The Market Bull – October 8, 2019
The major averages close with large losses as trade talks collapse again. Given how far apart and intransigent both sides are, I’m not surprised.
The Producer Price Index or PPI missed expectations substantially in September falling .3% on a large decline in energy prices, services prices also fell. On a year ago basis the PPI slipped to just 1.4%, a nearly 3-year low for the series.
The history of Republican Tax Cuts in the last 40-years has been a litany of failures as trickle-down economics and the Laffer Curve were shown to be completely false. The economic growth promised has always come up short while the deficits created have always been far worse than projected. Yet still they persist. Never mind the glaring and record income and wealth inequality created over the same period. The latest data from the Congressional Budget Office or CBO puts the Federal Deficit at 984 billion for 2019, a 7-year high, and 4.7% of Gross Domestic Product or GDP. The CBO went on to warn that the deficit is on an unsustainable path. Basic economic theory holds that debts and deficits crowd out productive economic activity, and this is starting to show in the macro economic data. Meanwhile our politicians, the lamestream media and various pundits push Modern Monetary Theory or MMT claiming that debt and deficits don’t matter. If they didn’t matter trend growth in GDP wouldn’t have gone steadily lower since the last crisis, and even before that. I suspect that another harsh lesson in debts do matter a great deal is near at hand. Be interesting to hear what the pundits have to say then.
Standard and Poors 500 Index closed at: 2,893.06 down 45.73
NASDAQ finished the day: 7,823.78 down 132.52
Gold ended trading at: $1,510.90 up $6.50