The Market Bull – September 23, 2019
Uneven data sent the major averages into the final hour mixed. Over the weekend the on again off again trade war was back on spelling trouble for farmers.
The Chicago Fed National Activity Index gained .46 points in August to +.10 on broad based improvement for a series that covers some 85% of economic activity. A volatile data set the 3-month moving average provides a better picture and it remains negative for a 7th consecutive month as does the 6-month moving average. While this is a step in the right direction it’s not as great as the headlines suggest.
Excessive debt and speculation have led to 3 booms and so far, 2 busts since 2000. With record levels of debt nearly across the board it would seem a 3rd bust is very likely. In terms of moving yearlong averages, June’s ratio of U.S. nonfinancial-corporate debt to GDP rose to a record high of 46.5% despite corporate debt’s slower rate of growth as it fell from 7.2% in 2018 to 6.6% this year. With nominal GDP slowing to 4.8%, the yearlong ratio of nonfinancial-corporate debt to GDP rose from 45.7% in June 2018 to 46.5% in June 2019. The yearlong ratio of nonfinancial-corporate debt to GDP previously set record highs at 45% in June 2009 and December 2001, and 42.8% in December 1990. In view of how each of the ratio’s prior record highs overlapped a recession, and other items, the next bust is likely very close.
Standard and Poors 500 Index closed at: 2,991.78 down .29
NASDAQ finished the day: 8,112.46 down 5.21
Gold ended trading at: $1,529.50 up $14.40