Market Commentary

Economic Data

There were a number of economic reports out this week and everyone already knows about our strong jobs market and trade deficit, but few dig into the nuts and bolts of the economy and the reports that describe what those nuts and bolts are holding together.

Two of the bolts seem to be loosening. The housing market with construction spending falling 1.1% for June, which is a lagging indicator, and for July the fall in sales for three months in a row in the sales of existing housing.  Auto sales were also a bit of a disappointment falling from 17.5 million in June to 16.8 million in July.

To be sure the experts have reasons why we see some weakness, and that weakness is mild compared to the robustness of the economy but as investors it is our job to ferret those things that might grow into a bigger problem.

A nut and bolt no one seems to be paying attention to, that is not only loose but just about falling off, is the weakness in world stock markets this year. China is in a bear market. The U.S. cannot stand alone for long as the rest of the world will start to drag us down. The reason it is not as important as it could be is because exports is a minor part of our overall economy, but our stock market is watching, and please remember the stock market is a leading economic indicator.

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