Market Focus on Trade Fades and Turns to Economic Hit-Parade

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U.S. consumer confidence hit a five-year high but is still off pre-crisis levels.

The past week has been dominated by policy/political issues, overriding good economic data. On the latter, the U.S. registered a blowout NFIB Optimism reading. Inflation readings were as expected, with real average hourly earnings sub-1%. Export prices are rising smartly (+4.9%) despite the strong USD. Initial unemployment claims are pushing towards the 1968 record low. With unemployment low, household wealth rising and confidence levels brimming, retail sales are outperforming at all levels and up 5.9% YoY. CPI inflation clearly has taken away deflation risk, but the charge up does open the Fed to a risk that they will see inflation rates edge above the FOMC’s comfort zone. Core CPI is now up 2.2% YoY with the six-month change at 2.4% annualized BUT the 3-month change is just 1.6%. Not enough for an aggressive Fed for sure, especially with real average hourly earnings up just 0.3%. The Fed will most likely tread carefully. Please watch lofty consumer confidence levels, so far not impacted by trade tensions, on page 58 of the Global Perspectives book - Special Guest Blogger: Tim Kearney, PhD.

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