Friday, September 14, 2018

Markets advance cautiously after new economic data

Dow went up 19, advancers & decliners were even & NAZ added 23.  The MLP index fell 2+ to the 278s & the REIT index rose 1+ to the 361 (remaining close to its record highs).  Junk bond funds did little & Treasuries weakened, taking the yield on the 10 year Treasury up to 3% again.  Oil lost pennies in the 68s & gold dropped 5 to 1203.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil68.59
 0.00 0.0%

GC=FGold  1,206.40

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Hurricane Florence pounded the Carolinas roday with heavy rain, gusting winds & rising floodwaters.  The massive, slow-moving storm crept toward the coastline, threatening Ms of people in its path with record rainfall & punishing surf.  Overnight, Florence was downgraded to a Category 1 storm & was moving west at only 6 mph with winds of 90 mph.  Weather Forecasters have said that the size of the storm means it will batter the East Coast for a full day.  Florence made landfall near Cape Fear, North Carolina.

Hurricane Florence slams into North Carolina, brings torrential rain, widespread flooding

The stock market rose as worries about trade tensions between the US & China eased & the gov reported positive news on summer sales in the retail sector, which drives about 2/3 of the economy.  If the Dow & the S&P 500 end the week higher it will mark the 5th straight daily gains for the 2 major indices.  Officials of the world's 2 largest economies have agreed to restart trade talks & retail sales rose last month.  In addition, Jul's retail sales numbers were revised up to 0.07% from the initial 0.05%.  Traders are also paying attention to Hurricane Florence, which made landfall near Cape Fear, NC.  Florence was downgraded to a Category 1 storm with winds of 90 mph moving west at only 6 mph.  Heavy rain, gusting winds and rising floodwaters hammered the Carolinas, threatening Ms in its path with torrential rainfall & widespread flooding.  In Asian markets, Japan's Nikkei average rallied to over a 7-month high as sentiment improved on signs China & the US could set aside their differences & resolve a heated trade dispute.  The Nikkei ended  up 1% & higher by 3.5% for the week, the best weekly performance in 2 months.  China's Shanghai Composite ended down 0.2% & down 0.8% for the week.  Hong Kong's Hang Seng finished the day1% higher.  In European trading, London's FTSE trade up by 0.2%, Germany's DAX gained 0.3% & France's CAC rose 0.3%.  Yesterday, the Dow jumped 147 ((0.6%) to 26,145 & the broader S&P 500 climbed for the 4th straight day, rising 15 to 2904.   The NAZ was up 59 (0.8%) at 8013.  Economic data released yesterday included weekly jobless claims, which stayed at a 49-year low & consumer price inflation, which tapered to an annual clip of 2.7% from 2.9%.  Today's economic agenda includes reports on retail sales, import & export prices & consumer sentiment.

US stock market boosted by trade optimism

A preliminary look at consumer sentiment in Sep easily topped expectations.  The Univ of Mich Surveys of Consumers said sentiment hit 100.8 in Sep, up from 96.2 in Aug.  The level marks the 2nd highest of the year & the 2nd strongest since 2004.  The forecast expected the preliminary to read 96.6.  The jump in consumer sentiment is "largely due to more favorable prospects for jobs and incomes," according to Richard Curtin, chief economist for the Surveys of Consumers.  "Consumers anticipated continued growth in the economy that would produce more jobs and an even lower unemployment rate during the year ahead."  The data also showed the biggest concern for consumers was a potentially negative impact from tariffs.  "Concerns about the negative impact of tariffs on the domestic economy were spontaneously mentioned by nearly one-third of all consumers in the past three months, up from one-in-five in the prior four months," Curtin added.  The US slapped tariffs on goods from some of its key trade partners, including China & the EU.  Both China & the EU have retaliated with tariffs of their own. However, sentiment around trade improved this week after multiple reports said the US was trying to restart trade talks with China.

Consumer sentiment reaches second-highest level of the year in September

US retail sales recorded their smallest gain in 6 months in Aug as consumers cut back on purchases of motor vehicles & clothing, but upward revisions to Jul data will likely keep intact expectations of strong economic growth in Q3.  The Commerce Dept said retail sales edged up 0.1% last month, the smallest rise since Feb.  Data for Jul was revised higher to show sales rising 0.7%  instead of the previously reported 0.5% gain.  The modest increase in retail sales suggests that high gasoline prices could be pulling spending away from other categories.  The forecast called for retail sales increasing 0.4% in Aug.  Retail sales in Aug advanced 6.6% from a year ago.  Excluding automobiles, gasoline, building materials &and food services, retail sales nudged up 0.1% last month after an upwardly revised 0.8% jump in Jul.  The core retail sales correspond most closely with the consumer spending component of GDP.  Core retail sales were previously reported to have increased 0.5% in Jul.  Despite the surprise slowdown in core retail sales in Aug, consumer spending remains supported by a tightening labor market, which is steadily pushing up wages.  Annual wage growth increased at its fastest pace in more than 9 years in Aug & there were a record 6.9M job openings in Jul.  Spending is also being underpinned by tax cuts & higher savings.  The economy is poised for strong growth in Q3 & this year, but an escalating trade war between the US & China is casting a shadow on the long-term outlook.  Pres Trump last week threatened duties on another $267B worth of Chinese goods on top of a $200B tariff list that is awaiting his decision.  The US already has slapped duties on $50B worth of Chinese imports, provoking retaliation from Beijing.

US retail sales post the smallest gain in 6 months

Today should be a flattish day with many eyes watching the havoc from the storm.  Hopes spring eternal on trade negotiations but solutions look to be far away.  Best wishes for the people suffering from the storm.

Dow Jones Industrials

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