The Market Bull – October 3, 2019
The major averages fell hard after the open, recovered late, closing with modest gains. Economic data heads south, as political infighting rages.
Factory Orders slipped .1% in August as expected on weakness in new orders and shipments. Core capital goods orders, a proxy for business investment, haven’t increased for two consecutive months, and trend growth has decelerated sharply since late 2017, reflecting the broader pullback in capital spending as the heavily indebted tight energy sector retrenches, unable to generate profits.
The Institute for Supply Management Non Manufacturing or Services Index continued its downward trend in September falling 3.8 points to 52.6. Declines were broad-based, exports improved a little, price data increased to 60, a 10-month high.
ProPublica has been tracking the assorted taxpayer funded corporate and banking bailouts since the 2008 Great Financial Crisis. The good news is that to date Uncle Sam has turned a profit of about a billion Dollars, not adjusted for inflation. While that sounds like a lot of money, keep in mind that some 638 billion was doled out, so the 1 billion profit represents a very meager return of .15% over 11-years and that’s before inflation, something that would send the profit figure deep into the red. From a risk perspective the return is pathetic as each of the bailed-out companies was insolvent at the time, and therefore very high risk. That said allowing them to fail in mass would have also carried some very substantial risks. But the real tragedy here was that too big to fail, or jail crowd was allowed to become even larger in the post crisis period. A moral, regulatory and common sensical failure that is all but certain to come back and bite us on the rear end again as the fundamental picture has changed little. As debt and derivatives are once again out of control. The latest round of oversubscribed Repos as overnight rates blew out to 9%+, doesn’t inspire confidence at all. The whole article can be found HERE.
Standard and Poors 500 Index closed at: 2,910.63 up 23.02
NASDAQ finished the day: 7,872.27 up 87.02
Gold ended trading at: $1,511.80 up $3.90