USD Trade Weighted Major Currency Index
Archives of “August 2019” month
rssThought For A Day
Trump says China has to do a lot to turn things around
Comments from Trump
- Warns he can increase tariffs
- US has to have a better deal, not an even deal with China
- Can raise tariffs ‘to a much higher number’
- Says China’s currency is ‘going to hell’
- EU auto tariffs are never off the table
This isn’t exactly a good news for the mini equity rally that was underway.
At the close: US Indices suffer the worst week of the year
Closing changes for the main indexes:
- S&P 500 down 22 points to 2932
- Nasdaq -107 to 8004
- DJIA -98 to 26484
Tech was hit particularly hard but all markets had a decent rebound later in the day.
- S&P 500 -3.1%
- Nasdaq 3.9%
- DJIA -2.6%
Here is the weekly look at the S&P 500:
Thought For A Day
European equity close: Stocks beaten up but finish off the lows
Closing changes for the main European bourses:
- UK FTSE 100 -2.2%
- German DAX -2.9%
- French CAC -3.1%
- Spain IBEX -1.4%
- Italy MIB -2.0%
On the week:
- UK FTSE 100 -1.75%
- German DAX -4.2%
- French CAC -4.1%
- Spain IBEX -3.4%
- Italy MIB -3.2%
It was a rough week as the ECB disappointed and the trade war ramped up. The measured target of that head-and-shoulders pattern points to a dip all the way to the June lows.
More Chinese customers now willing to boycott US products
FT survey
The FT is out with a survey showing that just over 60% of Chinese urban consumers are now willing to boycott US goods. That compares to 54% in a similar survey last year.
I think the rise and the absolute number are both surprisingly low. No doubt a similar survey in the US would show a rise as well. Maybe Chinese propaganda isn’t as effective as we thought?
Then again, if China wants a boycott it has plenty of ways to make it happen that aren’t consumer led.
China press: Beijing ‘won’t give an inch’ to Trump
The latest from the South China Morning Post
A just-published article highlights comments from the foreign ministry and commerce ministry on Trump’s new tariffs.
Both the foreign and commerce ministries said the US would have to “bear all the consequences”and demanded more sincerity from Washington if negotiations were to continue following the president’s latest announcement, which caught many in Beijing off guard.
The statements indicate that plans for further talks could be shelved after the US broke an agreement not to impose further tariffs during negotiations. It also hinted at retaliation.
Officials did not give details on the possible counter measures China would take, but observers said China would be less willing to buy US agricultural products, and could restrict exports of rare earths – a key material used in the manufacturing of hi-tech products such as smartphones .
It may also speed up the production of its list of “unreliable entities” – companies deemed to pose a threat to China’s interests – a measure that could target US firms and hamper their operations in China.
US June trade balance -$55.2 billion vs -$54.6 billion expected
Latest data released by the BEA – 2 August 2019
- Prior -$55.5 billion; revised to -$55.3 billion
- Exports -2.1%
- Imports -1.7%
- Services +$20.0 billion
Overall trade remains somewhat steady but the decline in both exports and imports will be a bit of a concern, especially with trade tensions escalating. Of note, the trade deficit to China is seen at $30.2 billion – steady relative to May.
US July non-farm payrolls +164K vs +165K expected
Highlights of the July 2019 non-farm payrolls report
- Prior was +224K (revised to +193K)
- Estimates ranged from 74K to 224K
- Two month net revision -41K
- Unemployment rate 3.7% vs 3.6% expected
- Participation rate 63.0% vs 62.9% prior
- Avg hourly earnings +0.3% vs +0.2% exp
- Avg hourly earnings +3.2% y/y vs +3.1% exp
- Avg weekly hours 34.3 vs 34.4 exp
- Private payrolls +148K vs +165K exp
- Manufacturing +16K vs +17K prior
- U6 underemployment 7.0% vs 7.2% prior
This is the closest to consensus I can ever remember a non-farm payrolls headline. When you factor in everything else, the good and bad also balance out. The revisions were negative but wage growth was upbeat. Unemployment rose but it was because of higher participation.