Some Stability Returns

The market is a lot calmer today after last week’s drama, but we’re not in the clear just yet. I expect more volatility soon.

As expected, Signature Bank (SBNY) confirmed that their earnings report will be on Thursday. I don’t know why it takes them so long. We have four Buy List reports on Thursday.

This morning’s retail sales report showed an increase of 0.1%. Economists were expecting an increase of 0.6%. We also saw the biggest drop in spending at bars and restaurants in nearly two years.

Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.5 percent last month. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Data for August was revised down to show core retail sales were unchanged instead of the previously reported 0.1 percent gain. Consumer spending is being driven by a robust labor market, with the unemployment rate near a 49-year low of 3.7 percent. Tight labor market conditions are gradually pushing up wage growth.

The solid core retail sales increase in September pointed to strong consumer spending that should offset anticipated drags on economic growth from a widening trade deficit and persistent weakness in the housing market. Growth estimates for the third quarter are above a 3.0 percent annualized rate. The economy grew at a 4.2 percent pace in the second quarter.

Now I’m curious about next week’s GDP report. This will be our first look at Q3 growth. The Q2 number was pretty good: +4.2%. The problem with this expansion is that it’s been very hard to string together more than a few quarters of decent growth.

Posted by on October 15th, 2018 at 11:51 am


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