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Not so fast, Mr Powell.....Strong data today on US economy dashes hopes for rate cut from the Fed

Jun 14, 2019

We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.
We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.

 

  • Strong readings on the US economy today goes against the notion that it needs an interest rate cut from the Fed to remain resilient
  • Both retail sales and industrial production data this morning show an economy performing well, certainly well enough to not need a rate cut
  • Despite whatever news is swirling around them, US consumers continued to spend as if they are confident about the economy’s prospects
    • Retail sales (ex-auto & gas) rose 0.5% in May, just shy of 0.6% consensus
      • April retail sales was revised higher to 0.3%, after initially reporting a drop in sales
      • The “control group” subset, often viewed as more reliable, rose 0.5%, beating consensus of 0.4%
      • Non-store sellers, which includes online purchases, grew 1.1%
      • Auto sales rose 0.7% in May while April was revised higher to a 0.5% drop from 1.1% drop
    • Industrial production rose 0.4% in May, handily beating consensus of 0.2%
      • Manufacturing rose 0.2% in May, the first rise of 2019, after falling 0.5% in April
      • Manufacturing makes up about 75% of industrial production and 12% of the US economy
      • Capacity utilization rose to 78.1% from 77.9% in May with the increase in manufacturing
      • Machinery production rose 1.1% with business equipment production rising 0.2%
  • In one of those strange paradoxes of Wall Street, good news on the economy is bad news for stocks
  • US Stocks are off in the wake of this data as it dashes hopes for an interest rate cut, something stock investors were starting to count on
     

 

 

 

 

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