Stocks opened the trading week with mixed action as the Dow fell on light volume while the S&P 500 and NASDAQ rose on light volume. Tech stocks rallied for the first time in 4 trading sessions led by chip stocks that rebounded after a positive report on AMD. At the close the Dow was down 59 points to 25,857.
CNBC posted an article about the affect of the recent corporate tax cuts on overseas cash holdings of big US corporations. The report noted that in the first quarter of 2018, US corporations repatriated approximately $300 billion in cash which was roughly 10X higher than any other quarter in recent memory. Since then it is estimated that companies have brought back additional amounts upwards of a trillion dollars. Before the tax cuts were passed, the Feds estimated that US corporations housed $2.5 trillion in cash overseas to avoid US corporate taxes. The money coming back into the US is being used mostly for stock buybacks as well as dividends, investments in growth and higher wages.
Trade jitters continue to plague Chinese equity markets. The Shanghai and Hong Kong exchanges each pulled back over 1.2% today and continue the slide which began in late January. A trade deal with Canada has yet to be finalized and apparently the big holdup is milk. The Canadians have had tariffs on dairy products coming from the US and farmers in Wisconsin have long complained about this practice however even in the face of this building pressure, Canada has held firm and milk has apparently become the sticking point that is preventing a deal with the US on trade.