Fed Beige Book: US Economy Improving Despite Tariffs

Fed Beige Book: US Economy Improving Despite Tariffs

$DIA, $SPY, $SOX, $QQQ, $RUTX, $VXX

FLASH: Wall Street saw follow-through buying on hopes for a Fed rate cut on slowing growth

Wednesday, the Fed reported that its contacts at companies across the country were worried that international trade tensions could weigh on business even as economic activity picked up.

It noted in it Beige Book report that its surveys of business contacts pointed to a “slight improvement” in growth in economic activity, which it described as being “modest” from April through mid-May.

The Fed’s so-called “Beige Book” report, a compendium of anecdotes on the state of the economy (click here for the full report), pointed to numerous cases of businesses citing concern over The Trump Administration’s trade war with China.

“Contacts in the corrugated packaging industry reported slow growth attributed to the current trade dispute with China,” the Fed said in the report, referring to activity in the St. Louis Federal Reserve Bank’s district.

The report was prepared with information from business contacts through 24 May, meaning it caught none of the comments in business circles over US President Trump’s threat last week to slap new tariffs on all Mexican imports if Mexico does not crack down on illegal immigration into America.

The U.S. economy will mark 10 years of expansion in July, the longest on record. But rising trade tensions between the United States and China have led to tit-for-tat tariffs, put a chill on U.S. businesses’ spending and exacerbated a manufacturing slowdown.

The Beige Book report pointed to employment growth nationwide with prices rising at a modest pace in most of the Fed’s 12 districts.

Economists generally expect policymakers to treat tariff-fueled price increases as a temporary issue.

Investors are increasingly betting the Fed will cut interest rates this year and a few policymakers have hinted this could be in the cards.

Wednesday, the major US stock market indexes finished at: DJIA +207.39 at 25539.57 NAS Comp+48.36 at 7575.45, S&P 500 +22.88 at 2826.15

Volume: Trade on the NYSE came in at 819-M/shares exchanged

  • NAS Comp +14.2% YTD
  • S&P 500 +12.7% YTD
  • Russell 2000 +11.7% YTD
  • DJIA +9.5% YTD

HeffX-LTN overall technical outlook for the major US stock market indexes is Neutral to Bullish in here.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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