The Market Bull – January 7, 2020
The major averages close with small losses on mixed economic data. The Iran question lingers, so far, it’s largely a non-event, but how much longer?
The international trade deficit fell to 43.1 billion in November, coming in a little less than expectations. Exports increased .7% to 208.6 billion, while imports fell 1% to 251.7 billion. This report will add slightly to 4th quarter economic growth. A 3rd consecutive decline as the deficit hits a more than 3-year low. News on a trade agreement with the Chinese has gone quiet of late.
Factory orders fell .7% in November as durable goods orders slipped 2.1%. The proxy for business spending non-defense capital goods ex aircraft gained .2%. This series continues to show mixed results as it has done for a number of months now.
The ISM nonmanufacturing or services index beat expectations in December advancing 1.1 points to 55. The details were unremarkable, most of the improvement was compliments of production gains. Tariffs weren’t mentioned as a concern for the 1st time in many months.
Reis reports that the mall vacancy rate increased to 9.7% in the 4th quarter, a gain of .3% over the 3rd quarter. Given that 2019 was another bloodbath for retail with over 12,000 store closings this comes as no surprise. The question is will 2020 be another disaster for retail. While it’s still very early, things aren’t looking promising.
Two years after Trump’s much heralded tax cuts and the results are underwhelming at best. Touted as driving domestic capex spending and jobs growth. Like republican tax cuts in general it failed to deliver substantially as job growth didn’t materialize, only about 25% of the benefits to corporations found their way into capex including research and development. The vast majority of the cuts were used to fund share buy backs and enrich wealthy Americans in the top 20% and mostly the top 5%, corporate executives and shareholders. Other highlights, if they can be called that, include the largest ever drop in corporate tax receipts outside of a recession. As the package is expected to add 1.5 trillion to the federal deficit over this decade. Another fine example of Trump being long on rhetoric, empty promises and delusional thinking while coming up woefully short on facts and actual benefits for your average American on Main Street or the Republic.
The Richest 5% Received Almost Half of the Trump Tax Cut Benefits in 2018
Source: Institute on Taxation and Economic Policy
Standard and Poors 500 Index closed at: 3,237.18 down 9.10
NASDAQ finished the day: 9,068.58 down 2.88
Gold ended trading at: $1,572.50 up $3.70