The Market Bull – August 15, 2019
A volatile session following yesterday’s drubbing saw the major averages closed mixed on generally positive data.
Productivity beat expectations in the 2nd quarter with a 2.3% gain. Unit labor costs advanced 2.4% over the same period. Nonfarm productivity increased 1.8% on a year-ago basis while unit labor costs rose 2.5%. with labor costs outstripping productivity growth corporate profits will suffer. An ageing workforce is largely to blame for weak productivity growth as the share of the labor force that is 65 and older has doubled over the last decade or so and will continue to increase over the next one.
Retail Sales handily beat expectations in July with a .7% gain. Internet and Gasoline Sales were particularly strong. Continued solid sales growth is doubtful. The stock market has gained little ground over the last 18 months and house price growth has slowed, undermining wealth effect spending, especially by important high-income households. Additionally the on again, off again trade war and tariffs with the Chinese isn’t helping either.
The Treasury International Capital Flows or TIC Report hit a 10-month high in June with 99.1 billion in net purchases. Agency Bonds led with 37.6 billion in net purchases, followed by Stocks up 26.6 billion, Corporate Bonds saw 7.2 billion in purchases while Treasury Notes and Bonds sold off for a second month.
Standard and Poors 500 Index closed at: 2,847.60 up 7.00
NASDAQ finished the day: 7,766.62 down 7.32
Gold ended trading at: $1,533.90 up $6.10