Market Support In GDP And Jobs Data

Even though we’ve had a couple slightly down days in the wake of the “sell the news” tax bill passage, if market indexes close in the green today, we’ll see yet another up week for this robust Santa Claus rally. Aside from the coming tax windfall for corporations, we also see market support in GDP and jobs market data.

The incoming economic data continues this morning with fresh Personal Income & Spending numbers, along with new Durable Goods Orders. Personal Income, while a little light of expectations at +0.3%, is more than made up by the exuberance shown in Spending, +0.6% — two-tenths higher than anticipated. The deflator month over month reached +0.2% — right in the middle of the 0.3% expected and the 0.1% reported last month. Core was 0.1%, year over year +1.5%. This data shows wages aren’t going up as high as consumer confidence, but unless these metrics widen over time, there’s not much to be wary of here.

Durable Goods Orders missed their +2% estimate, coming in at just +1.3%, but the good news here is that it’s a swing to the positive from the previous month’s -0.4%. Ex-transportation, this read falls to -0.1%, demonstrating that autos and aircraft are still pulling up the slack in durable goods.

Capital Goods Orders, Non-Defense, Non-Aircraft — a fancy way of describing “business investment” — fell to -0.1%. Another silver lining, however, came in the upward revision from the previous month: +0.3% originally reported to +0.8% this morning. Orders vs. Shipments shook out to the positive at +0.3%, following a previous read of +1.3%.

Government Shutdown Avoided

With little political will in Washington DC from either side of the aisle to shut down the government for Christmas (or any time, really), Congress was able to cobble together a quick compromise that kicks the can to January 19th. This means once Congress returns from winter break, there will be plenty of work to do on any number of issues that affect the U.S. government and the American populace as a whole.

We also will check to see if President Trump signs the just-passed tax bill into law today, after insisting Congress get a bill on his desk by Christmas. By matter of policy, Trump would have to sign a short-term spending bill that includes a waiver which allows a deficit increase, which would then situate him to sign the tax cut bill and its $1.5 trillion cost. But if the President waits until next year to sign the bill, this means the effects of tax reform won’t be felt until 2019 — in other words, after next year’s mid-term elections. Very quietly, the worm turns…