Friday, August 29, 2014
(This is Mark Vickery covering for Sheraz Mian, who is off today for an extended Labor Day weekend break.)
The ball gets rolling with macro-economic indicators this Friday morning, kicking off what will be a shortened Labor Day week filled with jobs data and a plethora of other economic reads. Consumer Spending in July was down 0.1%, a disappointment compared to the +0.2 expected. This was tempered somewhat by the upward revision of +0.3% to +0.4% in June.
July Personal Income was up 0.2%, light compared with the +0.3% expected. Again, however, June was revised upward from 0.4 to 0.5%, so we’re really talking a wash over the past two months relative to expectations. That said, this is the weakest read of 2014 (since Dec. ’13), indicating that the positive consumer confidence reads we’ve seen this week might not be all they’re chalked up to be.
However, it’s important to consider the unique context of this summer: it was colder than normal in much of the country, leading to lower electric utility costs for people’s air conditioning usage. So perhaps what we’re discussing this morning will amount to little more than drops in the bucket in the longer term. Still, the market can be counted on to look for disruptors in the overall narrative of a robust economic rebound.
Are we nitpicking here? Depends on one’s outlook: with the S&P 500 having peeked over the psychological 2000 number this past Tuesday — and its subsequent ceiling head-bumping for the remainder of the week so far — stock traders might consider a ramp-up from here would be priced for perfection, or at least a reasonable level of clear skies ahead.
Obviously, though, there are more than enough global tensions that may steal the thunder of another leg-up in this long-term bull run. And let’s be careful not to overthink everything: this is still late August, after all, when low volumes tend to distort impressions in day-to-day market trading.
So while it’s clear Q2 earnings season was the best we’d seen in a long time, and it would have been prudent to ignore the adage “Sell in May…” and remain invested — kudos to you; if you’d been making trades based on our recommendations all summer, you’re likely doing better now than you were this spring — it will likely take a lot more data to help push the positive narrative forward (or not). The proof will be in the pudding, as they say, but not til next week.
Have a Happy Labor Day holiday, and please be mindful of all the hard work put in by this country’s workforce over the years to help make the U.S. the great country that it is. And throw some ribs on the grill, while you’re at it.
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