As we head into this week, a lot of attention will be on the world’s most powerful central banks. While conventional wisdom doesn’t expect changes in rates, investors will watch carefully for messages. Most expect these money-printers to make it clear they are ready to pounce on any signs of economic weakness using current tools, and perhaps inventing newer tools.
On Wednesday, the Federal Reserve will wrap up the Federal Open Market Committee (FOMC) gathering. I suspect it’ll be without cutting rates, but they are making it clear that cuts are imminent. The European Central Bank (ECB) finishes a three-day meeting on the same day, while the Bank of Japan (BOJ) and the Bank of England (BOE) finish meetings on Thursday.
Just in the past week, these amazing economic facts were severely under-reported and largely ignored by media.
Wages - non-supervisory soaring:
- Up more than 3% 10 months in a row
- Up more than the overall wage growth 8 out of 10 months
Small Biz Confidence Rockets
Small biz confidence has rocketed to the highest point since October. The biggest problem is finding skilled workers, not tariffs or mean tweets. While major multinational companies write letters attempting to shame the White House on the eve of major negotiations with China, and report low confidence, small businesses are optimistic.
These people matter more in my opinion than large CEOs. They hire more Americans and provide a much better understanding of grassroots America.
NFIB Survey
Retail Sales
Retail Sales were so powerful, the Atlanta Fed hiked its Gross Domestic Product (GDP) forecast almost 50%.
Industrial Production
At its strongest in six months, production is being powered by pickup trucks, and even cars rebounded.
2Q 2019 GDP Estimate
The economy is doing much better than reported in the media, which fixates on the big market down days and speculation about things that more often than not never come to fruition, or never live up to the worst-case hype.
Recommended
Portfolio Approach
I hope everyone has enough cash to take advantage of potential big upside moves.
Communication Services | Consumer Discretionary | Consumer Staples |
1 | 3 | 1 |
Energy | Financials | Healthcare |
1 | 2 | 1 |
Industrial | Materials | Real Estate |
2 | 3 | 1 |
Technology | Utilities | Cash |
3 | 0 | 2 |
Today’s Session
Futures were up all morning, albeit not much, when the Empire State Manufacturing data was released. It was a huge miss and underscores the continued weakness in manufacturing. The news took some starch out of futures. Twenty-two percent of those responding indicated conditions had improved, while 30% reported conditions were worse.
The headline general business index dropped twenty-six point to -8.6, its largest monthly decline on record.
- New Orders -12.0, -21.7 M/M
- Shipments +9.7, -6.6 M/M
- Unfilled Orders -15.8, -17.9 M/M
- Delivery Time -4.5, -5.2 M/M
- Inventories -5.3, -1.2 M/M
- Prices Paid +27.8, +1.6 M/M
- Prices Received +6.8, -5.6 M/M, 4th consecutive month of declines
- Number of Employees -3.5, -8.2 M/M, first time its been negative in 2 years
- Average Employee Workweek -2.2, -6.6 M/M, slightly lower workweek
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