer who want changes in industrial policy that Beijing's trading partners say violate its free-trade obligations. Others worry that Trump might accept less in return for China narrowing its politically volatile trade surplus with the US thru higher purchases of soybeans & other exports. “If we don’t address the underlying structural issues, we will have continued trade frictions,” Stratford said. Trump's dramatic decision in Jul to hike duties on Chinese imports split the US business world. Some companies support the move to force Beijing into negotiations while others complain the tariffs are too costly & disruptive. Among 150 companies that responded to a questionnaire, 43% want to keep Trump's punitive tariffs of 10% on $200B of Chinese goods in place while negotiations go ahead. Stratford said nearly 10% want Trump to go ahead with a planned Mar 1 increase to 25%. Trump announced Sun he would postpone the Mar 1 increase after weekend talks made “significant progress,” but he set no new date. Both govs said they made progress on technology transfer, protection of intellectual property rights & non-tariff barriers to market access but gave no details. Companies that responded to the questionnaire said they want guarantees Chinese anti-monopoly & other laws will be enforced equally against them & local competitors. “We want a deal that really addresses the persistent problems,” said Stratford. “There are mixed feelings about the tariffs. The majority are in favor.” Trump raised duties in response to complaints China steals or pressures companies to hand over technology. The US wants Beijing to roll back plans including “Made in China 2025,” which calls for gov-led creation of global competitors in robotics & other technology. ¾ of companies in technology & other research-based industries said market restrictions hamper their operations & almost ½ of companies surveyed believe Chinese policies are enforced differently against them & local rivals.
Trade Representative Robert Lighthizer said that the trade deal he is negotiating with China would include a complicated enforcement mechanism that would involve regular consultations with Beijing & reserve the US the right to assess tariffs for Chinese failure to carry out pledges. Lighthizer sketched out the enforcement process the 2 sides are considering in testimony before the House Ways & Means Committee. After his testimony, Lighthizer also said the US would take steps to formally abandon plans to increase tariffs on $200B of Chinese goods to 25%, from 10% now, while the 2 sides continue talking. Pres Trump indicated Sun that the tariff hike, which could have taken effect on Sat, would be suspended. In his testimony, Lighthizer said any deal with China must have strong enforcement provisions to ensure Beijing honors the deal. Complaints of violations would be discussed in a series of consultations, he added—monthly by staffers, quarterly by vice ministers & twice-yearly by ministers of the 2 nations. That last would likely mean Lighthizer & Chinese Vice Premier Liu He, China's special envoy on trade.
New orders for US-made goods barely rose in Dec & business spending on equipment was much weaker than previously thought, pointing to a softening in manufacturing activity. Factory goods orders edged up 0.1%, the Commerce Dept said, amid declining demand for machinery & electrical equipment, appliances & components. Data for Nov was revised slightly up to show factory orders falling 0.5% instead of the previously reported 0.6% drop. The forecast called for factory orders rising 0.5% in Dec. The release of the report was delayed the shutdown of the federal gov. Manufacturing, which accounts for about 12% of the economy, is slowing as some of the boost to capital spending from last year's $1.5T tax cut package fades. In addition, a strong $ & cooling growth in Europe & China are hurting exports. Lower oil prices are also slowing purchases of equipment for oil & gas well drilling. In Dec, orders for machinery dropped 1.0% after tumbling 2.0% in Nov. Orders for mining, oil field & gas field machinery plunged 5.2% after rising 1.9% in Nov. There were also decreases in orders for industrial machinery as well as turbines, generators & other power transmission equipment in Dec. Orders for electrical equipment, appliances & components fell 0.3% after dropping 2.6% in Nov. Orders for transportation equipment rose 3.2% after increasing 3.1% in the prior month. Orders for civilian aircraft & parts jumped 28.4% in Dec. Motor vehicles & parts orders rose 2.4%. The Commerce Dept also said Dec orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, fell 1.0% instead of the 0.7% drop reported last week. Orders for these core capital goods declined 1.1% in Nov. Shipments of core capital goods, which are used to calculate business equipment spending in GDP, were unchanged in Dec instead of the previously reported 0.5% increase.
Factory orders rise less than expected in December
Stocks have pretty much been trading sideways since mid month. The main backdrop of news has been the stumbling trade talks with China & economic data keeps coming in mediocre. The Dow has been staying close to 26K, unable to take the next leg up to a new record. Sideways & lower markets seem to be in the near term future for stocks. The Dow is up 1K in Feb & over 2.6K YTD.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Federal Reserve Chair Jerome Powell says that
the central bank is close to announcing how it will its end its program
to reduce its large holdings of bonds. He
told the House Financial Services Committee that the Fed began a
series of 3 meetings to discuss the issue last fall & has now
worked up the framework for a plan to halt the reduction of its $4T balance sheet. The central bank's plan will result in the end of the asset runoff sometime later this year. The
Fed increased the size of its balance sheet from less than $1T
before the financial crisis to a high of around $4.5T as a way
of putting downward pressure on long-term interest rates. But starting
in Oct 2017, it began reducing the size of those holdings. Powell says that
the Fed is making its decisions on interest rates based on "our best
thinking" & not political considerations. In his
testimony to the House Financial Services Committee, Powell says the Fed
was setting set monetary policy "based on our best thinking and not
political considerations." He said that the Fed's culture in this area
"was a strong one."
The Latest: Fed to end runoff of bond holdings this year
American companies want Pres Trump's negotiations with Beijing to win them real improvements in their access to Chinese markets, not just a smaller overall US trade deficit, a business group said. Companies said last week they want an end to Chinese pressure to hand over technology, unequal enforcement of laws & other chronic problems, said Tim Stratford, chairman of the American Chamber of Commerce in China. If not, he said, their losses in a tariff war “will be a tremendous waste.” The comments appear to reflect support for US officials including Trade Representative Robert Lighthizer who want changes in industrial policy that Beijing's trading partners say violate its free-trade obligations. Others worry that Trump might accept less in return for China narrowing its politically volatile trade surplus with the US thru higher purchases of soybeans & other exports. “If we don’t address the underlying structural issues, we will have continued trade frictions,” Stratford said. Trump's dramatic decision in Jul to hike duties on Chinese imports split the US business world. Some companies support the move to force Beijing into negotiations while others complain the tariffs are too costly & disruptive. Among 150 companies that responded to a questionnaire, 43% want to keep Trump's punitive tariffs of 10% on $200B of Chinese goods in place while negotiations go ahead. Stratford said nearly 10% want Trump to go ahead with a planned Mar 1 increase to 25%. Trump announced Sun he would postpone the Mar 1 increase after weekend talks made “significant progress,” but he set no new date. Both govs said they made progress on technology transfer, protection of intellectual property rights & non-tariff barriers to market access but gave no details. Companies that responded to the questionnaire said they want guarantees Chinese anti-monopoly & other laws will be enforced equally against them & local competitors. “We want a deal that really addresses the persistent problems,” said Stratford. “There are mixed feelings about the tariffs. The majority are in favor.” Trump raised duties in response to complaints China steals or pressures companies to hand over technology. The US wants Beijing to roll back plans including “Made in China 2025,” which calls for gov-led creation of global competitors in robotics & other technology. ¾ of companies in technology & other research-based industries said market restrictions hamper their operations & almost ½ of companies surveyed believe Chinese policies are enforced differently against them & local rivals.
American companies are scared that trade ties with China will get worse
Trade Representative Robert Lighthizer said that the trade deal he is negotiating with China would include a complicated enforcement mechanism that would involve regular consultations with Beijing & reserve the US the right to assess tariffs for Chinese failure to carry out pledges. Lighthizer sketched out the enforcement process the 2 sides are considering in testimony before the House Ways & Means Committee. After his testimony, Lighthizer also said the US would take steps to formally abandon plans to increase tariffs on $200B of Chinese goods to 25%, from 10% now, while the 2 sides continue talking. Pres Trump indicated Sun that the tariff hike, which could have taken effect on Sat, would be suspended. In his testimony, Lighthizer said any deal with China must have strong enforcement provisions to ensure Beijing honors the deal. Complaints of violations would be discussed in a series of consultations, he added—monthly by staffers, quarterly by vice ministers & twice-yearly by ministers of the 2 nations. That last would likely mean Lighthizer & Chinese Vice Premier Liu He, China's special envoy on trade.
U.S. will formally abandon plans to raise tariffs on $200 billion of Chinese goods, Lighthizer says
New orders for US-made goods barely rose in Dec & business spending on equipment was much weaker than previously thought, pointing to a softening in manufacturing activity. Factory goods orders edged up 0.1%, the Commerce Dept said, amid declining demand for machinery & electrical equipment, appliances & components. Data for Nov was revised slightly up to show factory orders falling 0.5% instead of the previously reported 0.6% drop. The forecast called for factory orders rising 0.5% in Dec. The release of the report was delayed the shutdown of the federal gov. Manufacturing, which accounts for about 12% of the economy, is slowing as some of the boost to capital spending from last year's $1.5T tax cut package fades. In addition, a strong $ & cooling growth in Europe & China are hurting exports. Lower oil prices are also slowing purchases of equipment for oil & gas well drilling. In Dec, orders for machinery dropped 1.0% after tumbling 2.0% in Nov. Orders for mining, oil field & gas field machinery plunged 5.2% after rising 1.9% in Nov. There were also decreases in orders for industrial machinery as well as turbines, generators & other power transmission equipment in Dec. Orders for electrical equipment, appliances & components fell 0.3% after dropping 2.6% in Nov. Orders for transportation equipment rose 3.2% after increasing 3.1% in the prior month. Orders for civilian aircraft & parts jumped 28.4% in Dec. Motor vehicles & parts orders rose 2.4%. The Commerce Dept also said Dec orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, fell 1.0% instead of the 0.7% drop reported last week. Orders for these core capital goods declined 1.1% in Nov. Shipments of core capital goods, which are used to calculate business equipment spending in GDP, were unchanged in Dec instead of the previously reported 0.5% increase.
Factory orders rise less than expected in December
Stocks have pretty much been trading sideways since mid month. The main backdrop of news has been the stumbling trade talks with China & economic data keeps coming in mediocre. The Dow has been staying close to 26K, unable to take the next leg up to a new record. Sideways & lower markets seem to be in the near term future for stocks. The Dow is up 1K in Feb & over 2.6K YTD.
Dow Jones Industrials
