thependulumswings

Friends

This morning’s GDP release was quite a pleasant surprise. With most analysts expecting a number south of 2% for the 4th quarter of 2018, it was a bit of a stunner that we saw 2.6% growth in the quarter. Even more surprising was how business investment contributed to the strong number, as did consumer spending. Along with that surprisingly good news, we got a robust and much better than expected Chicago PMI number. So, though we do seem to be in a bit of a slowdown, and almost assuredly a slowdown in corporate earnings (after the massive increase the past two years), the bulls can hang their hat on the fact that the slowdown sure doesn’t look like a recession- at least not at this point.

Despite the good economic data, stocks slumped, perhaps partially due to the lack of a deal with the North Koreans, but more likely we simply have run up against resistance in the middle of very overbought conditions. In other words, it wouldn’t be bad if we took a breather. For the day, the Dow Jones Industrial Average was down 69 points to close at 25,915. The S&P 500 was down 7 points to close at 2,784. Gold was down $6 to trade at $1,315 per ounce, while oil was up $.25 to trade at $57.19 per barrel WTI.

Stocks have shown signs of fatigue this week. Let’s see how we close out the week tomorrow. Stay tuned.

Have a nice evening everyone.

Jim