The Market Bull – March 12, 2019
The major averages finished mixed on disappointing, but not overly significant, economic data. Trade wars are not easy to win.
The February Consumer Price Index or CPI gained .2% on notable advances in food and energy prices for the month. On a year ago basis the CPI fell to just 1.5% or about half of its long-term average of 3%. Brought down by sharp declines in energy costs. Moderating inflationary pressures will encourage the Fed to pause on interest rate hikes, if not resort to outright cuts as the futures markets increasingly predict.
Donald Trump famously quipped that trade wars are easy to win. With China’s economy looking sicker by the day and economic growth estimates for the US falling below 1% for the 1st quarter, and other economic data coming in very soft, ala the latest employment report. It would seem that trade wars might not be as easy to win as the Trumpeter might like to think. History is definitely not on his side as the Republican Smoot-Hawley tariff act of the 1930’s proved a disaster prolonging and deepening the Great Depression. This time around various pundits have pointed out that the tariff costs run into the billions and are primarily being borne by your average American consumer. With a recent study suggesting that consumer were paying an extra 3 billion per month and businesses 1.4 billion, while reducing trade by 165 billion per year. This directly contradicts Trumps claim that the Chinese would pay the tariff’s, he made similar statements about the Mexicans paying for the boarder wall. Once again long on rhetoric and short on substance. Additionally recent trade data shows that the international trade deficit is jumping as import growth outstrips export growth. Something that will cause 4th quarter economic growth to be revised lower and is instrumental in pushing 1st quarter growth estimates below 1%.
Standard and Poors 500 Index closed at: 2,791.52 up 8.22
NASDAQ finished the day: 7,591.03 up 32.97
Gold ended trading at: $1,301.80 up $3.70