Trade War Fears Haunt Investors Again

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Like Thursday-morning clockwork, new Initial Jobless Claims for last week have been released before today's opening bell. They further push the narrative that we are sturdily within an historically low range of new claims: 218K, up 1000 from the unrevised previous week's 217K and keeping the 4-week average squarely within the 200-225K range that we thought impossible not all too long ago.

Continuing claims have also reached new preposterously low levels: 1.724 million versus the previous week's 1.747 million, well below the psychologically satisfying threshold of 2 million continuing claims we had seen not all too long ago. These figures, of course, come sandwiched between yesterday's private-sector ADP ADP jobs survey, which outperformed expectations with 219K new jobs produced in July, and tomorrow's non-farm payroll report from the U.S. Government, expected to reach 190K with a new Unemployment Rate of 3.9%.

Futures are down significantly in today's pre-market, however, as trade tensions heat up again between the U.S. and China. President Trump is openly considering turning the screws on tariffs for Chinese goods - up to 25% on $200 billion worth of goods beyond the initial tariffs already instituted. The Trump administration is hoping this will cause China to reconsider its retaliatory tariffs on U.S. goods - particularly soybeans, of which it is easily the world's largest importer.

Talks between Washington, DC and Beijing have stalled as of late, and as Trump discusses his plans for all to hear, operatives within his administration plan to meet with U.S. industry leaders for perspective on this latest proposal. No action is expected before next month. However, the overall thinking seems to be that the U.S. operates from a stronger position - our economy is rolling while China's has been flagging.

Yet China has already devalued the yuan currency to absorb some of the impact on tariffs, and analysts expect more of the same should Trump's plan go into action next month. This, while the U.S. dollar continues to grow in value, further separating the two currencies and potentially leading to a whole host of problems regarding U.S. trade, not only in China - which would either acquiesce to Trump's demands or instate further tariffs on U.S. goods, making the situation worse - but everywhere around the world.

In the hear and now, however, Q2 earnings results keep rolling in, to mostly good news: Kellogg Company K reported earnings of $1.14 per share versus $1.05 expected, DowDuPont DWDP posted $1.37 per share versus the Zacks consensus of $1.33, Cigna's CI $3.89 per share trounced the estimated $3.33 and Royal Caribbean RCL topped expectations with $2.27 per share versus the $1.97 estimate.

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Kellogg Company (K): Free Stock Analysis Report

Cigna Corporation (CI): Free Stock Analysis Report

Royal Caribbean Cruises Ltd. (RCL): Free Stock Analysis Report

Automatic Data Processing, Inc. (ADP): Free Stock Analysis Report

Dow Chemical Company (The) (DWDP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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