Trade war tit for tat sent the major averages into the final hour with modest losses. Following an initial US round, the Chinese responded with 50 billion in tariffs of their own. Trumps reaction was to threaten another 200 billion in tariffs, after promising that trade wars are easy to win, this is where the rubber hits the road. For starters higher prices for us and the Chinese is to be expected, not quite sure how that equals winning, but will see.
Housing starts increased 5% in May to 1.35 million units annualized, handily beating expectations. Permits however fell for a second month down 4.6%. On a regional basis housing starts fell 4.1% in the West. Were it not for a large seasonal gain in the Midwest this report would have been disappointing.
State and Local Government tax revenues increased a respectable 6.4% in the first quarter. Another large gain in severance taxes, they have risen sharply in 4 of the last 5 quarter, driven by higher energy prices, and to a lesser extent individual income taxes. Corporate taxes fell 5.2% largely thanks to Trumps debt funded tax cuts.
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