Trade Deficit 

The trade deficit in August widened by $3.2 billion to $53.2 billion from $50.0 billion in July. Exports were $1.7 billion less than the prior month and imports were $1.5 billion more.  Year-to-date the deficit in goods and services rose to $31.0 billion, 8.6%.     

Exports

Industrial supplies and materials decreased $2.4 billion

• Crude oil decreased $0.9 billion

Foods, feeds, and beverages decreased $1.2 billion

• Soybeans decreased $1.0 billion

Consumer goods increased $1.6 billion

• Artwork, antiques, stamps, and other collectibles increased $0.6 billion
• Pharmaceutical preparations increased $0.4 billion

Exports of services increased $0.2 billion to $70.5 billion in August

• Financial services increased $0.1 billion
• Maintenance and repair services increased $0.1 billion

Imports

Imports of goods on a Census basis increased $1.6 billion

• Automotive vehicles, parts, and engines increased $1.0 billion
• Passenger cars increased $0.6 billion
• Cell phones and other household goods increased $0.9 billion

The goods trade deficit with China rose to 4.7% to a record of $38.6 billion despite the Trump administration’s efforts to reduce the deficit with China through tariffs.   

Oil

Baker Hughes reported that the number of active oil rigs declined by 2 rigs to 861 this week. That was the third weekly decline.  Total active rigs (oil and natural-gas) was lower by 2 for a total of 1,052.  Crude oil initially rallied on the news, but it has since given back the gains.  West Texas Intermediate crude oil is trading higher by $0.26, 0.35%, @ $74.60. 

Equities

Equities opened unchanged to slightly higher this morning.  Futures initially rallied after the nonfarm payroll report increased less than expected.  The Markets soon took a turn for the worse after negative analyst’s comments regarding Netflix (NFLX) and how its levered balance sheet becomes more of a concern as rates rise.  The fear of rising interest rates soon turned into the markets’ main focus, and equites sold off.       

• The Dow is lower by 300 points, 1.12% @ 26,330
• The S&P 500 is lower by 30 points, 1.04% @ 2,871
• The Nasdaq is lower by 154 points, 1.95% @ 7,725
• The Russell 2000 is lower by 24 points, 1.5% @ 1,622

Breadth:

• NYSE declines 2,239 to advances 758; new 52-week highs 21 to new lows 358
• Nasdaq declines 2,312 to advances 650; new 52-week highs 25 to new lows 194

Comments

Charles, I am a new client and have taken your advice on alert buys. I am not sure about the solar play. I am down 6% since I bought it but will be patient. I would ask you to look for companies other than Verizon that will benefit substantially from the 5G roll out. This technology is a game changer and will definitely impact the cable providers. Thank you for all your help. Earl Earl Winter on 10/5/2018 2:30:32 PM

Hello Earl, I don't want anyone to lose sleep so if you are too uncomfortable and at a point in risk tolerance you can't sleep or might not buy new ideas then it could be wise to close. That being said you have to be down in stocks from time to time and be prepared to hold. The key is to look at the fundamentals. Also make sure to use the tracker on the website - I don't see any positions. On 5G I like CSCO but also AMD and NVDA (high Beta names which means maybe too volatile for you) and TMUS. Thanks for reaching out. CP Charles Payne on 10/5/2018 2:41:38 PM

If (and when) the US agrees to a trade deal w the EU, will EM & Int’l stocks finally make a YTD move to the positive? Thoughts in general to an EU trade deal by end of the yr... Thanks! John Sulick on 10/5/2018 2:51:39 PM

I think an US-EU trade deal happens by the end of the year but those markets have their own issues. Terrible economic policies Aging populations High taxes ad welfare programs That doesn't mean those stocks can't rally but they haven't despite being hyped by Wall Street and benefiting from billions leaving US funds. The strong dollar is a problem and I would rather be long US companies with exposure to international markets. Charles Payne on 10/5/2018 2:56:01 PM

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