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Recent Past Looks Great, but Looking Forward... ?

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Wednesday, June 27, 2018

Market futures this Wednesday morning are up marginally at this hour, much the way they closed Tuesday’s regular trading day. Value-buying in the wake of harpooned indexes stemming from last week’s realities of a burgeoning trade war with the U.S.’ main trading partners seems to be sopping up losses, though we remain well off year-to-date highs established earlier in 2018.

May Durable Goods orders have been released ahead of today’s opening bell, and though they are in negative territory, they are better than expected. A headline of -0.6% on Durables for May is better than the consensus estimate -1.3% and the previous month’s upwardly-revised -1.0%. Ex-transportation looks even better: -0.3% for last month, with the revision for April a big swing from -0.9% originally reported to +1.9% today.

We also see the May Trade Balance (deficit) headline before the opening bell, which is better than expected: -$64.8 billion, lower than the -$69 billion analysts had been expecting, and down 3.7% month over month. Both imports and exports experienced increased activity, though exports were hotter. Of course, none of this takes into account our current trade frictions, but things like a trimmer deficit should have a positive impact on overall Q2 GDP numbers.

Yesterday, after regular day-trading commenced, Consumer Confidence for June slipped to 126.4, down from the 128 expected and the 128.8 in May. This metric looks at present-day attitudes for perceptions regarding U.S. business and labor, but it also gives a forward outlook to 6 months from now — and that’s where the concerns are.

Present-day views are unchanged from previous positivity, and while we do see very healthy economic reads pretty much across the board both here at home and around the world, consumers expect a tougher row to hoe in future months.

In fairness, this outlook cannot be fairly labeled “dire,” but it doesn’t take much of a leap to see these concerns tied to the burgeoning trade difficulties (it’s premature to call this a “trade war;” if we’re unfortunate to find ourselves in one of those, it will be apparent to all of us) that stand before us.

Bottom line, a consensus of consumers surveyed do not expect much in the way of gains in future months. Perhaps this also has to do with the difficulty in sustaining such excellent growth we’ve seen thus far in 2018, but it behooves us all to consider it may suggest something else.

Mark Vickery
Senior Editor

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