Dow was off 6, advancers were modestly ahead of decliners & NAZ fell 36. The MLP index crawled higher in the 135s & the REIT index went up 3+ to 359. Junk bond funds fluctuated & Treasuries were bid higher. Oil dipped lower in the 42s & gold dropped 14 to 1955.
| CL=F | Crude Oil | 42.19 | -0.05 | -0.1% |
| GC=F | Gold | 1,954.20 | -16.20 | -0.8% |
Consumer sentiment in the US remained almost flat in Aug, according to a University of Michigan survey. The final reading of the index of consumer sentiment stood at 72.8 in Aug, up from Jul's 72.5. The forecast called for the indicator to be at 71.0. 2 significant changes since Apr have been that consumers have become more pessimistic about the 5-year economic outlook & more optimistic about buying conditions. "Lower interest rates by the Fed prompted more favorable buying, especially for homes, and the D.C. policy gridlock was responsible for the weaker outlook," Richard Curtin, the survey's chief economist, said. "The overall confidence in economic policies fell to the lowest level since [President] Trump first entered office." Consumers' assessment of the current economic conditions fell to 82.5 in Aug from 82.8 in Jul. The index of consumer expectations--which reflects the balance of respondents anticipating improved business conditions in the next 6 months--rose to 66.5 in Aug from Jul's 65.9. The data, compiled after a minimum of 500 interviews, covers 3 broad areas of consumer sentiment: personal finances, business conditions & buying conditions. "Bad economic times are anticipated to persist not only during the year ahead, but the majority of consumers expect no return to a period of uninterrupted growth over the next five years," Curtin added. Consumers anticipate declines in the national unemployment rate to significantly slow & expect a rising rate of inflation during the year ahead. While a positive growth rate in consumption is anticipated in H2, it will hardly herald the end of the coronavirus recession.
Consumer sentiment ticks up in August
US households boosted retail spending 1.2% in Jul, the 3rd
straight monthly increase despite a rise in coronavirus infections, the
Commerce Dept reported. Retail sales—covering spending at service stations, restaurants, stores, & online—grew briskly in May & Jun. Meanwhile,
fresher data suggest retail spending softened this month. One factor:
the Jul 31 expiration of an enhanced unemployment benefit. That
benefit—authorized in the Cares Act passed by Congress in Mar—had
boosted jobless Americans' weekly income by $600 a week. Amid
congressional deadlock over a new stimulus plan, Pres Trump has
acted to replace the payments with a $300-a-week benefit, but it isn't expected to reach workers for weeks. On
top of that, a rise in coronavirus infections in several big states
earlier this summer prompted a new round of restrictions on businesses & spooked many consumers back into their homes. The prospect of
schools moving teaching online this fall may also undermine
back-to-school spending. Consumer spending & the economy in general are on a bit of a roller
coaster as they recover from a historically severe contraction. The
economy has added Ms of jobs in the past 3 months, including 1.8M in Jul. Initial jobless claims, a proxy for layoffs, fell below 1M last week, the first time since Mar. But the economy still has nearly 13M
fewer jobs than in Feb, & the unemployment rate remains high, at
10.2% in Jul.
US July retail sales rose 1.2%
Even as one of the worst financial downturns in US history rages on, Congress has failed to reach a deal on a relief package. The delay in additional unemployment benefits, stimulus checks & eviction protections could have lasting impacts on 10s of Ms of Americans who without aid can't cover their rent or food bills. 40M Americans could be evicted during the public health crisis. Nearly 60% of renters are at risk of eviction in West Virginia & Tennessee.. Around 26M adults said in Jul that their families were struggling to pay for enough food during the pandemic. Earlier in the month, Pres Trump took exec action to pass a patchwork of aid that experts say will deliver little meaningful relief to struggling Americans. The Senate wrapped up its session on yesterday without a deal, meaning a relief package may not get passed until after Labor Day.
Congress fails to reach stimulus deal, leaving millions of Americans with no relief
Traders are starting their weekend holidays early with little excitement for them to digest. Congress is away on holiday so they can go to their party conventions. The economy keeps chugging along, but many Americans are out of work & others are worried about their immediate future. And the virus keeps fighting hard, no wanting to give up soon. But the popular stock averages are near records & enthusiasm for gold has diminished this week.
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