Yesterday's Market Commentary from our Market Insights Letter:
Ugly data out of China and the US. Chinese Industrial Production and Retails Sales slowed in April and will likely slow again when we see the May data released of course in June. US Industrial Production slowed the most in 2yrs -0.5 vs -0.1% Prior and Retail Sales (US) slowed -0.2% vs 1.6% Prior. China is now back in a Growth slowing set up within their economy and as aforementioned we expect this to exacerbate as the trade war continues thru May/June.
The former Goldman Sachs Chief Lloyd Blankfein was out this morning in support of Trumps stance on trade with China:
Lloyd BlankfeinVerified account@lloydblankfein16h16 hours ago
Tariffs might be an effective negotiating tool. Saying it hurts us misses the point. China relies more on trade and loses more. As in a labor strike where mngmnt & workers both get hurt, the process may demonstrate relative strength & resolve & where compromise needs to happen.
Lloyd BlankfeinVerified account@lloydblankfein14h14 hours ago
As to who ultimately bears the tariffs cost: US buyers may eventually switch their purchases to domestic or non-Chinese companies (and pay a bit more than now). Chinese companies lose the revenues. Not great but part of the process to assert pressure to level the playing field.
I think its safe to say that Trump wont bend the knee to Xi on trade as support seems to be gathering steam from Wall Street.
Gold Prices are falling back this morning - we're very interested in Gold headed deeper into May and into June. We think the time is right about now for Gold to flex its muscles against the Dollar. we're somewhat surprised by the USD's resillincy in the face of falling US Treasury Yields, but we don't think that correlation will last for much longer.
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