8-2

 Trade war:

  • China says “ they will not  accept any maximum pressure,threat,or blackmailing and won’t compromise at all on major principle matters”  (BBG)
  • The latest barrage of Tariffs will hit Consumer goods the hardest, Apple products front and center laptops, Phones and Clothing (BBG)
  • Unlike the already imposed tariffs which had only an indirect impact on US consumer prices – as it was overwhelmingly intermediate goods which were taxed – the new round of 10% tariffs on an additional US$300bn of Chinese imports may hit the US consumer directly. The new round of taxes affects mostly finished goods, suggesting those retailers will sacrifice either their profit margins or consumer prices will rise. US consumer confidence is unlikely to stay strong for much longer –(Morgan Stanley)
  • Japan removed South Korea from a List of trusted Export destinations, increasing tensions between two countries (BBG),trade war spreading
  • A positive note Trump will hold press conference at 12:30 to announce a trade deal with EU regarding beef exports

Bonds:

 Try and find A Bond yield that is not lower today 30 year German yields Zero, Switzerland -.33 Bps Yields crashing worldwide as the flight to safety, Front running QE trade, or just worried about Global growth risk  fixed income in demand 10 year bund yields -.5%. 80% probability of A September rate cut almost double from what it was on Wednesdays close indicates that Todays payroll is less important than we thought on Wednesday, A bad number just reinforces the pricing of lower rates now in place, A good number will be brushed aside as old news as traders  think the worst is yet to come.

 Damage being done in the metals complex as the Industrial metals taking it on the chin Copper -2.27%, Iron ore a proxy for China’s Industrial demand -5%, Silver -1% and Goofy palladium -3%. Grains have bounced a bit surprisingly and Oil after collapsing yesterday has found a bid

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