The Market Bull – February 27, 2020
Another bruising day on the street as Covid -19 fears send the major averages skidding once again as they closed with substantial losses for a 3rd time this week.
Revised 4th Quarter Gross Domestic Product or GDP was unchanged at 2.1%. Despite a modest slowing, consumer spending remained a contributor to growth. Residential investment was solid. Trade powerfully supported growth as imports shrank sharply and exports modestly rose. Inventory investment was a major drag on growth. The government contribution increased. Real disposable income growth slowed to 1.7% from 2.1%, with the latter figure previously reported to be 2.9%. The saving rate remained 7.7%. A backward-looking series as is most economic data. If Covid-19 breaks containment, and it increasingly looks like it might a recession could easily ensue.
Advance durable goods orders fell .2% in January, December was revised lower to -2.9%. Some of the data in this report is very surprising to say the least. While transportation has always been a very volatile component the absolutely stunning 346.2% surge in non-defense aircraft orders in light of Boeings shutdown of the 737 Max production line in January redefines the whole concept of volatile. The proxy for business spending nondefense capital goods ex-aircraft advanced a solid 1.1%.
The National Association of Realtors pending home sales index jumped 5.2% in January to 108.8, an 8-month high. All regions advanced except the West. The South up 8.7% and Midwest with a 7.3% advance led the gains. Mortgage rates at more than 3-year lows helped to propel the gains, while also spurring a surge of refinancing’s as well.
Standard and Poors 500 Index closed at: 2,978.76 down 137.63
NASDAQ finished the day: 8,566.48 down 414.29
Gold ended trading at: $1,642.60 down $.50