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Economic Data Deluge

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The final trading day of November 2019 also happens to be Black Friday this year, the time when — traditionally, anyway — retailers would go from using red ink in their ledgers to black, meaning they at last post profits for their fiscal years. With online sales, dwindling activity at shopping malls and “door-buster” sales happening elsewhere at different times, enthusiasm about Black Friday has begun to dilute a bit.

But it does mark the time when retail analysts begin to project holiday season strength and/or weakness. Last year was a dismal shopping period over the holidays, dropping 2.6% year over year. The National Retail Federation predicts year over year gains of 4.2% for 2019, spurred in part by steady gasoline prices (in every state except California) and continued strength in consumer confidence.

That said, economic data released on Wednesday begins to raise the question whether consumer confidence ought to be as strong as it is. While Consumer Spending for October rose 0.3% (from 0.2% predicted and 0.2% reported in September), Personal Income was exactly flat: 0.0%. This was well off the expected pace of +0.3% for October and the +0.3% reported in September. while one month of data does not indicate a trend, we will monitor this situation for signs consumer strength may have peaked for the cycle.

Also on Wednesday, Core Inflation rose in October by 0.1%, as expected and above the 0.0% reported in the previous month. Also, Pending Home Sales data for October also came out, swinging to a negative 1.7% from a positive 1.5%. in September. Again, one month’s data do not a trend make, but we will keep an eye on any potential weakness in the U.S. home sales market. As baby boomers begin to downsize to smaller housing units, will the prices on bigger single-family homes begin to decline?

We hope your Thanksgiving feast has digested well. Markets close early today, and low trading volume is expected. Pre-market futures indicate a slight pullback from Wednesday’s all-time closing highs.