Dow gained 34 (off early highs), advancers over decliners about 2-1 & NAZ crawled up 1. The MLP index rose fractionally in the 231s & the REIT index was even in the 402s. Junk bond funds inched higher & Treasuries drifted sightly lower. Oil gave back 1+, falling to the 55s, & gold was steady at 1537.
AMJ (Alerian MLP Index tracking fund)
The University of Mich's final consumer sentiment index came in at 89.8 for Aug, falling below the preliminary reading from 2 weeks ago. The index was at 98.4 in Jul, making this the largest monthly decline since 2012. The forecast called for a final read on Aug consumer sentiment to reach 92.1. The drop comes after a turbulent month in the trade war between the US & China. “Trump’s tariff policies have been subject to repeated reversals amid threats of higher future tariffs. Such tactics may have some merit in negotiations with China, but they act to increase uncertainty and diminish consumer spending at home,” Richard Curtin, chief economist for the Survey of Consumers, said. Pres Trump announced on Aug 1 that the US would impose tariffs on an additional $300B of goods imported from China. The tariffs were originally slated to take effect in Sep, but some have been delayed until Dec 15 or removed. China announced last week that it would retaliate with new tariffs on products from the US & resume those on cars & auto components. The survey found that consumers who mentioned tariffs unprompted were more likely to expect higher inflation & rising unemployment. One-in-3 consumers mentioned the tariffs spontaneously, Curtin said. “While the overall level of sentiment is still consistent with modest gains in consumption, the data nonetheless increased the likelihood that consumers could be pushed off the ‘tariff cliff’ in the months ahead,” Curtin added.
US consumer sentiment falls to 89.8 in August for biggest monthly drop since 2012
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 56.35 | -0.36 | -0.6% |
| GC=F | Gold | 1,536.30 | -0.60 | -0.0% |
The University of Mich's final consumer sentiment index came in at 89.8 for Aug, falling below the preliminary reading from 2 weeks ago. The index was at 98.4 in Jul, making this the largest monthly decline since 2012. The forecast called for a final read on Aug consumer sentiment to reach 92.1. The drop comes after a turbulent month in the trade war between the US & China. “Trump’s tariff policies have been subject to repeated reversals amid threats of higher future tariffs. Such tactics may have some merit in negotiations with China, but they act to increase uncertainty and diminish consumer spending at home,” Richard Curtin, chief economist for the Survey of Consumers, said. Pres Trump announced on Aug 1 that the US would impose tariffs on an additional $300B of goods imported from China. The tariffs were originally slated to take effect in Sep, but some have been delayed until Dec 15 or removed. China announced last week that it would retaliate with new tariffs on products from the US & resume those on cars & auto components. The survey found that consumers who mentioned tariffs unprompted were more likely to expect higher inflation & rising unemployment. One-in-3 consumers mentioned the tariffs spontaneously, Curtin said. “While the overall level of sentiment is still consistent with modest gains in consumption, the data nonetheless increased the likelihood that consumers could be pushed off the ‘tariff cliff’ in the months ahead,” Curtin added.
US consumer sentiment falls to 89.8 in August for biggest monthly drop since 2012
US consumer spending increased solidly in Jul
as households bought a range of goods & services, which could further
allay financial market fears of a recession, but the pace of growth in
consumption is unlikely to be sustained amid tepid income gains. The
Commerce Dept said consumer spending, which accounts
for more than 2/3 of US economic activity, rose 0.6% last month
after an unrevised 0.3% gain in Jun. The forecast called for consumer spending to advance 0.5% last month. The
report added to trade & inventory data in suggesting that while the
economy was slowing, it was not losing altitude rapidly. A year-long
trade war between DC &China has spooked financial markets.
The US yield curve has inverted, stoking fears that the longest
economic expansion in history was in danger of being interrupted by a
recession. The economy is largely losing speed as the stimulus
from the White House's $1.5T tax-cut package & a gov
spending blitz fades. The US-China trade conflict has weighed heavily
on manufacturing & business investment, which contracted in Q2. Given the trade war-driven weakness in business
investment & manufacturing, slowing global growth as well as
persistently low domestic inflation, the Federal Reserve is expected to
cut interest rates again next month. Fed Chairman Jerome Powell
said last week that the economy was in a “favorable place,” but
reiterated that the central bank would “act as appropriate” to keep
the economic expansion on track. The Fed lowered its short-term
interest rate by 25 basis points last month for the first time since
2008, citing trade tensions & slowing global growth. Consumer
prices as measured by the personal consumption expenditures (PCE) price
index rose 0.2% in Jul as a drop in the cost of food was offset by a
surge in energy goods & services. The PCE price index edged up 0.1% in
Jun. In the 12 months thru Jul, the PCE price index increased 1.4% after gaining 1.3% in Jun. Excluding
the volatile food & energy components, the PCE price index rose 0.2%
last month, matching Jun's increase. That kept the annual increase in
the PCE price index at 1.6% in Jul. The core PCE index is the Fed's preferred inflation measure & has undershot the central bank's 2% target this year. When
adjusted for inflation, consumer spending increased 0.4% in Jul. This
real consumer spending rose 0.2% in Jun. Last month's jump in
core consumer spending suggested consumption remained strong early in
the 3rd qtr after it surged at its fastest pace in 4½ years in Q2. Last month, spending on goods surged 0.9%, driven by
outlays on recreational goods & motor vehicles & spending on services
increased 0.5%. Consumer spending in Jul was supported by savings
as personal income edged up 0.1%, the smallest rise since last
Sep, following a 0.5% increase in Jun. Wages increased
0.2% & personal interest income fell 1.8%. Savings fell to $1.27T , the lowest level since Nov 2018, from $1.32T in
Jun.
US consumer spending increases solidly; income tepid
Hurricane Dorian gained strength as it crept closer to Florida's coast, raising the risk that parts of the state will be hit by strong winds, a storm surge & heavy rain for a prolonged period after it makes landfall early next week. The Miami-based National Hurricane Center (NHC) issued a hurricane watch for northwestern Bahamas & said Dorian was likely to remain an extremely dangerous hurricane as it approaches Florida thru the weekend. “The biggest concern will be Dorian’s slow motion when it is near Florida, placing some areas of the state at an increasing risk of a prolonged, drawn-out event of strong winds, dangerous storm surge, and heavy rainfall,” the center said. The storm began today over the Atlantic as a Category 2 but was already expected to be classified a Category 3 later in the day, with sustained winds of at least 110 miles per hour. The entire state of Florida was under a declaration of emergency & Governor Ron DeSantis has activated 2500 National Guard troops, with another 1500 on standby. Forecasters predicted the storm would grow more ferocious as it gained fuel from the warm waters off Florida, slamming into the state late on Mon or early Tues. Tropical storm winds could be felt in Florida as soon as Sat. No evacuations were ordered as of today, but many were expected as the storm's path becomes clearer before it makes landfall. If, as expected, the storm reaches Category 4 over the weekend, its winds will blow at more than 130 mph. There was concern that it could slow from its current 12-mph (9-kph) march across the map, giving it more time to draw fuel from warm seas. Along with the dangerous winds, the storm was expected to drop 6-12 inches of rain on the coastal US, with some areas getting as much as 15 inches. “This rainfall may cause life-threatening flash floods,” NHC forecasters said.
‘Absolute monster’: Hurricane Dorian gains strength as Florida braces for direct hit
After an unusually volatile month, the last day of trading is relatively calm. Some traders are taking an early weekend & volume is light. Next week, the full force should be back & bring more thrills to investors. Enjoy the holiday weekend!
Dow Jones Industrials
US consumer spending increases solidly; income tepid
Hurricane Dorian gained strength as it crept closer to Florida's coast, raising the risk that parts of the state will be hit by strong winds, a storm surge & heavy rain for a prolonged period after it makes landfall early next week. The Miami-based National Hurricane Center (NHC) issued a hurricane watch for northwestern Bahamas & said Dorian was likely to remain an extremely dangerous hurricane as it approaches Florida thru the weekend. “The biggest concern will be Dorian’s slow motion when it is near Florida, placing some areas of the state at an increasing risk of a prolonged, drawn-out event of strong winds, dangerous storm surge, and heavy rainfall,” the center said. The storm began today over the Atlantic as a Category 2 but was already expected to be classified a Category 3 later in the day, with sustained winds of at least 110 miles per hour. The entire state of Florida was under a declaration of emergency & Governor Ron DeSantis has activated 2500 National Guard troops, with another 1500 on standby. Forecasters predicted the storm would grow more ferocious as it gained fuel from the warm waters off Florida, slamming into the state late on Mon or early Tues. Tropical storm winds could be felt in Florida as soon as Sat. No evacuations were ordered as of today, but many were expected as the storm's path becomes clearer before it makes landfall. If, as expected, the storm reaches Category 4 over the weekend, its winds will blow at more than 130 mph. There was concern that it could slow from its current 12-mph (9-kph) march across the map, giving it more time to draw fuel from warm seas. Along with the dangerous winds, the storm was expected to drop 6-12 inches of rain on the coastal US, with some areas getting as much as 15 inches. “This rainfall may cause life-threatening flash floods,” NHC forecasters said.
‘Absolute monster’: Hurricane Dorian gains strength as Florida braces for direct hit
After an unusually volatile month, the last day of trading is relatively calm. Some traders are taking an early weekend & volume is light. Next week, the full force should be back & bring more thrills to investors. Enjoy the holiday weekend!
Dow Jones Industrials
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