U.S. Stocks ended the week mixed while foreign stocks ended lower. Markets sold off on Friday due to fears of an economic meltdown in Turkey. Turkey already had been seeing a plunging currency, accelerating inflation and sky high interest rates. The fears of a financial meltdown were exasperated by the Trump administration sanctioning Turkey for failure to release a U.S. pastor, wrongly imprisoned on trumped up charges of aiding the coup attempt. Trump also threatened to double Turkey’s steel tariff.
The Trump administration released a list of tariffs, 25% on $16BN worth of Chinese imports will go into effect August 23rd. China also announced a list of reciprocal tariffs equal to the U.S. tariffs. Interestingly, China removed crude oil as one of the items for retaliatory tariffs. As China imports about 70% of its oil supply, it was decided those tariffs would hurt China too much.
A study by the Institute for Supply Management reported that parts deliveries from suppliers have slowed for the past 22 months indicating supply chain bottlenecks. Longer dated Treasury bond yields fell while shorter maturities rose, flattening the yield curve. Crude oil prices fell and gold prices rose, while the dollar rose sharply.
In the numbers this week:
- The Labor department reported
- The producer-price index was unchanged in July . Excluding volatile food and energy, producer prices were up 0.1% in July. However, from a year earlier, producer prices have risen 3.3%.
- The consumer-price index rose 0.2% in July. Core prices, excluding volatile food and energy, consumer prices rose 0.2% also. From a year earlier consumer prices have risen 2.9% and core prices 2.4%.
- First time claims for unemployment fell 6,000 at a seasonally adjusted 213,000. The four week moving average of claims fell 250 to a seasonally adjusted 214,250.
- The Federal Reserve reported that its balance sheet is now $4.258TN down $202.4BN since it started balance sheet reductions in October.
- Factset reported with 91% of S&P 500 companies reporting earnings, the blended earnings growth rate in the 2nd quarter is 24.6%
- The Energy Information Administration weekly report is here wpsrsummary. Also the EIA reported
- U.S. Crude oil production declined from 10.9MM barrels per day to 10.8MM barrels per day.
- Storage of natural gas rose 46BN cubic feet. Natural gas storage is below the minimum for this date during the past five years.
- According to Baker Hughes, In the past week the number of active oil rigs rose 10 to 869 and the number of active gas rigs rose 3 to 186 (corrected).
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik A Smith
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
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These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.