The major averages struggled in early trade despite a generally positive employment report. With 200 billion in additional Chinese goods about to have tariffs levied on them Trump threatens another 267 billion in tariffs in short order, essentially this would place tariffs on every single Chinese import. Consumers will soon be paying much higher prices as a result of the tariffs, something likely to prove unpopular as they already struggle with debt and cash flow issues.
The Bureau of Labor Statistics or BLS reported a slightly better than expected 201,000 new jobs in August. The official unemployment rate was unchanged at a very low 3.9%. The real highlight of the report was the continued strong increase in average wages as they gained .4% for the month and a respectable 2.9% from a year ago. June and July were revised down by a combined 50,000 jobs. More disconcerting is the Household Survey that reported a net loss of nearly 1.5 million jobs and a little over 2-million leaving the labor force. Hardly numbers indicating a robust labor market as the headline suggests. Overall not a bad report, but at the same time not as great as the headlines indicate either.
Tech companies are seeing marked increases to chip inventories of late as they recently hit pre-Great Financial Crisis Levels as sales fell in the Memory, PC, Mobile and Data Center markets, with Apple, Samsung, Intel, and others reporting much higher inventories. While this maybe just a short-term glitch, in light of the trade war rhetoric and dramatic escalations in applied tariffs due to hit the tape very soon, it’s not looking positive.
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