The Market Bull – May 31, 2019
Trump’s surprise 5% tariffs on Mexican imports spooked the markets as did a contraction in the Chinese economy as trade war fallout spreads rapidly. With threats of sharply escalating tariffs on Mexican imports as Trump attempts to halt the migrant crisis, it would seem that tariffs have become his weapon of choice. Tariffs also loom for the Europeans as well and could be announced any day. Like China, you have to think that the economic data is going to take a real hit, and soon. For the week the major averages fell hard with the Standard and Poors 500 Index down 68 points or 2.4%, while the NASDAQ gave up 203 points or 2.65%.
Personal Income growth beat expectations in April with a .5% gain. On a year ago basis income growth is up a respectable 3.9%. The savings rate increased slightly to 6.2%. Income gains were broad based with income on assets a real standout at +1.6%.
Personal Spending was unchanged in April and has been fairly volatile of late. Durable Goods spending was particularly weak, a category that includes automobiles a sector that has shown marked weakness recently.
The price change measuring Personal Consumption Expenditures or PCE Deflator advanced .3% in April and 1.5% from a year ago, far below the Fed’s 2% target. Durable Goods prices fell markedly for a 3rd consecutive month. Food prices gave back some of their recent gains falling .3%.
Agricultural prices advanced 1.1% in April despite sharp declines in commercial vegetable and fruit prices. Gains were driven by a large jump in livestock prices. Despite a 3rd consecutive monthly increase agricultural prices are up just .1% from a year ago.
Standard and Poors 500 Index closed at: 2,752.06 down 36.80
NASDAQ finished the day: 7,453.15 down 114.57
Gold ended trading at: $1,311.10 up $18.70