Weekend July 22, 2018
Auto Armageddon avoided for Present
Commerce Secretary Wilbur Ross says ‘it’s too early to move ahead with 25% tariffs on imported cars and parts.’
Wall Street Journal today July 20, 2018
We have written numerous columns this year warning of a ‘gathering storm’ of retaliatory tariff wars. Social Mood is slowly lowering markets as political leaders, not wanting to appear weak to Trump threats, resist. Around the world only Canada seems to be making a new high, with India revisiting the last high. Most other markets made their high in January along with the US. Shanghai in particular, has fallen from 3,550 plus to 2,765.
Now consider these news headlines.
Trump Raps FED (once again Trump’s Wharton degree fails him, the FED simply follows the two-year note yield. Higher rates are a sign of a more robust economy, low rates reflect the weakness of the last eight years. )
EU threatens of Retaliate for Levies
US Automotive Policy Council Opposes Tariffs (that is GM, Ford, Chrysler and Toyota et al)
America’s Chinese Ambassador Feels Heat
Investors Treat Asian Junk Bonds Like trash (yields rising to 9%)
Alcoa Shares Tumble 13% on Tariffs
Stocks Decline, Weakened by Financials (odd in that rates are supposed to be going up)
British Sterling Falters over Brexit Worries
Trade fears Crunch U S Grain Prices (farmers voted for Trump)
Another article suggests that even powerhouse German is now the ‘sick man of Europe with small company productivity lagging.
On a positive note, Blue Origin passes Test in West Texas
Amid worries about the EU and Brexit, the US Dollar has risen from 89 to 95. That is a counter to the fall from 102 to 89. But it is enough to have crushed various commodity prices. In the past four months gold has dropped from $1,370 to $1,224. Silver is down from $17.60to $15.19. In the last two months copper fell from $3.30 to $2.70. All this weighs on emerging markets which are basically commodity exporters.
Crude oil has dropped about the same 10.7% as gold. We predicted a pullback and oil dropped from $75 to $68. Unleaded gasoline prices eased by 25 cents. Note that Congress is working for the US to ship more LNG to Europe in response to Trump’s comments that Germany is too dependent on Russian energy supplies.
The bottom line is that markets do not like uncertainty. Foreign markets are pulling back due to their weaker currencies and uncertainty over higher tariffs. Most world markets have not re joined their January highs. With the November elections 3.5 months off, don’t expect new highs in mood, or the markets.
Comments