The major averages enter the final hour mixed on little real news though the 3-ring circus that passes for political leadership in this country continues. The markets have shrugged of one significant event after another over the last several years that should have mattered a great deal and continue to make new record highs despite painfully high leverage and valuations. The trend is you friend until it isn’t, and I’m reminded of the 2000 and 2008 crisis when things went from everything is fantastic to everyone’s worst nightmare in a relatively short period, without much warning.
Case/Schiller reports that its 20-city home price index advanced 5.9% in July from a year ago. For the month prices increased .3%. Standouts include Las Vegas up 1.1%, San Francisco +.9% and Miami with a .5% gain. At the other end of the scale New York led with a 4th consecutive decline, down .5%, followed by Boston -.2% while Chicago slipped .1%.
The Richmond Fed gained 5 points in September to 29, new orders jumped but employment slipped markedly. Tariffs will begin to impact the various Fed manufacturing surveys and also consumer price data beginning with the October releases.
We’ve been told that trade wars are easy to win and will ultimately benefit the USA. Caught in the crossfire will be American consumers forced to pay higher prices because of the tariffs, something that will hit hard after the New Year. American workers are very likely to suffer as well as the transfer pricing mechanisms of the existing tax code, something that has punished American labor for quite some time, will most likely be used to simply shift production to other tariff exempt locations. Labor shortages notwithstanding as it is quite clear that US corporations don’t want to pay competitive wages in order to entice workers back into the labor force despite hefty deficit funded tax cuts and record profits. The results of which are clearly seen in the wage data and employment to population ratios.
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