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Registered Investment Adviser Caleb Lawrence 

The major averages enter the final hour with small gains on better than expected data. Since Monday the Standard and Poors 500 Index is up 6 points or .25% while the NASDAQ has lost 42 points or .6%. The government dodges another shutdown with a last minute 2-week deal.

Consumer credit came out after the close yesterday gaining 20.5 billion in October a second 20+ billion Dollar advance on strength in revolving or credit card debt. Non-Revolving debt essentially student and auto loans slipped a little but remained strong. The usual mantra about consumer debt levels being low and having room to run followed while omitting the 10+ point drop in the homeownership rate, and the mortgages that go along with it. That said student and auto loan debt remains at a record high and the recent strong gains in credit use have pushed credit card debt to near record highs as well.

The November employment report beat expectations with a gain of 228,000 new jobs. The official unemployment rate was unchanged at 4.1%, the average work week increased .1 to 34.5 hours, average earnings went up .2%, previous months job gains were revised up by 3,000. A second solid headline number to be sure, that said the Labor Force Participation rate at 62.7% hasn’t gone anywhere for 8-months and wage growth remains tepid. These last 2-items are contrary to economic theory that states low, or very low, 4.1% unemployment in this case, should be putting considerable upward pressure on wages while drawing people back into the workforce that had previously given up. The fact that neither is occurring speaks volumes about the true strength of the labor market as it isn’t anywhere near as strong as the official 4.1% unemployment rate implies.

The October Wholesale Trade data is the latest in a string of trade reports showing weakening trends with a .5% decline, and snapping a string of gains, on a large decline in non-durable goods. September was revised lower to just +.1%. The inventory to sales ratio dropped to 1.25.


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