Stocks were on a wild ride today with the Dow dropping 280 points intraday before a rally at the close put the Dow at 26,287 down 90 points. The Dow had actually gone positive but then faded at the closing bell. The cause of all the volatility is trade talks between the US and China. It seems chip stocks took a hit when the White House was misquoted regarding its decision not to allow US gubment agencies to buy Huawei gear. The misquote came because gurus thought Trump meant that no US chip maker could deal with Huawei but once this was clarified stocks began to recover. Both sides of the US China trade war have dug in and continue to take shots at each other. IBD has markets now in correction mode and BTS still has a 30/70 treasury high yield bond mix which means they are cautiously yet pessimistically optimistic which pretty much sums up how most people feel these days. For the week the Dow lost a net 147 points or approx. 0.5%.
John is in Vegas this weekend at the Hackers Conference with his beautiful and only wife who is a Microsoft employee. He will be back on Monday but then I leave with some adults and 18 boy scouts on an adventure to the International scout camp Kandersteg, Switzerland. The camp was established in 1920 by Lord Baden Powell and for $60 a day the lunkheads get a bed and three squares which is about the same cost as Camp Parsons and half the cost of the scout camp on Catalina Island in California. It will be fun, and our scouts will meet scouts from all over Europe. They are planning a “never before seen” skit for the international campfire which I think will be about how to deal with running low on toilet paper while on a long hike.
China is caught in a bind with deflation and inflation occurring at the same time. The South China Morning Post reported that producer price inflation (PPI) in China has fallen by 0.3% due to a drop in raw material, energy and machinery prices from suppliers while consumer price inflation (CPI) has shot up 2.8% thanks to a runup in pork and other agriculture products. Due to the African swine fever decimating China’s pig industry pork prices are up 27% since last year but also recently fresh fruit prices have skyrocketed 39.1%. Other foods including eggs, chicken and fresh veggies have jumped anywhere from 5.2% to 11.4%. The paper noted that the divergence indicates rising recession risks and growing anxiety over jobs and purchasing power among locals.