Registered Investment Adviser Caleb Lawrence
Disappointing economic data sent the major averages into the final hour mixed. The Institute for Supply Management Non-Manufacturing or services index is the latest series to give up its post Trump gains after it fell 3.5 points to 53.9 in July on weakness in new orders and employment. Prices paid advanced for a second month reaching 55.7.
Factory orders were a real standout today with a 3% gain in June on a huge advance in durable goods orders. The proxy for business spending non-defense capital goods ex-aircraft component was unchanged for the month, and has averaged just .42% over the last 6-months indicating weak business spending.
The Federal Reserve has jawboned inflation for the last 10-years or so saying that higher inflation, like faster economic growth, is just around the corner. Neither have materialized and all sorts of excuses have been offered up as to why this is so despite trillions in stimulus. I and a few others have pointed out repeatedly that credit busts are inherently deflationary and that debt is no substitute for income, these are the real culprits, despite this a rational discussion of both is by and large studiously avoided by the status quo as we attempt Quantitative Easing and other forms of financialization that have been shown to be very effective at blowing socially and economically destabilizing asset bubbles and debt levels and almost completely ineffective in helping Main Street America.