The Market Bull – September 26, 2019
The major averages closed with modest losses on mixed data. Political infighting, trade war drama, and continued turmoil in the Repo Markets all took their toll.
The International Trade in Goods Deficit increased slightly in August to 72.8 billion. Exports advanced fractionally to 137.8 billion, as did Imports to 210.6 billion. Rising trade volumes are a positive sign, especially considering all the trade war rhetoric.
Final 2nd Quarter Gross Domestic Product or GDP was unchanged at 2%. Income and profits were revised lower, residential fixed investment was negative for a 6th straight quarter. While not new residential fixed investment, basically housing construction and remodeling, tends to lead the economy into and out of recessions. Fixed nonresidential investment was also negative in the second quarter, not a positive trend. That said I do not for see a recession in the next 6-months, and 12-months is doubtful as well. The U.S. economy is growing at or below its potential. Real GDP growth in the second quarter was 2%, and the economy’s current potential is estimated at 2% to 2.5%. Prior to the last crisis economic potential was figured to be about 3.25% and this is a great example of excessive debt crowding out economic growth, per basic economics.
Lower interest rates continue to drive real estate sales and expectations. The latest pending Home Sales Index for August advanced 1.7 points to 107.3. The Western region saw the strongest data at both the monthly and year ago levels, by quite a bit.
Standard and Poors 500 Index closed at: 2,977.62 down 7.25
NASDAQ finished the day: 8,030.66 down 46.72
Gold ended trading at: $1,512.40 down $2.80