Stocks continued to trade mixed with a slight upward bias. Banks were higher thanks to strong earnings from Morgan Stanley. The Dow gained another 79 points to 25,199 on heavier trading volume.
We continue to keep an eye on China as more articles about possible economic disruption hit the news wires. Bloomberg recently posted an article on Chinese debt problems and had this to say: “The Shanghai Composite Index of stocks has declined 7% in a month, dropping below the government’s red line of 3,000 for the first time since September 2016. Corporate bonds are about to set a record for the most defaults in a year. Junk bond yields are spiking. The chorus of anxiety about debt is reaching a crescendo, with daily press reports on governments that can’t pay their employees or meet pension obligations. Property prices are tumbling in some cities and frozen in others whose governments have placed a finger in the dyke by halting transactions”. We at Greystone are watching to see how this might, if at all, affect US markets and will keep you posted. It is important to remember that past predictions of a China recession have not panned out so patience is advised as this situation unfolds.
The transportation sector got a boost when Florida based CSX rail reported better than expected earnings. Revenue was up 6% and net income grew a whopping 58%. The company improved operating margins significantly and saw the biggest increases in demand for rail services from forest products, metal and equipment, intermodal and export coal. Shipments of light trucks were also up 7%. Going forward, CEO Jim “Choo Choo” Foote sounded a positive note saying that due to overall economic strength and cost controls the company was upping its forward guidance. For those Monopoly fans, CSX is a 190 year old company that grew out of the original B&O Railroad. (B&O stands for Baltimore & Ohio).
Amazon said its Prime Day went well as over 100 million items were shipped despite an early computer glitch. The company experienced a record day for prime member signups, shipped product to 17 countries and here in the US sold an astounding 300,000 Instant Pots. Rumor has it that even Kim Jung Un signed up on Prime and bought an Instant pot.