May 29, 2019

Good morning!

Last week likely did not bring any resolution to the US-China trade conflict.  Both sides are resolute with their positions, reluctant to accept terms proposed by the other.  What is apparent however is that tariffs are impacting sales.  US companies exported $26 billion of goods to China in the first quarter 2019, on pace for $104 billion for the entire year.  That projection is 13% lower than the $120 billion of actual exports to China in 2018.  Chinese companies exported $106 billion of goods to the United States in the first quarter 2019, on pace for $424 billion for the entire year.  That projection is 21% lower than the $540 billion of actual exports sent to America in 2018 (source: Commerce Department).   

Traders in the oil market juggle a myriad of issues each trading day that go well beyond the classic supply/demand discussion – inventory disruptions, geopolitical tensions, recessions, and now the potential consequences of the US-China trade dispute.  But the majority of topics that would have moved the pricing-needle a decade ago are now oftentimes overshadowed by the surging supply of US shale oil.  Crude oil production in the United States, running at 5 million barrels a day just a decade ago, is at 12 million barrels a day in 2019, largely a result of the US shale oil revolution (source: DOE).       

In less than one week, the USA will begin its 120th month while in an expansion, tying the longest growth-run in US history.  However, the message from the US bond market (falling interest rates recently) suggests we are heading into a period of ordinary if not slowing-growth, and weak-to-low inflation.  If the Fed follows the bond market’s lead, its next action would be to ease monetary policy, i.e., lower rates (source: BTN Research).                                 

Notable Numbers for the Week:

1.     BIG AND REALLY BIG - 62 publicly held US companies produced at least $1 billion of sales per week in 2018, up from 58 companies that accomplished that level of weekly sales in 2017.  Just 1 domestic company generated more than $1 billion of sales per day during 2018 (source: Fortune).          

2.     COLLEGE - During the 2018-19 school year, American colleges awarded 1.88 million bachelor’s degrees, down from a record 1.96 million degrees from the 2016-17 school year (source: NCES).    

3.     RECYCLING - Just 15% of plastic is recycled globally, i.e., 85% of plastic ultimately is burned, dumped into a landfill or dropped into the ocean (source: United Nations). 

4.     NEWBORNS - Our nation’s “general fertility rate,” defined as the number of births per 1,000 women between the ages of 15-44, was just 59.0 births in 2018, a record low for birth data that has been tracked nationally since 1909 or for the last 110 years (source: National Center for Health Statistics).  

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