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Registered Investment Adviser Caleb Lawrence

The major averages moved higher in early trade on generally disappointing but not overly significant data. 2nd quarter GDP or Gross Domestic Product estimates get their first big reduction falling below the wildly optimistic 4% level.

Inventories fell a much larger than expected .3% in April on large declines in nondurable and retail. On a year ago basis inventories are up 1.8%. March was revised down from .2% to .1% growth.

The trade deficit widened sharply in May jumping 4.3% to 67.6 billion as exports slipped and imports increased. Like the inventory data this report will weigh on 2nd quarter GDP.

The Kansas City Fed regional economic index increased 1 point in May to 8 despite a 13-point plunge in production to -1. New orders gained a point, employment advanced 2 points.

The narrative of the economic recovery continues despite increasingly negative data from a position that was weak to start with at best. Recent data from the Treasury Department shows that tax receipts are running below expectations ahead of the debt ceiling limit and the approaching summer recess for Congress. Treasury Secretary Steven Mnuchin is making the rounds asking for a removal of the debt ceiling limit with no strings attached. Once again, it’s all about whatever is expedient, never mind how blatantly hypocritical it may be as Republican approval will show that they really don’t care about debt reduction or balanced budgets.

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