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Double Chinese Tariffs?
The Market Bull 2018

00:00 / 2:17

After opening lower the major averages enter the final hour mixed on generally positive, but not overly significant economic data. Trump ratcheted up the trade war pressure with China. While Tesla posted some more questionable numbers, more on that tomorrow.

Factory orders beat expectations in June with a .7% gain, on strength in durable goods orders. The proxy for business spending non-defense capital goods ex-aircraft slowed dramatically but gained .2%, a 3rd consecutive advance.

The New York Institute for Supply Management Purchasing Managers report surged 20 points in July to 75. Price data jumped as well hitting a very high 70.2, employment slipped a little but remains strong.

Auto Data reports that auto sales missed expectations in July falling to an 11-month low of 16.77 million units annualized and seasonally adjusted on weakness in light truck sales.

Trump’s latest trade war salvo includes threatening the Chinese with much higher tariffs, more than doubling the existing 10% to 25% on a very large and broad array of goods. Given the substantial quantity of Chinese goods purchased by consumers on a regular basis a 25% tariff will dramatically raise the costs of these goods and have a substantial impact on your average Americans household budget. Additionally the Chinese could respond by devaluing their currency by an equivalent amount, a common trade war strategy. Something that would very likely spell the end of Chinese real estate purchases, or at least severely curtail them. Given that hot Chinese money has goosed real estate prices in a large number of markets, the real estate boom could well turn to bust. Once again Trump plays with fire, at our peril.

This is Caleb Lawrence Registered Investment Adviser Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202 or call me toll free at 888-RICH PIG / 888-742-4744.

You can catch me on the radio at noon each business day as well on California’s central coast. KPIG 107.5 FM in the Monterey Bay or KPYG 94.9 FM in San Luis Obispo.

Rebroadcasts, additional writings, and other entries are also available on my Blog at www.clinvestments.com

Advisory services offered through Caleb Lawrence Registered Investment Adviser Inc.


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