Friday, we received the advance estimate for Q-2 GDP that showed us annualized growth rate of 2.1% beating The Street’s consensus of 1.9%, and that followed an unrevised 3.1% growth rate in Q-1 of this year, a Good result.
Yes this was a good number, that the market too in stride.
Growth in domestic final sales continued to drive the economy forward with a 3.5% increase, which was the largest quarterly gainer in a year that was driven by a 4.3% advance in personal consumption expenditures, which was the strongest quarterly gainer since Q-4 of Y 2017 and that was driven by a 12.9% strengthening in durable goods purchases.
Current-dollar GDP increased 4.6% in Q-2 after having increased 3.9% in Q-1.
Price inflation also picked up some in the last Quarter.
The GDP chain price index rose at a 2.4% annual rate, which was the quickest growth rate in 4 Quarters.
The PCE chain price index advanced 2.3% after rising 0.4% in Q-1.
Higher food and beverage prices, as well as costlier clothing and home furnishings, accounted for the acceleration.
All this underlines the fact that the US economy is doing well and performing near trend growth with an unemployment rate that’s near a 50-year low notwithstanding all the uncertainty that is caused by the trade tensions/disputes, which logically weigh on business investment.
For equity investors, we believe that the US economy is #1 on the list of the best and safest places of the developed economies to be invested in while it certainly shows no serious signs that it’s on its way to an imminent recession.
It will be interesting to see if the Fed will cut its Fed funds rate Wednesday and will take something like an insurance against the risks that are posed by slowing global growth and continuous trade tensions.
Note: about 75% of market participants still expect a 0.25% rate cut on Wednesday.
Monday, the major US stock market indexes finished at: DJIA +28.90 at 27221.35, NAS Comp -36.88 at 8293.33, S&P 500 -4.89 at 3020.97
Volume: Trade on the NYSE came in at 744-M/shares exchanged
- NAS Comp +25.0% YTD
- S&P 500 +20.5% YTD
- DJIA +16.7% YTD
- Russell 2000 +16.4% YTD
HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish across the board with our Key indicators flashing Very Bullish.
Stay tuned…
