The Market Bull – July 3, 2019
The major averages closed early for the July 4th holiday with modest gains on mixed but not overly significant data.
The Mortgage Bankers Association reported that mortgage activity slipped .1% last week as refi’s dropped 1.2% and purchase apps gained 1.1%. The 30-year contract rate for a jumbo loan was unchanged at 4%. Mortgage interest rates have fallen more than a .5% so far this year as the yield curve inverted.
ADP reported disappointing employment data for a second consecutive month in June with just 102,000 new private sector jobs. Far less than the 150,000 expected. The 3-month moving average for job creation fell to an anemic 133,000, a sharp decline from the 244,000 seen as recently as February. One particularly disturbing trend in this series is that small business employment has fallen for 2-consecutive months, down a combined 61,000, the last time this happened was early 2008 just before the Great Financial Crisis got underway in earnest. The significance here is that small business employment tends to lead the economy into and out of recessions. While not yet a trend, I will watch the July report very closely.
The International Trade Deficit increased 9.25% in May to 55.5 billion. Exports gained 2% while imports advanced 3.3%. Rising trade volumes are generally considered a good sign. That said this is the largest deficit so far this year and is well above the 2018 average. While additional tariffs on Chinese goods are on hold once again following the latest ceasefire. Trump was quick to threaten Europe with substantial additional tariffs as the trade war shows little if any sign of actually abating.
The Non-Manufacturing or Services Index fell 1.8 points in June to 55.1 on broad based declines, price data increased slightly but remains fairly moderate. This series has fallen steadily since late last year.
Factory Orders fell for a second month in May down .8%. New Orders for Non-Durable and Durable Goods both fell for the month and have fallen in 3 of the last 4-months. The proxy for business spending Non-Defense Capital Goods Ex-Aircraft advanced .5%.
Standard and Poors 500 Index closed at: 2,995.82 up 22.81
NASDAQ finished the day: 8,170.23 up 61.14
Gold ended trading at: $1,420.90 up $12.90