Trade Relations Push Equities Lower
The US and China continued to trade words of increasing tariffs. Last Monday, President Trump suggested 10% tariffs on $200 Billion of Chinese imports, which set the tone for the week. For the week, the Dow was down 2%, the S&P 500 down .89%, the NASDAQ down .69 with the Small Cap Russell 2000 up .10%.
So how is the trade talk affecting the Chinese Stock Market? Last week, China’s Shanghai Composite Index fell 4.4% and for 2018, the Index is off 13%.
The 10 Year US Treasury Yield was modestly changed, with the yield decreasing from 2.92% to 2.90%, as of last Friday. Interestingly, the spread between yields of the 2 Year US Note and the 10 Year US Note is down to .35%. The immediate cause may be the slight flight to safety with the trade discussions, however this is definitely worth paying attention. The spread stood at .52% on December 31 2017.
Last week, housing starts rose 5% in May which was above the consensus estimate. Existing home sales declined .4%. Many suggest the reason for slowing existing home sales is a combination of supply, rising home prices and rising mortgage rates.
This week brings several data points. Today will be kicking things off with a report on US Home Sales, followed on Tuesday with the Home Price Index and Consumer Confidence. On Wednesday, we will hear about US Pending Home Sales and Durable Goods Orders for May.
Question of the Week (July 4th)
When the Declaration of the United States was signed in 1776, what was the population of the United States?
a) 5 Million people
b) 2.5 Million people
c) 1 Million people
d) 10 Million people
For reference, today the United States Population is over 300 Million people!
Answer to Last Week’s Question of the Week!
The question was; “What country does the United States import the most wine?
d) South America
In 2017, the United States imported the most wine from Italy, a close 2nd was France, then Spain and Argentina.