Dow lost 15, advancers over decliners 3-2 & NAZ went up 19. The MLP index rose 1+ to the 283s & the REIT index was even in the 349s. Junk bond funds inched higher & Treasuries remained weak. Oil slid lower in the 51s & gold was flattish at 1288.
AMJ (Alerian MLP Index tracking fund)
Concern over the fallout from a pair of late-summer hurricanes caused US consumer sentiment to dip in Sep, though Americans remain relatively optimistic about the direction of the economy, a Univ of Mich survey showed. Sentiment index fell to 95.1 (est. 95.3) from 96.8 in Aug.; preliminary reading for Sep was 95.3. The current conditions gauge, which measures Americans' perceptions of their finances, rose to 111.7 from 110.9 & the expectations measure decreased to 84.4 from 87.7. Confidence in the economy has waned slightly following Hurricanes Harvey & Irma, which caused more than $100B in damage, pushed up gas prices & spurred a jump in unemployment filings. At the same time, confidence remains high by historical standards, & respondents later in the month indicated less of an impact from the storms, a sign of consumer resilience. Overall, the share of consumers expecting good times financially in the economy fell to 47% from 54% in Aug. Pres Trump & congressional Reps unveiled a long-awaited framework for cutting taxes this week, which could further support the economy & boost an already-tight labor market, trends that would likely sustain sentiment. “In the past year, there has been a long list of issues that could have derailed the overall level of consumer confidence, including the unprecedented partisan divide, North Korea, Charlottesville, and the hurricanes,” Richard Curtin, director of the consumer survey, said. “Confidence has nonetheless remained very favorable, moving sideward in a very narrow positive range.”
US consumer spending cooled in Aug on a cutback in auto purchases that partly reflected less demand linked to Hurricane Harvey, Commerce Dept figures showed. Purchases rose 0.1% from prior month (matching est.) after a 0.3% increase in Jul & Incomes rose 0.2% (matching est.) after a 0.3% gain. Price gauge tied to consumption rose 0.2% from previous month (est. 0.3%); was up 1.4% from year ago (est. 1.5%). Excluding food and energy, prices rose 0.1% (est. 0.2% rise) & core was up 1.3% from year ago (est. 1.4%). Adjusted for inflation, purchases declined 0.1%, the first decrease since Jan. The latest results indicate household spending, which accounts for about 70% of the economy, may struggle to match the momentum of Q2. Inflation-adjusted income, after taxes, dropped 0.1% in Aug, the first decrease this year. The report said that the spending & income data reflect the effects of Harvey, which made landfall later in the month. While the Aug results were held back by fewer outlays for motor vehicles after the industry reported the slowest pace of sales since Feb 2014, purchases may increase in coming months as households in hurricane-stricken areas replace cars & trucks that were destroyed by flooding. Wages & salaries were little changed in Augt after robust gains in the prior 2 months.
U.S. Consumer Spending Cools on Drop in Vehicle Purchases
Pres Trump is open to negotiating on the deduction individuals take for state & local taxes, his top economic adviser Gary Cohn said. While the tax framework would eliminate that deduction, the provision isn't a red line, according to Cohn, the director of the National Economic Council. The deduction is used extensively in high-tax states like NY, NJ & California. Eliminating it would raise an estimated $1.3T that could be used to offset the plan’s proposed tax cuts. “We are willing to work with the tax writers on the other dials that we have in the system,” Cohn said. He added that the pres isnt open to negotiating on the corp tax rate, which the framework calls for cutting to 20%, down from 35%. Also, Trump isn't flexible on a provision cutting the rate for pass-through businesses like partnerships & limited liability companies to 25%. The current rate on pass-through income can be as high as 39.6%. The framework lacks extensive details about offsetting its rate cuts with additional revenue. It says most itemized deductions for individuals should be eliminated, without providing specifics, while calling for mortgage-interest & charitable-giving deductions to be preserved. But it does single out the state & local tax deduction for elimination. That break tends to benefit high-income filers in Dem states, but the move to abolish it would face resistance from some Rep House members in districts that use the deduction heavily.
Cohn Says Ending State, Local Tax Deduction Up for Negotiation
With the month closing, there is little exciting data & news to inspire stock traders. Just a lot to talk about tax reform. However since that remains a work in progress, words do not mean much. Dow is up over 400 in what has traditionally been its worst month, quite a good performance!
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 51.47 | -0.09 | -0.2% |
| GC=F | Gold | 1,286.60 | -2.10 | -0.2% |
Concern over the fallout from a pair of late-summer hurricanes caused US consumer sentiment to dip in Sep, though Americans remain relatively optimistic about the direction of the economy, a Univ of Mich survey showed. Sentiment index fell to 95.1 (est. 95.3) from 96.8 in Aug.; preliminary reading for Sep was 95.3. The current conditions gauge, which measures Americans' perceptions of their finances, rose to 111.7 from 110.9 & the expectations measure decreased to 84.4 from 87.7. Confidence in the economy has waned slightly following Hurricanes Harvey & Irma, which caused more than $100B in damage, pushed up gas prices & spurred a jump in unemployment filings. At the same time, confidence remains high by historical standards, & respondents later in the month indicated less of an impact from the storms, a sign of consumer resilience. Overall, the share of consumers expecting good times financially in the economy fell to 47% from 54% in Aug. Pres Trump & congressional Reps unveiled a long-awaited framework for cutting taxes this week, which could further support the economy & boost an already-tight labor market, trends that would likely sustain sentiment. “In the past year, there has been a long list of issues that could have derailed the overall level of consumer confidence, including the unprecedented partisan divide, North Korea, Charlottesville, and the hurricanes,” Richard Curtin, director of the consumer survey, said. “Confidence has nonetheless remained very favorable, moving sideward in a very narrow positive range.”
U.S. Consumer Sentiment Cools as Storms Deliver Hit to Outlook
US consumer spending cooled in Aug on a cutback in auto purchases that partly reflected less demand linked to Hurricane Harvey, Commerce Dept figures showed. Purchases rose 0.1% from prior month (matching est.) after a 0.3% increase in Jul & Incomes rose 0.2% (matching est.) after a 0.3% gain. Price gauge tied to consumption rose 0.2% from previous month (est. 0.3%); was up 1.4% from year ago (est. 1.5%). Excluding food and energy, prices rose 0.1% (est. 0.2% rise) & core was up 1.3% from year ago (est. 1.4%). Adjusted for inflation, purchases declined 0.1%, the first decrease since Jan. The latest results indicate household spending, which accounts for about 70% of the economy, may struggle to match the momentum of Q2. Inflation-adjusted income, after taxes, dropped 0.1% in Aug, the first decrease this year. The report said that the spending & income data reflect the effects of Harvey, which made landfall later in the month. While the Aug results were held back by fewer outlays for motor vehicles after the industry reported the slowest pace of sales since Feb 2014, purchases may increase in coming months as households in hurricane-stricken areas replace cars & trucks that were destroyed by flooding. Wages & salaries were little changed in Augt after robust gains in the prior 2 months.
U.S. Consumer Spending Cools on Drop in Vehicle Purchases
Pres Trump is open to negotiating on the deduction individuals take for state & local taxes, his top economic adviser Gary Cohn said. While the tax framework would eliminate that deduction, the provision isn't a red line, according to Cohn, the director of the National Economic Council. The deduction is used extensively in high-tax states like NY, NJ & California. Eliminating it would raise an estimated $1.3T that could be used to offset the plan’s proposed tax cuts. “We are willing to work with the tax writers on the other dials that we have in the system,” Cohn said. He added that the pres isnt open to negotiating on the corp tax rate, which the framework calls for cutting to 20%, down from 35%. Also, Trump isn't flexible on a provision cutting the rate for pass-through businesses like partnerships & limited liability companies to 25%. The current rate on pass-through income can be as high as 39.6%. The framework lacks extensive details about offsetting its rate cuts with additional revenue. It says most itemized deductions for individuals should be eliminated, without providing specifics, while calling for mortgage-interest & charitable-giving deductions to be preserved. But it does single out the state & local tax deduction for elimination. That break tends to benefit high-income filers in Dem states, but the move to abolish it would face resistance from some Rep House members in districts that use the deduction heavily.
Cohn Says Ending State, Local Tax Deduction Up for Negotiation
With the month closing, there is little exciting data & news to inspire stock traders. Just a lot to talk about tax reform. However since that remains a work in progress, words do not mean much. Dow is up over 400 in what has traditionally been its worst month, quite a good performance!
Dow Jones Industrials
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