The Market Bull – December 20, 2019
More or less as expected economic data sent the major averages into the close with small gains. After the trade war and the impeachment process got put on the back burner. Since Monday the Standard and Poors 500 Index has gained 37 points or 1.2% while the NASDAQ is up 134 points or 1.5%.
Personal income advanced .5% in November, beating expectations on strength in small business and investment income, to reach a 3-month high. Wages and benefits continue to increase, albeit slowly. The personal saving rate rose to 7.9% from 7.8%.
The price measuring personal consumption expenditures or PCE deflator rose .2% in November, in line with expectations, led by advancing services prices. On a year ago basis the PCE increased fractionally to just 1.5%, well below the Fed’s desired 2% target.
Personal spending advanced .3% in November on strength in motor vehicles and parts; recreational vehicles and sporting goods. The significance of personal spending can’t be emphasized enough as consumer spending accounted for all of the economy’s growth in the third quarter and more than all the growth in GDP in the second quarter when the rest of the economy contracted. Once again, this report noted that households had deleveraged significantly in the post crisis period and that debt service levels were at generational lows. While true it’s a case of there’s “lies, dam lies and statistics” to quote Mark Twain. The veracity of this statement is predicated on historically low mortgage debt, by virtue of the fact that the homeownership rate never fully recovered in the post crisis period. Conversely student, auto and credit card debt are all at new record highs.
Standard and Poors 500 Index closed at: 3,221.22 up 15.85
NASDAQ finished the day: 8,924.96 up 37.74
Gold ended trading at: $1,481.90 up $2.50