Markets reacted to trade pressures with China. On Thursday JPMorgan predicted the U.S. would end up in a full-blown trade war with China in 2019. Markets felt threatened by such thoughts. As evidenced by negotiations with other countries, the Trump administration is looking for new negotiations with China regarding trade. The latest tariffs against China, 10% on $200 billion in goods, go up to 25% in three months if China doesn’t come to the table.
The U.S. signed a new trade agreement with Mexico and Canada. Now the trade agreement moves to Congress to get approved.
The jobs number missed badly. September’s consensus was for 180,000 new jobs, but the actual number came in at 134,000.
The U3 unemployment rate dropped from 3.9%, down to 3.7%.
The ISM indexes were mixed. The Institute for Supply Management’s manufacturing index dropped from 61.3 down to 59.8. Their non-manufacturing index rose from 58.5 up to 61.5. Numbers above 50 mean the index is expanding, while numbers below 50 mean the index is declining.
Fed Chair Jerome Powell, in an interview with PBS, said the Fed wants to get to at least a neutral place regarding interest rates. He then added the Fed was a “long way” from neutral. The current rate is +2.0%. Projections are for the Fed to raise ¼ points for the next six quarters.
The economic focus of the week: The new quarterly earnings season gets underway this week. Some of the companies reporting: Citigroup, Delta, JPMorgan, PNC, Walgreens, and Wells Fargo.
Inflation stats come on Wednesday and Thursday when we get a look at last month’s inflation stats. The PPI is expected to climb slightly, while the CPI’s year-over-year change should drop a touch.
U.S. Bond markets are closed on Monday for the Columbus Day holiday.
Indicator focus: September’s Producer’s Price Index (Wed); September’s Consumer Price Index (Thu); and October’s preliminary consumer sentiment (Fri).
Hope you have a great week.
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