The Market Bull – February 6, 2020
China struggles with the Coronavirus, but still manages to slash tariffs on US imports per the round 1 trade deal signed recently. Stocks close at record highs.
Productivity advanced 1.4% in the 4th quarter and 1.8% for all of 2019 on strong 1st half gains as the year finished with the best improvement since 2010. Unit labor costs grew 1.4% in the 4th quarter and 2.43% for the year, an ok but not great number. While unit labor costs outpaced productivity pressuring corporate profit margins in 2019 as is common with late stage economic cycles. 4th quarter earnings reporting is going well with profit growth set to return if current trends hold.
Despite very little mainstream media coverage the Treasury’s repo market operations continue and have returned to being dramatically oversubscribed. With the total running nearly ½ trillion Dollars in the last 4-months the not “QE” or quantitative easing is still looking an awful lot like QE if you ask me. When the government is running trillion Dollar plus annual deficits to fund endless stupid wars and poorly considered tax cuts for the 1% and corporations, something has to give if the party is to continue. I’m not quite sure when we cross from temporary repo market operations to permanent repo market operations, but at 4-months and counting if it hasn’t happened already, its got to be any day now.
Standard and Poors 500 Index closed at: 3,345.78 up 11.09
NASDAQ finished the day: 9,572.15 up 63.47
Gold ended trading at: $1,570.30 up $7.40