The latest trade salvo is hurting big American exporters such as Boeing and Caterpillar.  But there are other issues gnawing at the market as well, including incongruent central bank policies between the Fed, ECB and BOJ. 

Manufacturing

There was more positive manufacturing data out today, this time from the NY Fed.  The Empire State Manufacturing Survey came in well above consensus with all the current condition components moving in the right direction.

General business and new orders were higher, but the biggest highlight was number of employees, which more than doubled in just one month.  This is an eye-catching number that may mean potential workers who had been sitting on the sidelines may be getting drawn back into the workforce.   

Prices paid declined, but remain at an elevated level, while prices received saw a minor increase.  This shows pricing power and should work its way into corporation’s bottom lines.  The overall report pointed to continued strong economic growth in the New York State region. 

Looking forward, firms increased their six-month forward-looking optimism.  The index for future business conditions gained eight points to 38.9.   Inventories appear to be lean, and manufactures are hiring workers to meet anticipated demand. 

Industrial Production and Capacity Utilization

Industrial production was down 0.1% in May, from an upwardly revised 0.9% in April.  Industrial production was 3.5% higher year over year.  Manufacturing declined to -0.7% from 0.6% in the prior month, but it was still up 1.7% from the prior year.  Motor vehicle manufacturing was down 6.5% from April due to a sharp drop in truck assemblies, which was blamed on a fire at a Ford parts supplier.  Excluding motor vehicles and parts, manufacturing output was down 0.2%.   

• Mining increased 1.8% driven by gains in oil and gas production.  Mining is up over 12% year over year
• Utilities rose 1.1% with electric utilities outpacing gas utilities
• Total industry capacity utilization saw a slight decline to 77.9% from 78.1%

Given the strong pace of manufacturing in April, it is not surprising to see a slight drop in May. 

Oil is down today, with WTI trading lower by 2.93% to $64.91, as OPEC prepares to increase production at their next meeting on June 22-23 in Vienna.  The latest Baker Hughes U.S. Rig report showed an increase of 1 oil rig to 863. This is the fourth straight week of gains.  The overall rig count fell by 3 to 1059, which is up 126 from the prior year.  Gas rigs were down 4 to 194, higher than the year ago 186.

Once again consumer discretionary names are showing strength.  Harley-Davidson (HOG) and Cheesecake Factory (CAKE) are riding high, up 3.87% and 6.16%, respectively.

Lack of buying has most markets trading slightly lower today.  The Nasdaq is holding up the best and is currently making a valiant attempt at turning positive on the day.