Issue: Tariffs on $115 B of consumer products (apparel, footwear, etc) went into effect September 1st.
Implication: Products on Target and Walmart shelves could start rising soon. Target directed its suppliers to eat the cost increase but it’s not clear how long that can last.
Issue: There is now $17 Trillion of negative interest rate government bonds around the world.
Implication: Pressure is mounting for the Federal Reserve to further lower interest rates. The 10-Yr Treasury bond is paying 1.59% interest today. The lowest level in 50 years has been 1.46%.
Issue: Manufacturing in the U.S. has fallen sharply, now at its lowest level since January 2016.
Implication: Business confidence is eroding and so may go business spending (i.e. capital expansion, wage increases, etc.)
Issue: Consumer spending in Q2 rose 4.7%, the largest rate in 4 ½ years
Implication: Consumers feel good about today but surveys show they are concerned about the future, and could curtail spending. Consumer spending drives 70% of the U.S. Economy.
Issue: Trade talks with China are back on for October.
Implication: The stock market is rallying on the news with hope for a trade war resolution.
Issue: The economy added 130,000 jobs in August; 25,000 were temporary census workers. Unemployment rate remains at 3.7%, near a 50-year low.
Implication: The economy is strong though the job number indicates some signs of slowing.
Here’s to a profitable week!
Ron
