Market Bull

Earnings Season

Earnings Season
The Market Bull 2019

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The Market Bull – July 15, 2019

Stocks struggled into the close about even as earnings season begins. China’s economy records the lowest growth in 27-years as tariffs bite.

The Empire State Manufacturing Survey jumped 12.9 points in July to 4.3, ending a brief trip into the red and handily beating expectations. That said new orders, employment and inventories all remained negative. Price data slipped a little and remains mixed.

Despite being the longest economic expansion in history and sporting an official unemployment rate of just 3.6% the current recovery has left a lot to be desired despite adding ten times to the national debt than previous recoveries and quadrupling the Fed’s balance sheet. While the stock market boomed earnings and revenues struggled, were it not for the magic of debt funded share buybacks and Wall Street’s focus on Earnings Per Share or EPS, as opposed to actual earnings, the market wouldn’t be anywhere near as high as it is today. Compliments of calculation methodology and other statistical manipulations mediocre or downright poor data magically transforms into “good or great data”.

We’ve been living the last twenty years in a trickle-down recession that has only benefited the top 10%. Mostly, of course, the 1%, whilst spreading debt far and wide leading to new records across the board. For all that debt, we have seen less GDP improvement than at any time in the past hundred years.

Unemployment only appears to be at its lowest ever, but unemployment truthfully remains quite bad. Falling out of the official statistics happens in three main ways: 1) You only remain counted in unemployment stats for as long as you keep actively seeking work and qualifying for benefits. 2) You also fall off the list as soon as you use up all your available benefits because that is another way to no longer qualify. 3) You fall off the list when you replace your former full-time job with part-time work. As a result, we have the lowest labor force participation rate in half a century. Even the Fed acknowledges that and pretends to be mystified as to why that is when it is as obvious as the gray hair on the Fed chair’s head. There are other egregious examples of number “fudging” but these are the primary ones.

Standard and Poors 500 Index closed at: 3,014.28 up .51
NASDAQ finished the day: 8,258.19 up 14.04
Gold ended trading at: $1,415.70 up $3.50

S&P 500 Over 3,000

The major averages finish with decent gains. For the week the Dow closed above 27,000 for the first time. Same for the S&P 500 above 3,000.

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DOW 27,000

The major averages closed mixed on little news. While the Dow closed above 27,000 for the 1st time, the S&P 500 can’t seem to close above 3,000.

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FOMC Minutes

The major averages finished with small gains on generally positive but not overly significant data. FOMC minutes got their usual dissection.

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Financial Contagion

Financial contagion fears spread with Deutsche Banks troubles. British hedge funds freezing up and now growing earnings warnings, not pretty.

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Death Spiral

The major averages begin the week with modest losses. Deutsche Bank continues its death spiral as it sheds employees and exits business lines.

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Solid Job Report

The major averages finished with small losses after a better than expected job report cast doubt on interest rate cuts early.

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Modest Gains

The major averages closed early for the July 4th holiday with modest gains on mixed but not overly significant data.

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Last Minute Charge

The major averages closed with small gains on a last-minute charge. Diminishing concerns over war with Iran and the Chinese trade war seemed to help

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Economic Expansion

The current economic expansion hit the record books today at 121 months, longest ever.The previous record ended with the Dot-Com crash after 120 months.

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Trade War Continues

The major averages last minute charge helped them to close with modest gains. As expected, the trade war continues, and looks to expand in Europe.

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Caleb Lawrence

Registered Investment Adviser

5321 Scotts Valley Drive
Suite #202
Scotts Valley, CA 95066

Local: (831) 334-5318

After nearly 19 years of live radio it was time to move on to new projects. My daily economic update can still be found on my Blog and the I-Tunes and Google Play stores as a podcast. Or you can call my office 831-334-5318 and take advantage of my still “free” after 20+ years initial consultation.  Usually about an hour, will have an opportunity to get to know each other better and address your specific concerns on a one to one basis.