China Partial Trade Agreement

11 Oct

Anticipation and then the announcement on Friday of a partial trade agreement with China drove the markets this week.  Stock indexes ended the week with gains with the largest gains in international stocks.  The partial trade deal has China agreeing to buy $40BN to $50BN worth of agricultural products, further opening up to international financial services and some intellectual property protection.  The U.S. is suspending planned tariff increases on October 15th and the U.S. may be delaying or calling off the tariff increases scheduled for December 15th.  The deal is expected to be finalized in three to five weeks.

Also, this week the FED released minutes from the September meeting and showed FED officials were worried about slowing global growth and the trade war.

In economic numbers this week:

  • Germany reported that industrial output grew 0.3% in August.  However, the manufacturing component was down 0.6%.  Industrial output was down 4.0% over the past 12 months..
  • The Labor Department reported:
    • First time claims for unemployment dropped 10,000 to a seasonally adjusted 210,000.  The four week moving average of claims rose to 213,750.
    • The consumer-price index was unchanged in September.  Excluding volatile food and energy consumer prices were up 0.3%.  Over the previous 12 months consumer prices rose 1.7% and 2.4% excluding food and energy.  Contributing to the weaker inflation number was a 1.6% drop in used car prices.
    • The producer-price index fell a seasonally adjusted 0.3% in September.  From a year earlier, producer prices were up 1.4%, the lowest 12-month period in nearly three years.  Excluding volatile food and energy, wholesale prices have risen 1.7% from a year earlier.  The biggest September drop was in trade services reflecting margins received by retail and wholesale businesses.
  • The EIA weekly oil report is here wpsrsummary (7).  Also, the EIA reported in the past week:
    • Field production of crude oil rose from 12.4MM barrels per day to 12.6MM barrels per day.
    • Natural gas storage increased by 98BN cubic feet and is at the five year average for this time of year.
  • Baker Hughes reported the number of active oil rigs rose 2 to 712 and the number of active gas rigs fell to 143.

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Best Regards,

Loren C. Rex, CFP®, AIF®, MA                                                       Erik A Smith

President                                                                                               Managing Partner

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These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.  The Indices mentioned are unmanaged and cannot be invested into directly.