The Global Update

Above: S&P 500 Daily Chart: July 31 to August 20, 2018

August 1

• Futures are mixed, being supported by stronger than expected second quarter corporate earnings reports and a bullish Automatic Data Processing employment change report, but fears of an escalating tariff war between the U.S. and China limited gains.
• The Shanghai Composite Index dropped 1.8% after several White House advisers urged President Donald Trump to sharply increase tariffs that were proposed on some Chinese imports.
• The ADP national employment report for July showed + 219,000 beating expectations of 185,000. On Friday, U.S. nonfarm payrolls report is predicted to come in at + 190,000.
• The 8:45 central time July PMI and ISM manufacturing index came in close to expectations at 55.3 and 58.1 respectively.
• The June construction spending report, estimated to be up .3%, came in at -1.1%.

August 2

• Indices opened lower due to US and China trade war fears as President Trump proposed a 25% tariff on $200 billion worth of Chinese imports.
• As a corollary, the Shanghai Composite Index had dropped over 2.0%.
• Initial jobless claims increased to a seasonally adjusted 218,000 in the week ended July 28, though less than economist forecasts.

August 3

• S. nonfarm payrolls increased by a seasonally adjusted 157,000 in July, weaker than the 190,000 expected.
• The unemployment rate was 3.9% as expected, less than 4.0% the previous month.
• Revised figures show a net upward revision of 59,000 as employers added 248,000 jobs in June and 268,000 in May.
• Financial Times reports that China had lost its status as the world’s second largest stock market to Japan as a result of the trade war with the U.S.
• S. stock index futures performed well despite global trade uncertainties and weaker-than-expected nonfarm payrolls report.

August 6

• The Shanghai Composite Index dropped for a fourth consecutive day and testing its 2018 lows.
• Over the S&P 500 companies that have reported to date, 78.6% have exceeded earnings estimates.

August 7

• JOLTS report can in at 6.662 million, slightly higher than the 6.650 million expected.
• Consumer credit came in below expectations, up $10.2 billion in June as consumers held back from adding to their credit-card debt
• Of the S&P 500 that have reported so far, 79.2% of them have surpassed estimates, closing on its highest record in 1994.

August 8

• China announced that it will impose $16 billion of 25% retaliatory tariffs on August 23.

August 9

• PPI excluding the often volatile food and energy categories was up .1%, virtually unchanged.
• Americans filing applications for new unemployment benefits remained close to historic lows as U.S. initial weekly jobless claims fell 6,000 to 213,000 beating expectations of 220,000.

August 10

• Turkey’s crisis spilled into global financial markets, the Lira plunging by -20%.
• The crisis is heightening fears that Turkey’s crisis may affect Asian and European banks that have invested in that region.
• The U.S. consumer price index in July increased 0.2% from a month earlier; core prices, excluding the food and energy components, are up by 0.2%.

August 13

• The Turkish Lira continued its drop, raising demand for the US dollar; the dollar index jumping by 1.3% today.

August 14

• Global markets rebounded from concerns over weakness in the Turkish currency; US indices advanced.
• As the US and China trade war heats up, U.S. import prices are soaring to its highest levels in six years, while export price gains slowed.

August 15

• S. stock index futures fell due to concerns over the political situation in Turkey and trade war tensions.
• China’s equity markets underwent another sell-off, now in bear market territory; their economy slowing.
• Retail sales rose .5% from the prior month. Economists had expected a .1% increase in July.
• The Empire State manufacturing increased to 25.6 beating expectations of 20.
• Industrial production increased .1%, lower than economist expectations of .3%.
• The August Atlanta Federal Reserve business inflation expectation came in at 2.1% as expected.

August 16

• S. stock indices advanced as China and the White House announced that they will be holding trade talks later in August.
• Housing starts increased .9% in July from the previous month, higher than the median estimate of an 8.3% increase.
• Residential building permits were up 1.5%, lower than economist expectations a 2.9% gain for permits.
• Initial weekly U.S. jobless claims fell 2,000 to a seasonally adjusted 212,000. Median estimate called for 215,000.
• The August Philadelphia Federal Reserve business index was 11.9, as compared with 25.7 in July. Median estimate was 22.0.

August 17

• S. stock indices opened lower due to disappointing earnings from several technology companies.
• Trump administration warned Turkey that it would impose more sanctions if it doesn’t release the American pastor facing 35 years in prison on disputed espionage charges.
• The selling was limited by guarded optimism that progress could be made in next week’s new round of trade talks between the U.S. and China.
• Consumer sentiment report fell to 95.3, well below consensus and also below the low estimate.

August 20

• S&P 500 reaches a new record high at 2873.23 and ties the record for the longest bull run in history.
• US indices are higher on hopes that planned trade talks between the U.S. and China could help resolve escalating trade tensions between the worlds two biggest economies.