When questioned before Congress this morning on the impact of the “trade war” with China, Fed Chair Powell confirmed that respondents to the many surveys the Fed performs have major concerns, and that in some cases it is indeed influencing their expansion plans.


This morning’s release of December factory orders confirms Powell’s commentary. Here’s from Econoday’s summary: emphasis mine…

“A glaring weakness in December and November orders are sharp 1.0 percent and 1.1 percent declines for core capital goods orders (nondefense ex-aircraft). This is telling evidence that business investment is down which in turn may well betray a downturn in business confidence. And there’s an important revision in today’s report that will be trimming back estimates for nonresidential investment in tomorrow’s fourth-quarter GDP report as December shipments for this series, initially at a 0.5 percent gain in last week’s advance report, are now revised to no change. November stands at a 0.2 percent decrease for core shipments.”

 As I’ve preached here from the get-go, I can think of virtually nothing more economically pernicious than policy that would disrupt global trade relations. 


I — as I’ve been preaching of late — believe we’re nearing a critical juncture; i.e., it’s critical for the health of the economy and for the markets going forward that a trade agreement be reached relatively soon with China, and that a similar skirmish is not provoked with Europe immediately thereafter…