It was a slow news day and the markets saw some sector rotation. Investors moved out of tech and into energy and utilities, which doesn’t really play into the whole China/tariff thing. The Dow ended up gaining 86 points to close at 26,743 while the NASDAQ was down half a percent. We wonder if some of the sector rotation could be due to the realignment of the S&P indexes, which will be moving companies like Facebook and Google out the the tech sector and into the communications sector. In addition, it will increase the weighting of chip companies, which some investors are down on, and so as a result some investors could be fleeing this space causing some overall tech selling.
Retailers are getting antsy regarding trade and tariffs with China as the holiday (big spending) season approaches. Target and Walmart were the headline names, but a group of 300 retailers wrote a letter to Washington expressing their concern. In the letter, the retailers believe the tariffs will cause "massive disruption and cost increases due to materials availability, quality, compliance, and capacity in other countries". They also expressed concern that it could put millions of American supply chain jobs at risk. Mostly, we think they are concerned with sales and how to compete with Amazon.
Canada and the U.S. have still yet to come to an agreement over trade. It’s anticipated that the U.S. will give them till the end of the month to join the “NAFTA” deal the U.S. has agreed to with Mexico, and if there is no agreement at that point then the U.S. will move forward without Canada as a part of the deal. It sounds like they are pretty close but are hung up on agricultural and dairy products.