Tuesday’s economic data actually drove the 2Q17 Gross Domestic Product (GDP) expectations lower at the Atlanta Fed, but it was the regional Fed banks “Hourly Wage Tracker” that set the pace of the session. In addition, housing and the Consumer Price Index (CPI) were mixed, although headlines focused on that headline number on inflation; the fact is there wasn’t the kind of evidence to show true sustainable inflationary forces.
There’s no doubt there’s upside pressure on gasoline prices, and it probably gets more intense; last night, the American Petroleum Institute (API) Inventory report saw the following:
- Crude -1.1 million
- Gasoline -1.9 million
However, it is hourly wages (as monitored by the Atlanta Fed) that has many investors worried. Growing at 3.4%, which is the fastest pace in the post-recession period, it is still a long ways from the start of the recession. Speaking of which, the recession was a long ways from wage growth during the great Internet and telecom booms.
Sector Watch
The most intriguing action in the market Tuesday occurred in the Dow Jones Transportation Index where truckers and some rails were higher. The index could set the pace for the overall economy, but it must first close above 7,797, then 8,109, which would be a monumental breakout.
I understand the gyrations are unnerving, as it’s clear there are distinct and powerful forces pulling the market in both directions. Otherwise, it could be a major indecision and a handful of fast money traders coupled with machines and algorithms having the run of the joint.
My broad market parameters haven’t changed, but my buy list is increasing; there was a very compelling action in scores of stocks on Tuesday, but the missing element for all was the lack of convincing volume.