The Market Bull – August 22, 2019
The major averages closed mixed on generally disappointing but not very significant data. As Wall Street holds its breath waiting for another rate cut.
The Saint Louis Fed Financial Stress Index increased slightly but remains negative at -1.18 last week. Unlike the domestic recession and global recession odds that have both moved sharply higher of late, this series continues to suggest that there is nothing to worry about. That said the trade war and tariffs continue to bite causing global growth to shrink. China’s economy is growing at the slowest rate in nearly 30 years, while Germany’s economy contracted in the second quarter.
The Kansas City Fed regional manufacturing index contracted for a second month in August falling to -6. Weakness was noted in production, employment and new orders that plunged 14 points to -16. Price data was negative for the month. Despite considerable rhetoric from both the lamestream media and the Trump administration, it is becoming increasingly evident that U.S. manufacturers and distributors are paying the price of the trade war. Further escalation will only exacerbate these worsening conditions in the form of declining business sentiment, delayed capital investment, and slowing sales as price increases are ultimately passed on to consumers.
The Conference Board Leading Economic Indicators snapped back in July with a .5% gain. Once again, I don’t pay much attention to various consumer sentiment surveys as they are frequently driven by misleading mainstream media headlines and talking points along with whimsical consumers who frequently say one thing and do another.
Standard and Poors 500 Index closed at: 2,922.95 down 1.48
NASDAQ finished the day: 7,991.39 down 28.82
Gold ended trading at: $1,493.80 down $10.80