Morning Minutes 5/15/2020

Morning Minutes

Stocks Slide Amid US-China Threats and Retail Sales Reports

May 15, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

World markets have been mixed this morning as investors consider a growing war of words between the US and China with the US threatening to block semiconductor shipments to China’s Huawei, and China threatening to retaliate against senior US technology and aerospace companies. This adds to growing concerns that the COVID-19 pandemic and other factors could sour US-China political and trade relations and negatively impact implementation of the US-China Phase I trade deal.

There are a number of economic reports from around the world for investors to digest today. Here in North America, US retail sales plunged 16.4% in April, worse than the 12.0% drop investors had been expecting. Meanwhile, the Empire State Manufacturing Survey improved to -48.5 from 78.2 the previous month and as not as bad as the -63.5 reading investors had been expecting. US industrial production is due at 9:15 am EDT with the street expecting a monthly decline of 11.5%. Capacity utilization is also due at 9:15 with a drop to 64.0% from 72.7% widely expected.

In what could potentially be a preview of things to come in other parts of the world, China posted mixed economic numbers for April, the first month of its economic reopening. Industrial production grew by 3.9% beating the 1.5% street estimate. Retail sales continued to struggle, however, down 7.5% over year, which was worse than the 7.0% decline the street had expected.

European Q1 GDP updates are out this morning with Germany down 1.9% over year, which was worse than the -1.6% street estimate, and the Eurozone down 3.2% over year, which was not quite as bad as the -3.3% street estimate.

US index futures are down 0.8% -1.25% this morning as investors respond to overnight developments, but have been steady following the US retail sales report. Dow futures are down about 200 points, giving back most of yesterday’s 377-point bounce. In Europe, the Dax and FTSE are both up about 0.8%. Crude oil continues to climb with WTI up 2.9% and trading near $28.25/bbl ahead of this afternoon’s weekly US Baker Hughes drill rig count report. Gold is holding steady just below $1,750/oz.

New Video: Market Commentary and Portfolio Update – May 13, 2020

With Colin Cieszynski – Chief Market Strategist, and Jason Leesui, Vice President of SIA Wealth Management

A new webinar replay is available featuring Colin Cieszynski discussing current trends in world markets, and Jason Leesui continuing his series on Advisor Alpha and portfolio strategy. A PDF version of the presentation is available.

GoToMeeting Version: https://attendee.gotowebinar.com/recording/258195423901245698

YouTube Version: https://youtu.be/QpcANTlq7qM

 

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