The Market Bull – October 31, 2019
With doubts about the latest trade war settlement making the rounds again the major averages fell in early trade, closing with small losses.
The 3rd Quarter Employment Cost Index or ECI advanced .7% as expected. Despite 50-year low unemployment rate and an endless parade of stories promising higher wages, they have yet to materialize. Stuck in slow growth mode now for some 40-odd years. While the annualized rate of growth is clocking 2.8% it is only slightly ahead of inflation that is running some 2%. At the regional level the ECI for private wages was up 3.3% on a year-ago basis in the Northeast, down from 3.7% last quarter, but still the strongest region in the country. Private wage growth in the South increased to 2.8%, while the West posted a 3.1% gain, a slight deceleration from last quarter. The Midwest came in at 2.7% growth, which marks a slowdown relative to prior quarters.
Personal Income advanced .3% in September, matching expectations. Income from assets was particularly strong snapping a pair of declines with a .9% gain, followed by small business or proprietor’s income that increased .4%. Wages grew just .1% the lowest rate in the last 5-months. The savings rate increased slightly to 8.3%. Personal Spending grew .2% in September, durable goods spending was particularly strong up .6%. Personal spending accounted for more than all the economic growth over the last two quarters as the rest of the economy contracted.
The inflation measuring Personal Consumption Expenditures or PCE Deflator was unchanged for a second month in September. On a year ago basis this series is up just 1.3%, far below the Fed’s 2% desired inflation target. Goods prices fell for a second month, services advanced just .1%.
Standard and Poors 500 Index closed at: 3,037.56 down 9.21
NASDAQ finished the day: 8,292.36 down 11.62
Gold ended trading at: $1,513.20 up $16.50