Another volatile week for the markets as the wild swings continue. With an hour to go the major averages have recovered most of yesterday’s sharp losses. To finish the week in positive territory will require substantial gains tomorrow as well.
The Beige Book on regional economic conditions showed more moderate economic growth. Raising prices remain an issue but with the sharp declines in energy costs of late, should abate somewhat. Tariffs were also cited as a significant issue with respect to costs. Difficulty finding employees also remains a challenge, because the wages offered still fail to entice people back into the labor force.
Wholesale inventories advanced .3% in September as businesses try to get ahead of the tariffs. Retail inventories increased .1%, following two large gains.
The trade deficit advanced .7% in September to 76 billion, a 5th consecutive gain. Exports increased to 141 billion, imports advanced to 217 billion. Trade will be a significant drag on 3rd quarter economic growth.
Durable Goods Orders gained .8% in September. The proxy for business spending non-defense capital goods ex-aircraft slipped for a 2nd month down .1%. As with the other trade and manufacturing related indices, tariffs and the trade war remain significant obstacles going forward. Come the New Year when Chinese tariffs jump from 10% to 25% on 200 billion in additional goods the negative effects will become much more pronounced.
Pending home sales snapped a pair of losses with a .5% gain in September. That said this series has increased only twice in the last 6-months. Strength was notable in the west with a 4.5% advance. On a year ago basis all regions were negative except the south.
The Kansas City Fed regional index dropped 5 points in October to 8. New orders fell by more than half to 7, employment gained, price data slipped again.
This is Caleb Lawrence Registered Investment Adviser Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202 or call me toll free at 888-RICH PIG / 888-742-4744.
You can catch me on the radio at noon each business day as well on California’s central coast. KPIG 107.5 FM in the Monterey Bay or KPYG 94.9 FM in San Luis Obispo.
Rebroadcasts, additional writings, and other entries are also available on my Blog at www.clinvestments.com
Advisory services offered through Caleb Lawrence Registered Investment Adviser Inc.