Registered Investment Adviser Caleb Lawrence
Uneven trade sent the major averages into the final hour mixed. Since Monday the Standard and Poors 500 Index has gained 11 points or .4% while the NASDAQ has advanced 53 points or .8%.
Personal income gained .2% in August on strength in small business, rental and transfer payments aka social benefit program income. Previous months were revised materially lower and what income gains there are continue to primarily accrue to the top 10%.
Personal spending fell .1% in August, notable declines were seen in automobiles and parts, durable goods, gasoline and, clothing. Risks to this series are growing and transcend the hurricanes which should make their impact felt beginning with next month’s data.
The Personal Consumption Expenditures deflator or PCE advanced .2% in August primarily driven by higher energy costs. On a year ago basis prices are up just 1.4% well below the Fed’s desired 2% target. The Fed Chairwoman Janet Yellen recently mused that the various inflation measuring metrics don’t work, in particular she noted the breakdown in the Phillips Curve which measures the inflation cost push from full employment, something that its presently absent. That said she went on to reiterate the Fed’s desire to raise interest rates gradually. A strategy I suspect she will soon reconsider in light of the soft incoming data particularly with respect to real estate.