Market Update: Friday, July 20, 2018

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Daily Insights

  • The full $500 billion? In an interview aired this morning, President Trump said he is ready to go with tariffs on $500 billion in Chinese imports in an effort to drive an agreement. Tariffs on just $34 billion in Chinese goods have been implemented thus far, with $16 billion coming soon and an additional $200 billion previously threatened. With China only buying about $130 billion in U.S. goods, Chinese retaliation would have to come in other forms, such as regulatory actions, boycotts, currency devaluation, U.S. Treasury sales, or other non-tariff actions. These latest developments may bring the tit-for-tat closer to its end, though resolution may take the bulk of the summer.

  • Trade tensions weigh on commodities. Threats of further escalation of the ongoing trade dispute, which already includes tariffs on metals and grains, in addition to a strong U.S. dollar, have dragged commodities prices broadly lower. As noted in our latest Portfolio Compass publication, our views on precious metals and agriculture commodities are negative, while our industrial metals and energy views are neutral.

  • LEI’ding the way to a stronger economy. The Conference Board’s Leading Economic Index (LEI), one of our favorite economic indicators, painted a continued strong backdrop for future economic growth yesterday, as it rose 0.5% month over month and 5.8% year over year. While the yield curve has been getting all the attention recently, the LEI has a solid track record of predicting recessions. Get the details at noon eastern on the LPL Research blog.

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Friday

  • Japan: All Industry Activity Index (May)

 

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

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All performance referenced is historical and is no guarantee of future results.

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Index data obtained via FactSet

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