The major averages enter the final hour mixed following choppy early trade. Since Monday the Standard and Poors 500 Index is up 7 points or .25% while the NASDAQ has gained 98 points or 1.2%.
There is little real news today, but tightening US Dollar conditions and the ongoing trade war continue to take their toll on emerging markets, particularly those with a lot of US Dollar denominated debt, as currencies devalue further in Turkey, Argentina, Indonesia and India to name a few. Sparking fears of a debt crisis and financial contagion.
While the ultimate economic consequences of a protracted trade war won’t be known for some time, some preliminary effects are already starting to appear. Long supportive of economic growth, trade is rapidly going from a positive to becoming a drag on GDP or Gross Domestic Product, as exports start to slip. That said our thirst for imports continues unimpeded, at least for now. Inventory builds should help to prop up 3rd quarter GDP, but after that if the trade war expands its impact on 4th quarter growth won’t be negligible.
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