The Market Bull – April 26, 2019
The major averages closed with small gains to finish a decent week. Since Monday the Standard and Poors 500 index increased 41 points or 1.2% while the NASDAQ added 177 points or 2.2%.
1st quarter preliminary Gross Domestic Product or GDP shattered expectations with a 3.2% gain on strong inventory growth and trade gains despite the tariffs and some trade war rhetoric. Weakness was noted in personal consumption, aka consumer spending and residential fixed investment a category that has fallen for 5 straight months and tends to lead the economy into and out of recessions. Real disposable income growth slowed to 2.4% in the first quarter from 4.3% in the 4th. The saving rate rose to 7%, from 6.8% in the fourth quarter.
It’s no secret that debt funded corporate share buy backs have given a generous assist to the markets in the post crisis period since 2009, the 2018 total was a cool trillion dollars. History may not repeat but it often rhymes as the chart below shows. Given the record corporate debt levels from the buy backs, you have to wonder just how much longer it can continue.
Standard and Poors 500 Index closed at: 2,939.88 up 13.71
NASDAQ finished the day: 8,146.40 up 27.72
Gold ended trading at: $1,287.90 up $8.20