Dow fell 95 with a little selling into the close, decliners over advancers more than 3-2 & NAZ was off 26. The MLP index declined 2+ to the 227s & the REIT index was fractionally lower to the 409s. Junk bond funds fluctuated & Treasuries were sold. Oil went up pennies to 53 & gold dropped 15 to 1497.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
White House economic adviser Larry Kudlow said he is optimistic that trade officials from the US & China could make progress on a deal & that the administration is open to proposals Beijing brings to the negotiating table. Kudlow said the US is open to a short-term deal as long as "structural issues," like market access for US companies & the Chinese gov subsidizing state-owned companies, are addressed. “We are open to a number of ideas, some may be short term, some may be long term,” Kudlow told reporters. “It’s essential that the structural issues that we've talked about for two years since I’ve been around ... that stuff’s gotta get solved.” Kudlow added that Chinese negotiators have been a “little more cooperative recently” as they have recently purchased US agricultural products like soybeans, pork & wheat. China Ministry of Commerce sources said deputy-level talks between Beijing & the US high-level talks Thurs are meant to work out any issues for an interim deal. The focus of the trade talks this week will be to get closer to an agreement on achievable items & to try to create a timeline to complete a full deal next year.
One major cluster of data shows the US economy is doing well despite concerns of a potential recession. The hard data, which refers to actual numbers about the economy such as unemployment & retail sales, continues to reflect economic strength. The US unemployment rate fell to a 50-year low in Sep while retail sales grew more than expected in Aug. However, stocks have struggled in recent months amid disappointing soft data, which includes corporate and consumer sentiment surveys as well as purchasing managers' index (PMI) numbers. Soft data is often seen as a leading indicator of the economy & the recent batch has stoked fears of a recession as the US-China trade war drags on. But those fears may be overblown as the hard data shows the US economy remains strong. The Bureau of Labor Statistics said Fri that the US unemployment rate dropped to 3.5% in Sep, its lowest level since 1969. The rate dropped even as the pace of US job growth slowed last month. Nonfarm payrolls expanded by 136K in Sep, down from 168K in Aug. The consumer is also in a solid place. Retail sales rose 0.4% in Aug, topping an estimate of 0.2%. The better-than-expected retail sales increase came after a 0.8% jump in Jul. But despite the solid hard data, the major stock indices are all down over the past 3 months as weak soft data has raised concern over the economy moving forward. The Dow & S&P 500 are both down more than 1% in that time. Meanwhile, the NAZ has lost more than 2%. The Institute for Supply Management said last week that its US services PMI fell in Sep to its lowest level since Aug 2016. ISM also said US manufacturing activity contracted last month to its lowest level in more than 10 years. Meanwhile, the Univ of Mich Survey of Consumers said last month that a near-record number of consumer are worried about the US-China trade war. A survey released today by the National Association for Business Economics showed respondents expect the US economy to grow by less than 2% next year as the trade war rages on. That would be the slowest pace for US economic growth since 2016.
The hard data says the US economy is just fine
Consumer borrowing growth weakened a bit in Aug, led by weaker credit card debt, according to Federal Reserve data. Total consumer credit increased $17.9B at an annual growth rate of 5.2%. Borrowing was up $23B in Jul. The forecast called for a $18.2B gain. The trend rate for 2019 had been closer to $16B. Revolving credit, like credit cards, fell 2.2% in Aug, after a 2-year high of 10.5% in Jul. Expectations were for a the pullback, viewing the Jul pace as unsustainable. Nonrevolving credit, typically auto & student loans, rose 7.8% in Aug after a 5.4% gain in the prior month. This category does not fluctuate as much as revolving credit. The Fed's data does not include mortgage loans. With business investment weak, consumers are the key to the economic outlook. The worry is that firms will pull back from hiring or reduce the hours worked by existing employees. This might create a channel to dampen consumer spending & weaken the economy. Last week, Federal Reserve Vice Chairman Richard Clarida said he took some comfort from the relatively high household savings rate, which has ticked up to 8%. “That’s a good sign because it means that households, compared with prior decades, have a cushion,” Clarida added. Economists will continue to watch the behavior of consumers closely. The Univ of Mich will release its consumer sentiment index on Fri. Measures of consumer confidence have been weakening lately.
Federal Reserve Bank of Minneapolis Pres Neel Kashkari said he is “happy” the central bank is lowering rates. Kashkari, who has been a steadfast advocate for keeping rates lower than most of his colleagues have wanted, said that he isn't sure how far the Federal Reserve needs to take a rate-cutting campaign that has thus far resulted in 2 qtr-percentage point rate cuts this year.
Little was decided today in the stock market. The General Motors (GM) strike drags on for a 4th week. DC is more dysfunctional than its usual pace. It's hard to see any accomplishments, starting with US-Mexico-Canada trade deal. The China negotiations need more work, even after recent optimism. And US economic data is OK, but shy of excellent. The Dow has been in the 26K area for much of the last year (see the chart below). A China trade could excite investors, but after more than a year of stumbling it looks to be far away.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
White House economic adviser Larry Kudlow said he is optimistic that trade officials from the US & China could make progress on a deal & that the administration is open to proposals Beijing brings to the negotiating table. Kudlow said the US is open to a short-term deal as long as "structural issues," like market access for US companies & the Chinese gov subsidizing state-owned companies, are addressed. “We are open to a number of ideas, some may be short term, some may be long term,” Kudlow told reporters. “It’s essential that the structural issues that we've talked about for two years since I’ve been around ... that stuff’s gotta get solved.” Kudlow added that Chinese negotiators have been a “little more cooperative recently” as they have recently purchased US agricultural products like soybeans, pork & wheat. China Ministry of Commerce sources said deputy-level talks between Beijing & the US high-level talks Thurs are meant to work out any issues for an interim deal. The focus of the trade talks this week will be to get closer to an agreement on achievable items & to try to create a timeline to complete a full deal next year.
Kudlow hints a US-China trade deal may finally be within sight
One major cluster of data shows the US economy is doing well despite concerns of a potential recession. The hard data, which refers to actual numbers about the economy such as unemployment & retail sales, continues to reflect economic strength. The US unemployment rate fell to a 50-year low in Sep while retail sales grew more than expected in Aug. However, stocks have struggled in recent months amid disappointing soft data, which includes corporate and consumer sentiment surveys as well as purchasing managers' index (PMI) numbers. Soft data is often seen as a leading indicator of the economy & the recent batch has stoked fears of a recession as the US-China trade war drags on. But those fears may be overblown as the hard data shows the US economy remains strong. The Bureau of Labor Statistics said Fri that the US unemployment rate dropped to 3.5% in Sep, its lowest level since 1969. The rate dropped even as the pace of US job growth slowed last month. Nonfarm payrolls expanded by 136K in Sep, down from 168K in Aug. The consumer is also in a solid place. Retail sales rose 0.4% in Aug, topping an estimate of 0.2%. The better-than-expected retail sales increase came after a 0.8% jump in Jul. But despite the solid hard data, the major stock indices are all down over the past 3 months as weak soft data has raised concern over the economy moving forward. The Dow & S&P 500 are both down more than 1% in that time. Meanwhile, the NAZ has lost more than 2%. The Institute for Supply Management said last week that its US services PMI fell in Sep to its lowest level since Aug 2016. ISM also said US manufacturing activity contracted last month to its lowest level in more than 10 years. Meanwhile, the Univ of Mich Survey of Consumers said last month that a near-record number of consumer are worried about the US-China trade war. A survey released today by the National Association for Business Economics showed respondents expect the US economy to grow by less than 2% next year as the trade war rages on. That would be the slowest pace for US economic growth since 2016.
The hard data says the US economy is just fine
Consumer borrowing growth weakened a bit in Aug, led by weaker credit card debt, according to Federal Reserve data. Total consumer credit increased $17.9B at an annual growth rate of 5.2%. Borrowing was up $23B in Jul. The forecast called for a $18.2B gain. The trend rate for 2019 had been closer to $16B. Revolving credit, like credit cards, fell 2.2% in Aug, after a 2-year high of 10.5% in Jul. Expectations were for a the pullback, viewing the Jul pace as unsustainable. Nonrevolving credit, typically auto & student loans, rose 7.8% in Aug after a 5.4% gain in the prior month. This category does not fluctuate as much as revolving credit. The Fed's data does not include mortgage loans. With business investment weak, consumers are the key to the economic outlook. The worry is that firms will pull back from hiring or reduce the hours worked by existing employees. This might create a channel to dampen consumer spending & weaken the economy. Last week, Federal Reserve Vice Chairman Richard Clarida said he took some comfort from the relatively high household savings rate, which has ticked up to 8%. “That’s a good sign because it means that households, compared with prior decades, have a cushion,” Clarida added. Economists will continue to watch the behavior of consumers closely. The Univ of Mich will release its consumer sentiment index on Fri. Measures of consumer confidence have been weakening lately.
U.S. consumer credit growth weakens a bit in August
Federal Reserve Bank of Minneapolis Pres Neel Kashkari said he is “happy” the central bank is lowering rates. Kashkari, who has been a steadfast advocate for keeping rates lower than most of his colleagues have wanted, said that he isn't sure how far the Federal Reserve needs to take a rate-cutting campaign that has thus far resulted in 2 qtr-percentage point rate cuts this year.
Fed’s Kashkari Supports Rate Cuts, But Unsure How Many More Are Needed
Little was decided today in the stock market. The General Motors (GM) strike drags on for a 4th week. DC is more dysfunctional than its usual pace. It's hard to see any accomplishments, starting with US-Mexico-Canada trade deal. The China negotiations need more work, even after recent optimism. And US economic data is OK, but shy of excellent. The Dow has been in the 26K area for much of the last year (see the chart below). A China trade could excite investors, but after more than a year of stumbling it looks to be far away.
Dow Jones Industrials
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