A delay in tariffs was announced, which put a pop into the market; although, key resistance continues to hold.  The United States Trade Representative released a 21-page report on products that will get short-term relief on the implementation of tariffs.

Press Release

USTR Announces Next Steps on Proposed 10 Percent Tariff on Imports from China

08/13/2019

Washington, DC - The United States Trade Representative (USTR) today announced the next steps in the process of imposing an additional tariff of 10 percent on approximately $300 billion of Chinese imports. 

On May 17, 2019, USTR published a list of products imported from China that would be potentially subject to an additional 10 percent tariff.  This new tariff will go into effect on September 1 as announced by President Trump on August 1. 

Certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent.

Further, as part of USTR’s public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles.  Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing. 

USTR intends to conduct an exclusion process for products subject to the additional tariff.

The USTR will publish in the Federal Register as soon as possible additional details and lists of the tariff lines affected by this announcement.

“Good talk & Very Productive”

Shortly after the tariff announcement, President Trump posted a tweet that suggests to me he relented to his negotiating team after an upbeat call with their Chinese counterparts.

Donald J. Trump @realDonaldTrump As usual, China said they were going to be buying “big” from our great American Farmers. So far, they have not done what they said. Maybe this will be different!

Later, before boarding Air Force One, Trump said the call was a good talk and very productive and corrected harsh language on China thus far not living up to its promised purchases of agriculture products.  President Trump also mentioned Christmas and making sure here were no price increases.  Again, this feels like a talking point from his team as he underscored prices on consumers haven’t gone up but, “just in case.”

Still Muted Inflation

The release of July Consumer Price Index put some pressure on the market early this morning, as some saw glimmers of tariffs seeping into the data.   Its true apparel prices increased 0.4% (lead by men’s underwear) along with household furnishing +0.3%.  But, computers and sporting goods were -1.4% and televisions -1.0%.

Although not part of core inflation reading, I found the increases in pork chop prices +4.1% and lettuce +9.5% interesting, and wonder what the heck the new diet fad is?

Additional observations

• Rents continue to climb faster than owner equivalent
• Medical cost from services to drug prices continue to chug along

July CPI Household Expenses	Relative Importance	Monthly Change
Shelter	33.3%	+0.3%
Rent	7.9%	+0.2%
Owner	24.0%	+0.2%
Medical Services	7.0%	+0.5%
Transportation	5.9%	+0.3%
Motor insurance	2.4%	+0.3%
Motor repair	1.1%	-0.1%
Air Fares	0.7%	+2.3%
New Cars & Truck	3.7%	-0.2%
Used Cars & Trucks	2.4%	+0.2%
Medical Care Commodities	1.7%	+0.2%
Household Furnishing	3.3%	+0.3
Apparel	3.0%	+0.4%
Men’s Underwear	0.1%	+4.7%
Computers	2.8%	+0.3%

Technical

The major indices still have to take out the close from August 2^nd on a closing basis to trigger additional buying. 

Key Resistance on Closing Basis

• Dow 26,485
• NASDAQ 8,004
• S&P 500 2,932

 

Comments

Trump has China on a yo-yo string. And the "financial elites" as well. It's about time this trade unfairness has been addressed. I drank the globalist kool-aid from grad school to several C-suite assignments; yet never focused on all the plants I shuttered or USA workers I unemployed. I was making money for my greedy owners/shareholders. At what cost? Towns? Families? There has to be a better way to achieve good stewardship. Hope we find it. Teach it! Reward it! We can do better as a society! Joe Noga on 8/13/2019 2:10:52 PM

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