Stuck in the Middle

Stuck in the middle.  Stocks did a bunch of nothing on Friday as traders, with not much to do, await audibles from the Fed and the outcome from G-20 trade talks.    Despite interesting economic data, stocks traded marginally lower in Friday’s session.

MY TWO CENTS

1.  People are buying stuff! And that is a good thing, considering that consumer spending represents roughly 2/3 of the GDP.  On Friday, the US Census Bureau released its Retail Sales figure for May and the number showed a month over month growth of +0.5%, slightly below expectations.  The prior month’s figure was revised up to +0.3% from -0.2%, which is really the big news.  With wages growing slowly but surely, the positive economic effects only come when the consumer spends.  Whether the spending lasts or not is the big question.  The University of Michigan Sentiment preliminary read for June was also released on Friday and it missed expectations. A breakdown of the index revealed that sentiment of current conditions was higher than expected but sentiment about long term prospects missed by a lot.

2.  Stock market analyst Donald Trump predicts a stock market crash… if you don’t vote for him in 2020. His prediction came in the form of a tweet which gives us a hint about what we can expect in his upcoming presidential campaign.  What does it mean?  More volatility as markets struggle to digest the realities of mixed economic numbers, global economic slowdown, real economic impacts of tariffs, low inflation, and moving interest rate targets.  Markets have a fear of the unknown and mixed messaging adds to that fear.

THE MARKETS

Stocks bounced around on Friday as traders assessed the potential for Middle East troubles giving energy further reprieve.  Traders however, are really interested in what the Fed is going to say when they announce policy and projections this Wednesday so they took no chances on Friday.  Stocks traded marginally lower with the S&P 500 slipping by -0.16%, the Dow Jones Industrial Average trading off by -0.07%, the Russell 2000 selling off by -0.87%, and the NASDAQ 100 dropping by -0.42%.  Crude Oil climbed by another +0.44% on fear of supply cuts as a result of the sabotaging of two gasoline tankers in the Gulf of Oman.  Bonds slipped slightly on Friday and 10-year treasury yields fell by -1 basis point to 2.08%.

WHAT’S NXT

- The National Association of Home Builders releases their Market Index which gauges builder sentiment.  The Index is expected to have climbed to 67 from 66.

- The Treasury will sell $36 billion each of 3 and 6-month bills

- A public hearing on the Administration's tariffs will begin today in which more than 300 affected companies will appear to voice grievances.

- The week ahead will feature Housing Starts, Building Permits, the Leading Index, Manufacturing PMI, and Existing Home Sales.  Wednesday’s FOMC policy release and press conference will be the show stopper for the week.  Rates are expected to remain unchanged, but the wording of the policy, the press release, and the Dot Plots will be where the action is at.  Please refer to the attached earnings and economic release calendars for details.

daily chartbook 2019-06-17

earnings releases 6_17

econ numbers 6_17