The Market Bull – November 27, 2019
The major averages closed with modest gains, setting new record highs, on generally positive data ahead of the Thanksgiving holiday.
Personal income missed expectations in October, coming in unchanged. Weakness was noted with investment income and proprietors or small business income. Wages advanced a respectable .4% for the month. The personal savings rate declined from 8.1% in September to 7.8% in October. Real or inflation adjusted disposable income, a driver of consumer spending, fell .3% for the month.
Personal spending advanced .1% in October driven by solid wage gains. Spending was particularly strong for clothing, footwear, recreational goods and vehicles. Of note durable goods spending fell .8% for the month something that contradicts the durable goods report, more on that in a minute. Personal Spending accounted for nearly all of the economy’s growth in the third quarter.
The personal consumption expenditures or PCE deflator showed that prices advanced .2% in October and just 1.3% from a year ago. Well below the Fed’s desired 2% target. Once again most of the price gains came from the energy sector.
Durable goods orders advanced .6% in October, handily beating expectations for a .8% decline. Orders for non-defense capital goods and notoriously volatile aircraft orders led the increase. The proxy for business spending non-defense capital goods ex-aircraft gained 1.2% snapping a pair of declines, with the best showing in quite some time. Another oddity with the Durable Goods report as capital spending is closely tied to corporate profits something that has come in weak for a 3rd consecutive quarter.
Standard and Poors 500 Index closed at: 3,153.63 up 13.11
NASDAQ finished the day: 8,705.17 up 57.24
Gold ended trading at: $1,453.90 down $6.40