Today is Friday. We have this long weekend to have some fun, and then we go back to work. The weakness of August will begin to fade on Tuesday, slowly I suspect, and September will bring a mixed bag of emotions. The news for September is already in place – QE tapering is coming! QE tapering is coming!
The market also faces a dirge of bad news coming in late September, early October – the Republicans threaten to shut down the government! As well, in both months, the market will continue to hear the constant drumbeat of the data, the day-to-day, week-to-week, and month-to-month mixture of weak and strong incremental changes in the economy. And, again, earning reports will come and the relentless analysis will begin.
Yes, September and might not be that different from August, other than the investor type folks taking the month off will be back, which means more volume in the market. For today, though, here is the “bad” and the “good” data for today.
- U.S. consumer sentiment retreated in August from last month’s six-year high, though Americans were slightly more upbeat in their outlook than earlier in the month. The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment slipped to 82.1 in August from 85.1 in July.
Along with Syria, the weak market in August, and a general tenor of things are not so good here in America, it is understandable why consumers would feel less inclined toward the positive.
- The Commerce Department said on Friday consumer spending ticked up 0.1 percent as outlays on services were flat and purchases of durable goods such as automobiles fell. Spending was also held back by weak incomes.
Okay, spending on services was down in August. I get it. Folks are on vacation, so banking, insurance, medical, and other such services get the short thrift, but spending on automobiles fell?
- J.D. Power has estimated that based on the pace set in early August, new car sales will hit 1.27 million units by the end of the month—a 12% increase over August 2012, and the highest tally since the onset of the Great Recession. What’s more, because the average price paid for new cars has risen over the years, and “consumers are spending more on new vehicles than in any month on record,” J.D. Power “anticipates that consumer spending on new vehicles in August will be close to $36 billion, which would be the highest level on record.”
So much for falling auto sales and, apparently, the “weak” incomes is not such an issue either.
- A joint forecast by J.D. Power and Associates and LMC Automotive projects monthly sales will hit the 16 million level for the first time since late 2007.
Furthermore, cars are not the only things the American consumer is buying and because of that, manufacturing is still clicking in America.
- The MNI Chicago Report business barometer rose to 53 after a reading of 52.3 in July. Numbers greater than 50 signal expansion. Manufacturing, which makes up about 12 percent of the economy, is regaining its strength after slipping earlier this year as demand for automobiles, construction materials, and appliances keeps assembly lines running.
The American economic engine is still running, even if the speed is less than the limit. It appears also that the economic engine of Japan, the third largest economy on the planet, is beginning to pick up speed as well.
- Friday’s data painted a brightening picture for Japan, a country seeking to escape 15 years of debilitating deflation: core consumer prices posted their biggest rise in nearly five years, unemployment fell to its lowest since late 2008, factory output rose and is expected to rise further, and workers’ incomes rose.
I wish I had something more to write about today, but the truth is I am happy it is Friday and the last trading day of August. September might be more of the same, but at least the volume will be stronger and those who are inclined to agree with me about brighter market days in autumn will be back. Maybe they will see fit to put their money into the market. As always, we will see …
Trade in the day; Invest in your life …
