5-23 Risk Off

Risk OFF! 

 China on the offensive saying” Washington needs to correct its wrong actions for trade talks to continue, “Also A deal must be based on mutual respect. China also said ““America using using national power to suppress Chinese Companies “Worries about a tit for tat technology war seems to be a theme gaining traction. Watch Semiconductor index, SOX as a barometer for trade war  tensions’ .A  handful Of banks  Changing their baseline call to no deal vs expecting a deal, From Bloomberg

After months of predicting a trade deal
between the world’s two largest economies, economists at some of
the biggest financial institutions are growing increasingly
pessimistic.


Goldman Sachs Group Inc., Nomura Holdings Inc., and JPMorgan
Chase and Co. are among those that have rewritten their
forecasts as U.S. President Donald Trump threatens to impose a
25% tariffs on around $300 billion of additional Chinese
imports. Analysts at Nomura have made that hike in duties — which
would mean practically all of China’s exports to the U.S. are
hit by tariff hikes — their baseline forecast. They see it as a
65% probability before year-end, and most likely to come in the
third quarter.

Adding to the Gloom is German and Eurozone  PMI, which were  a touch weaker than expected ,German IFO ,Business confidence also on the weak side of expectations  From IFO Economist: “Export dynamic is very weak & uncertainty among biz remains very high”-ITC markets  causing a brief sell off in Risk . Toss in Brexit headlines which have reappeared and you find little good news for Risk to grab on too.Tesla below $200 for first time in 2.5 years. 10 year yields approaching YTD lows watch for a reaction on a break below 2.33% in 10s, 2.11% in 5s 30-year yields are trading at new YTD lows.

Markets

Shanghai -1.36,CSI 300 -1.8%,Hong Kong -1.58 Dax -1.6%, as auto sector -3% due to trade worries,Spoo -25 handles (-.8%)  ,Nasdaq -1.15%. Oil taking it on the chin As WTI dips below 200 D MA, Storage number bearish ,Reports of China Oil Storage tanks full. And ongoing Worries about global slow down, WTI -2.3% Brent -2%, heating oil -2% Gold though +.7% Currencies little changed and grains steady

Calendar:

  • 7:30 Jobless claims
  • 8:45 markit PMI
  • 9:00 new home sales

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