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Afternoon Note

Trying to Hold On

By Charles Payne, CEO & Principal Analyst
5/30/2019 1:39 PM

The major indices started the day in the green, gave up most of those gains, and the Dow briefly dipped into negative territory as U.S. Treasury yields slipped again.   The benchmark 10-year is now down to 2.251%.  

Then around 12:30, stocks turned around on comments from the Federal Reserve Vice Chairman Richard Clarida.  While “The U.S. economy is in a very good place, with the unemployment rate near a 50-year low, inflationary pressures muted, expected inflation stable, and GDP growth solid and projected to remain so,”  the central bank is prepared to consider interest-rate cuts should economic data signal a greater risk of a slowdown than is currently expected. 

Clarida added an important caveat, “If the incoming data were to show a persistent shortfall in inflation below our 2% objective, or were it to indicate that global economic and financial developments present a material downside risk to our baseline outlook, then these are developments that the committee would take into account in assessing the appropriate stance for monetary policy.”  

The most important part in my opinion of Clarida’s statement, is the persistent lack of inflation.  Remember, the market sold off when Jay Powell said this phenomenon was "transient."

Yet, today, we saw the PCE deflator revised to 0.4% from 0.6%.

Crude oil dipped to $57.70 per barrel, despite a slight decrease in crude inventories, which were down 0.3 million barrels from the previous week, amid continued growth concerns.  Overall, U.S Crude oil inventories are about 5% above the five-year average for this time of year, at 476.5 million barrel.  Gasoline inventories increased by 2.2 million barrels, 1% above the five-year average and Distillates decreased by 1.6 million barrels and are about 5% below the five-year average for this time of year.

Energy is the worst performing sector down 0.94%. 

S&P 500 Index

+0.28%

Communication Services (XLC)

+0.50%

Consumer Discretionary (XLY)

+0.94%

Consumer Staples (XLP)

+0.40%

Energy (XLE)

-0.94%

Financials (XLF)

-0.02%

Health Care (XLV)

+0.64%

Industrials (XLI)

+0.48%

Materials (XLB)

+0.30%

Real Estate (XLRE)

+0.53%

Technology (XLK)

+0.59%

Utilities (XLU)

-0.07%

There has been lots of economic data out today.   

 


Comments
Charles: You are a port in the storm, a light in the darkness, clarity in obfuscating confusion. It is my hope and prayer that your insight will not be lost on the voting public.

Jim Johnson on 5/30/2019 4:56:44 PM
Dear Charles,
I love your sanity and rational explanations. I learn so much from your thought processes.
Your parents and teacher are to be commended.
You are likewise to be commended for continuing and prospering with that good start.
I fervently hope many colleges and high schools ask you to be a commencement speaker - you have much to offer. (A little early but Happy Father's Day!)

C on 5/30/2019 6:05:30 PM
 

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