Monday, August 26, 2019
You’d think that the week before the long Labor Day holiday, with Q2 earnings season in the rearview mirror and low market trading volume, would lead to a quieter news front. But clearly these days are far from normal, with hard questions about the U.S.-China trade war still unanswered, even after a G7 meeting over the weekend that apparently got nothing accomplished.
This morning, via tweet (as per usual), President Trump has announced that China wants to make a trade deal, and that it is “possible” for the president to delay new tariffs aimed at Chinese goods to take affect September 1st. This was enough to bolster early trading to the positive, and we see major indexes making back some of their big losses from last Friday.
Durable Goods for July came in at +2.1%, higher than the roughly +1% expected. This compares to the previous month’s slightly downwardly revised +1.8%. Ex-Transportation, this figure tumbles to -0.4% (+0.8% in June), while ex-Defense amounted to +1.4%. Take these numbers as overall positive, with a few big-ticket items putting their thumb on the scale for the month.
Shipments slipped to -0.7%, and this can be directly traced to the ongoing trade war. Should we actually see an agreement with China made in the near term, as the president infers may happen, expect whatever weakness in these Durable Goods numbers to be completely ignored and indexes to rocket back up. That’s said, it’s a lot to ask for.
Later this week, we get new reads on Case-Shiller home prices, consumer confidence, jobless claims, advance trade in goods and, importantly, a first revision to Q2 GDP. This announcement, coming Thursday morning, is expected to dip below 2% from the 2.1% originally reported. Further, this would take domestic growth even further off-pace from the goal of 3% for the full year.
Mark Vickery
Senior Editor
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