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Afternoon Note

Tariff Cliff

By Charles Payne, CEO & Principal Analyst
8/30/2019 1:21 PM

Consumer sentiment saw its largest decline since December 2012 to 89.8 down from 98.4 in July.  The University of Michigan used the term “tariff cliff,” which I haven’t heard one person in the financial or non-financial community use.  It will be picked up by those in the media eager to stoke such concerns.

I do agree with the assessment the level of sentiment is still consistent with modest gains in consumption, and in fact, we saw that this morning as consumer spending continues to soar in the face of volatility sentiment readings.  I also agree the way President Trump has announced his moves have added a level of uncertainty that takes away from the fact we are winning the trade war.

Consumer Sentiment

Aug 2019

Jul 2019

Aug 2018

Index of Consumer Sentiment

89.8

98.4

96.2

Current Conditions

105.3

110.7

110.3

Consumer Expectations

79.9

90.5

87.1

The news dovetailed with a report of overproduction of crude oil this month in Russia, which sent crude plunging taking the energy sector along for the ride.  Consumer Discretionary is down the most, but a big chunk of that is the carnage on Ulta Beauty (ULTA).

S&P 500 Index

+0.07%

 

Communication Services (XLC)

 

-0.28%

Consumer Discretionary (XLY)

 

-0.40%

Consumer Staples (XLP)

+0.07%

 

Energy (XLE)

 

-0.14%

Financials (XLF)

+0.65%

 

Health Care (XLV)

+0.20%

 

Industrials (XLI)

+0.68%

 

Materials (XLB)

+0.69%

 

Real Estate (XLRE)

+0.13%

 

Technology (XLK)

 

-0.19%

Utilities (XLU)

+0.18%

 
 

Summation

With so few investors around today, it’s easy to dismiss the session, but we are seeing the same kind of resolve that turned Wednesday from a losing day to a solid winner.  I think smart buyers and speculators have been nibbling on weakness all week mitigating normal reluctance to buy into so much uncertainty and before a three-day summer weekend.  Have a great holiday.

 


Comments
President Trump's comments on the tariff negotiations are aimed at the Chinese for maximum affect.
I don't think he considers the affect on the markets. He can't soften his comments and still get his message through to China.
SyG

Sy G on 8/30/2019 4:59:51 PM
 

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