trade war

TRADE WAR MOVES TO DEFCON 4

Stocks gapped down at the open this morning. The Dow is currently down 350 pts and the SPX is down 1.5%. Nearly every sector of the market is down more than 1%, led by energy and tech (-2%). Domestically oriented stocks like healthcare insurance, real estate and utilities are holding steady. But companies exposed to the trade war are getting hit. A lot of this is headline driven (see below). The VIX Index spiked to 17.5. Commodities are falling in value, save gold (+1.5%). WTI crude oil is down 3% to $53.60/barrel. Bonds are sopping up the negativity and benefiting from it. The 10-year Treasury Note yield fell back to 1.55% and the iShares 20+ Year Treasury Bond ETF (TLT) is up nearly .9% this morning. The often cited “yield curve” difference between the 2-year and 10-year Treasury yields is still barely positive. This is a technical indicator bond traders watch in order to gauge the chances of an economic recession within the next year or two.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

RELIEF RALLY

Stocks jumped at the open (Dow +260 pts; SPX +1.25%) after the Secretary of Commerce said President Trump intends to delay restrictions on US companies doing business with China’s Huawei Technologies. This has been flashpoint between US and Chinese trade negotiators, with the president using it alternatively as a carrot and then a stick. Traders are enjoying the carrot today; maybe we’ll see the stick again tomorrow or next week. UBS’s Rob Sechan says 85% of stock exchange trade volume during this month’s correction has been either ETF or algo-based—in other words, driven by short-term traders. All eleven major market sectors are in the green today. The cyclical sectors like energy, tech and consumer discretionary are leading the charge, up more than 1.3%. Interest rates jumped, allowing the banks to rally as well. WTI crude oil bounced back to $55.50/barrel, and gold is down .8%. Bonds sold off on higher yields. The 10-year Treasury yield climbed back to 1.60%. Junk bond are the exception, up .25%, as they typically trade along with stocks.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

TRADE WAR IS TAKING A TOLL

Stocks opened modestly higher this morning (Dow +38 pts; SPX +.16%). Defensive sectors—utilities, consumer staples, real estate—are leading way. On the other hand, energy, industrials and tech are flat to down in early trading. The VIX Index is holding its ground at 21.8 and VIX September futures are trading at 20.4. So despite incredibly bearish financial news media coverage, trading aren’t panicking. European markets will close slightly lower, whereas Asian markets were mostly higher overnight. Oil is down in price again; WTI crude is down 1% to trade around $54.60/barrel. The dollar is stronger after hints by an official at the European Central Bank (ECB) that a bigger monetary stimulus package is coming. Bonds are trading uniformly higher today as yields continue to drop. Junk bonds are up about .25% after some better than expected reports on the economy. But Treasuries are also catching a bid. The 10-year Treasury Note yield has fallen to just 1.55%, the lowest since September 2016.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

THE BOND MARKET IS DRIVING THE BUS

Stocks opened sharply lower today (Dow -590 pts; SPX -2.1%). Financials and energy are leading the market lower, down by over 3% in early trading. The only sector in the green is utilities, up .4%. The SPX is still about 1.5% higher than it fell on Monday August 5th, so this is not even the worst day for stocks this month. Machine trading has taken over in reaction to falling yields in the bond market, and also lower trade volume. The VIX Index climbed back to 21, but that’s pretty tame compared with the spike above 35 we saw last December. As opposed to yesterday, everyone wants to be first to call the next recession. Scanning Bloomberg headlines, we see the following:

“Bond Panic Pummels Banks with Global Recession Fears…”

“Countdown to Catastrophe? The Yield Curve and Stock Bull Markets”

“Recession Worries Pile Up for the Battered Global Economy”


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

HONG KONG JITTERS

The major US stock market averages dived in early trading on continued social unrest in Hong Kong. The Dow is currently down 239 pts and the SPX is down .7%. Ten of eleven market sectors are in the red; financials & energy are the worst performing. As is typical in August, exchange trade volume is pretty low. European markets are poised to close slightly lower today. Strangely enough, most of Asia closed higher last night. Despite intensified pro-democracy protests, Hong Kong’s Hang Seng stock index fell only .4% during the session. The US dollar continued to strengthen vs. China’s yuan and that’s putting some pressure on commodities (i.e. iron ore, copper, agricultural goods). WTI crude oil is unchanged around $54.50/barrel. Bonds are once again powering ahead as yields edge lower. The iShares 20+ Year Treasury Bond ETF (TLT) is up 1.5% today (and 17% on the year). High-grade corporates are up about .4%. On the other hand, Junk bonds are down .3%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

VOLATILITY IS HERE TO STAY IN AUGUST

Stocks opened lower this morning, taking a breather after two days of gains. The Dow is down 218 pts and the SPX is down 1%. Technology (-1.7%) and energy (-1.3%) are the worst performing sectors. Only utilities are holding flat. The VIX Index climbed back to 18.5 this morning. European stock markets (and those in China) closed down by about 1%. Commodities are mostly lower on the day, save oil. Oddly enough, WTI crude oil spiked more than 3% to trade at $54.40/barrel even after an IEA report showed global oil demand at a decade low. It’s no secret that slower global economic growth is bringing down the rate of demand growth; at the same time, US producers continue to pump oil near record levels. It just goes to show that speculation and manipulation are rampant with commodities, and day-to-day prices moves often don’t make sense. Safe-haven Treasury bonds are gaining in price today, pushing yields lower. On the other hand, corporate bonds are falling in price.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

CHINA'S CENTRAL BANK STABILIZES GLOBAL STOCK MARKETS

Stocks opened sharply higher this morning (Dow +197 pts; SPX +1.4%). All eleven major market sectors are in the green, led by tech (+1.9%), materials & consumer discretionary (+1.7%), and communications services (+1.5%). In fact, the SPX has now recovered 50% of its recent decline. The VIX Index collapsed back to 17.6 as jittery traders breath a sigh of relief. Near-term, it looks like Monday’s SPX correction low was successfully re-tested yesterday. But make no mistake, we’re not out of the woods when it comes to volatility. Remember, President Trump’s new round of trade tariffs is scheduled to take effect at the beginning of September. For the moment, however, everything looks rosy. European markets closed up by more than 1%, and Asian markets are also up overnight. Commodities are rebounding today, paced by a sharp recovery in oil prices. WTI crude is up 3% to trade around $52.60/barrel. The bond market about-faced as well. Junk bonds, which sold off by 2% early this month, are now recovering. Treasuries and high-grade corporates, however, are selling off after a monster run. The 10-year Treasury Note yield, which collapsed from 2% to 1.71% in a matter of a few days, ticked up to 1.75%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

ANOTHER TRUMP SLUMP

The major stock market averages gapped down at the open, but quickly pared losses. The Dow is currently down 350 pts and the SPX is down 1%. Energy & financial sectors continue to slide, down 2% or more in early trading. In fact, the S&P energy sector has fallen nearly 11% since mid-July, right along with oil prices. It seems oil is somewhat over-supplied at the moment. The VIX Index, which spiked to 24.5 on Monday, has settled down toward 21. The index measures fear among traders, and hasn’t been this high since January. Commodities are mostly lower in today’s session, save copper and gold. In fact, gold is now up over 6% this month. Bonds are, in the words of Jim Cramer, trading like a recession is around the corner. The iShares 20+ Year Treasury Bond ETF (TLT) is up over 7% this month. Interest rates for Treasuries, municipals, and high-grade corporates are falling. The 10-year Treasury Note yield is down around 1.64%, the lowest since early October 2016.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

IT'S ALL ABOUT THE TRADE WAR

Stocks gapped down at the open after China surprised the world by devaluing its currency (see below). The Dow is currently down 596 pts and the SPX is down 2.3%. Not surprisingly, cyclical sectors like consumer discretionary, tech and financials are down the most. Stocks more exposed to China are getting hurt (i.e. Apple Inc. down 4%). Utilities is the best performing sector, essentially flat. Gold is up 1% in early trading and gold mining stocks are up more than that. Other commodities, however, are in the red. WTI crude oil is down 1% to trade around $55/barrel. Copper and iron ore are down nearly 1%. The bond market is trading mostly higher—save junk bonds. Treasury bond yields are down across the board as investors all around the world shift to the ultimate safe-haven asset. The 10-year Treasury yield gapped down to 1.77%, the lowest since mid-October 2016.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

TRADE WAR ESCALATES

Stocks opened lower this morning (Dow -225 pts; SPX -1%) after President Trump threatened another round of 10% trade tariffs on Chinese imports. The market began today’s session as if the next economic recession is right around the corner. Energy, materials and tech are down well over 1%. Only utilities and real estate are catching a bid. The dollar is weaker against a basket of foreign currencies. Perhaps the only real surprise is that oil prices spiked and gold is flat. Safe-haven Treasury bonds are up on the day, whereas junk bonds are falling in value. The 10-year Treasury Note yield tumbled quickly to 1.87%, the lowest since 2016’s presidential election.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

FED STIMULUS WHETHER WE NEED IT OR NOT

The stock market jumped at the open after the Federal Reserve rate cut yesterday. At the moment, the Dow is up 300 pts and the SPX is up 1%. The tech sector (+2.2%) is leading the way, along with communications (+1.3%) and consumer staples (+1.2%). Financials are lagging—up a mere .3%--in the wake of the rate cut. Strangely enough, the dollar strengthened after the Fed cut, probably because other central banks around the world (i.e. Europe, China) are expected to pursue stimulus more aggressively than the US Fed in the near future. So commodities are mostly trading lower today. WTI crude sank 2.7% to trade around $57/barrel after a report confirming a rebound in US production levels (12.2 million barrels per day). Traders are saying the world is well supplied. In addition, US and Chinese trade negotiators parted ways after accomplishing nothing this week and traders are using that as an excuse to sell. Bonds are up in price, down in yield today. From short-term to long-term, from corporates to Treasuries, the bond market is up across the board. The 10-year Treasury Note yield fell back to 1.95%, matching the lowest level going back to November 2016.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

IMPROVING ECONOMIC MOMENTUM

Stocks opened lower this morning on trade war concerns. The Dow is currently down 22 pts and the SPX is down .28%. Pharmaceuticals, transports, semiconductors and banks are all down. Real estate investment trusts (REITs) are up on the better than expected pending home sales report. The consumer staples sector is higher on a strong earnings report by Procter & Gamble (PG). European markets were uniformly and sharply lower in today’s session, whereas Asian markets traded higher overnight. Commodities are mostly higher, with WTI crude oil bouncing back toward $57.15/barrel. Bonds are mixed. Long-term Treasuries are up slightly, but corporates are down on the day. The iBoxx Investment Grade Corporate Bond ETF (LQD) is showing signs of topping out after 10% run this year. As we see more signs of improving economic momentum (see below) rates could move upward, pushing bond prices lower.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

THE EARNINGS BEAT GOES ON

Major stock market averages opened modestly higher today (Dow +86 pts; SPX +.2%). The materials sector (+1.5%) is leading the way after paint maker Sherwin Williams (SHW) reported excellent second quarter results. Financials are up (+.8%) and industrials (+.6%). However, utilities & communications services sectors are in the red. Commodities are mostly lower in early trading. WTI crude oil is back down under $56/barrel this morning. Oil is in the middle of a tug-o-war between geopolitical tensions with Iran, and modest global oversupply. Bonds are mostly lower in price as yields tick higher. The 10-year Treasury yield is hovering around 2.05%. Junk bonds, which usually trade with the economy and corporate earnings, are holding their own this year. The SPDR High Yield Bond ETF (JNK) has been roughly flat over the last three months after recovering from last year’s selloff.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

AWAITING THE FED

Stocks opened slightly higher this morning but quickly faded. The Dow is currently down 38 pts and the SPX is up .18%. The tech sector surged 1% in early trading, led by semiconductor stocks. In addition, biotechs and transports are modestly higher. Most everything else, however, is in the red. The Dow is now up about 18% this year, and investors are scrutinizing earnings reports to see if the growth outlook will support further stock market gains (see below). The VIX Index—a common measure of fear among traders—is hovering around 14, considered fairly low. And strangely enough, surveys by the American Assn. of Individual Investors (AAII) show improving sentiment among non-professional investors. Taken together, we can conclude that people feel fairly good about the market. Commodities are mixed today. Iran’s geopolitical tantrum is propping up oil prices (WTI crude back up over $56/barrel). But copper and iron ore are lower in price. Bonds are mostly higher in early trading. The 10-year Treasury Note yield fell back to 2.03% today. Long-term Treasury bond funds, such as iShares 20+ Year Treasury Bond ETF (TLT) is up nearly .5%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

STOCKS DOWN ON MIXED ECONOMIC/EARNINGS REPORTS

Stocks opened lower this morning as investors strain to digest quarterly earnings & economic reports. The Dow is currently down 123 pts and the SPX is down .3%. Financials and consumer staples are in the green, but most everything else is down.

Here’s a quick look at earnings announcements. Morgan Stanley (MS) is flat after reporting better than expected revenue and earnings; the wealth management business stood out. United Health (UNH) is down 2.8% after reporting better than expected second quarter results and boosting its 2019 profit outlook. Netflix (NFLX) fell 11% after reporting only 2.7 million new subscribers compared with Wall Street forecasts closer to 5 million. Danaher (DHR) is up 1.4% after reporting revenue & earnings slightly ahead of estimates. Honeywell (HON) surged 2% even though second quarter revenue fell slightly short of Wall Street forecasts. Investors felt management executed very well despite a weak global economic environment.

CNBC’s latest “Rapid Update” survey shows that economists believe the US economy is tracking to 1.8% growth in the second quarter, and 2% in the third quarter. That’s roughly equivalent to what the Federal Reserve calls long-term potential growth. Reporter Steve Liesman notes the gap between that figure and the Trump Administration’s goal of 3%, and says achieving that goal would require a boost in capital spending by Corporate America. Unfortunately, the trade war with China is clearly restraining capital spending. So while the US economy achieved about 3% growth last year, don’t expect that this year or next.

The Index of Leading US Indicators (LEI) fell in June, suggesting the 6-month outlook for the US economy is softening. This index is actually a set of 10 different economic indicators designed to predict economic conditions. The primary reasons for the drop were weakness in orders for manufacturing equipment and also building permits. It’s important to note that the index isn’t predicting recession, but the US economy has definitely lost some momentum over the last year. The LEI is 1.6% higher than it was a year ago, and that’s on the low end of the 8-year trend.

China’s economy grew by 6.2% in the second quarter of 2019. That sounds pretty strong, but it’s not. The truth is that growth has been decelerating in China for decades. Part of that trend is natural, due to the law of large numbers. But more recently, growth has slowed due to the trade dispute with the US and also slower economic growth in Europe, a major trading partner to China. Government stimulus, mostly debt-fueled , is being thrown at the problem. But Bloomberg notes that total corporate/household/government debt now equals 300% of China’s annual economic output. While the economy is growing at 6.2%, total debt is growing at an unsustainable 11%. This report, by the way, emboldened President Trump to announce that the US and China are no closer to a trade deal despite ongoing negotiations.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

MR. POWELL'S WILD RIDE

Stocks gapped up at the open during Fed Chair Jerome Powell’s congressional testimony this morning. The Dow is currently up 78 pts and the SPX is up .33%. But don’t expect the rally to last—and make no mistake, earnings season will trump any Fed rate cut in terms of influencing the direction of the stock market. At the moment, most sectors are in the green, led by energy and tech. Financials are down along with interest rates today. Crude oil, copper and gold are all up. WTI crude jumped 3% to trade around $59.50/barrel, right around the 2-month high. Bonds are rallying after Mr. Powell hinted at a rate cut (see below). The 10-year Treasury yield dipped to 2.04%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

GOOD NEWS IS BAD NEWS

The major stock market averages opened lower this morning after a stronger than expected jobs report. The Dow is currently down 106 pts and the SPX is down .55%. The financials sectors is up about .25% but all other sectors are lower in early trading. European stock markets closed down by about .6% today. In the wake of the jobs report the dollar strengthened and commodities fell. Gold is down 1.5%, copper is down about 1% and WTI crude oil fell back to $57.28/barrel. In addition, the bond market reacted by selling off. The 10-year Treasury yield climbed to 2.05% from 1.95% in the prior trading session. Whether municipals or corporates of Treasuries, the bond market is down sharply today. The iShares 20+ Year Treasury Bond ETF (TLT) fell 1.6%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

WAITING ON THE FED

Stocks opened sharply higher this morning (Dow +99 pts; SPX +.6%), probably because recent economic data (see below) encourages traders to believe the Federal Reserve will soon begin lowering interest rates.

Payroll processor ADP says the US economy generated 102,000 new jobs in the month of June. That’s a lot better than May’s 41,000 but it’s also less than economists were forecasting. The fear, of course, is that hiring activity is slowing, whether because economic growth is slowing or because we’re already at full employment. It’s true that there are more open positions than job seekers.

ISM’s Non-Manufacturing Index, which measures business activity in the service sector, fell to 55.1 in June from 56.9 in the prior month. The decline was a bit more than economists were expecting. And while any reading above 50.0 indicates continued expansion of activity, the index is down around a 2-year low. The index’s key forward-looking new orders component fell to 55.8, the lowest since December 2017. In both manufacturing and service sectors, overall business activity as well as hiring, cost inflation and new orders are slowing. A spokesman for ISM noted the trend and said surveys “reflect mixed sentiment about business conditions and the overall economy. A degree of uncertainty exists due to trade and tariffs.” However, business activity “continues to reflect strength.”

Investors are rightly concerned about the trade war’s impact on business investment. And today we learned that corporate capital spending continued to soften in May. New orders for capital equipment excluding defense/aircraft are up only 1% from year-ago levels. That compares with 7% growth a year ago. Still, Bloomberg points out that conditions aren’t as bad as many anticipated. At least business investment is still showing some growth. Perhaps some underlying resilience can be teased out of this report.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

STOCK & BOND TRADERS AT ODDS ON NEAR-TERM OUTLOOK

Stocks jumped at the open after Presidents Trump & Xi agreed to pause further trade tariffs and re-start negotiations. The Dow is currently up 133 pts and the SPX is up .74%. In fact, the SPX touched an all-time high this morning. The best performing groups today are not surprisingly those that were hit hardest by the trade war: semiconductors and retailers. But we’re also seeing a 1% bump in financials despite the fact that interest rates aren’t rising. Commodities are mixed today. Traders are generally shifting to risk, so it’s not surprising to see gold down 1.4%. WTI crude oil climbed to nearly $59/barrel. But strangely, the bond market is not selling off. Bond traders are ignoring the G-20 trade war truce because of weak manufacturing data (see below). The 10-year Treasury yield is hovering around 2.02%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

MEXICO TRADE RELIEF

Stocks opened higher today after US & Mexican negotiators reached a tentative arrangement to avoid new trade tariffs. The Dow is currently up 174 pts and the SPX is up 1%. Consumer discretionary, financials and technology sectors are all up 1.5% or more in early trading. The VIX Index—a common gauge of fear among traders—sank back to 16. European stock markets closed up by about .5% and most Asian markets were up over 1% last night. In the wake of the Mexico headline, the dollar strengthened and gold & bonds fell. WTI crude oil is trading flat just under $54/barrel. Most areas of the bond market are down today, except for junk bonds. The 10-year Treasury yield climbed back to 2.14%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.