good morning all, looks like the trade numbers came in a bit higher than expected... may mean a down day for the market... futures down since this came out, but not down too terribly much...
cme.com
INSTANT VIEW -US June trade gap up to $24.6 bln
Reuters Story - August 19, 1999 08:49
NEW YORK, Aug 19 (Reuters) - Following are comments from economists and market experts after the U.S. Commerce Department reported that the U.S. international trade deficit expanded to a record $24.62 billion in June from a revised $21.17 billion in May.
Economists surveyed by Reuters had predicted, on average, a $20.5 billion trade gap in June.
PETER OSLER, GNI LTD, LONDON: "This is a very bad figure indeed."
Osler was speaking on Reuters Television.
RAM BHAGAVATULA, CHIEF ECONOMIST, NATWEST GLOBAL FINANCIAL MARKETS: "Once again, the deficit is much bigger than the consensus forecast. It continues to point to the strength of domestic demand. This will scale back second-quarter GDP growth from the previous number. With these trade numbers, it looks as if second-quarter GDP will be revised down to 1.5 percent or slightly less than that. Domestic demand is super strong, but most of that demand is being satisfied by imports.
"It shows that the Fed still has some work to do to cool off domestic demand. A 25 basis point rate hike at least seems a certainty next week. The second consideration is that as everybody else's growth picks up, the dollar probably has further downside. So it's difficult to see the dollar appreciating from its present levels.
"Treasuries still have further to fall. Six percent yields are ridiculously low given levels of domestic demand. Treasuries need to be at least 50 basis points higher. There's no reason to touch Treasuries until they hit a 6.5 percent to 7.0 percent yield on the long bond. Stocks will go sideways. It will be a repeat of 1994 when the Fed had to make a policy adjustment. The quicker the Fed is in making that adjustment, the less likely it is that the stock market is going to collapse."
DAVID SLOAN, SENIOR ECONOMIST, 4CAST LTD: "(The) exports figure wasn't that bad, it's really the imports figure being incredibly strong that's the story.
"I don't think this is going to change anything for the Fed. If anything, the strength in imports confirms the U.S. demand remains strong. There's no sign of slowness, while it will cause a downward revision to GDP ... probably GDP is going to be lower than 2.0 percent now in the second quarter, but with the downward revision being caused by strength in imports it's not a sign of slowing demand."
ROSANNE CAHN, CHIEF EQUITY ECONOMIST, CREDIT SUISSE FIRST BOSTON: "This is a trade deficit that is deteriorating because the strong U.S. economy is pulling in imports. That is true for both consumer goods and it's an inventory story as well. Because it's a deteriorating trade deficit, it will probably add downward pressure to the dollar because the dollar is in a downtrend."
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