Markets were quiet like church mice as banks were closed due to the Columbus Day holiday. The Dow drifted back and forth before closing with a 29-point drop on light trading volume at 26,787. While last Friday was constructive for markets IBD continues to have stocks listed as “rally under pressure”. BTS has a cautiously optimistic view of equities.
The trade deal announced on Friday is being called “phase 1” “skinny”, “mini” and “the no-deal trade deal”. The bottom line is that two things were done in the agreement which are 1) China agrees in principle to immediately purchase up to $50 billion in US ag products and 2) the US will not increase tariffs on $250 billion worth of goods scheduled to hit this week. The deal also contains unspecified provisions for currency and intellectual property issues plus US companies will gain greater access to China’s financial services market. The deal does not address the “7 deadly sins” which relate to China’s trade practices like forced technology transfers, piracy and other issues. Businesses would also like to see tariffs reduced and since that was not part of this deal many big Wall Street firms are disappointed with the outcome.
Shares of Boeing held steady after the company announced it had removed Dennis “The Menace” Muilenburg as chairman but will remain President and CEO. Board member David Calhoun will take over as non-executive Chairman. David used to run the Aircraft engine unit at General Electric and has been a member of the board since 2009. PR at Boeing said move is being made so that Dennis can focus on getting the 737 MAX flying again as well as address issues with the 777X and problems in the KC 46 tanker program while the board will handle oversight and provide big picture leadership.