Personal Income, Spending Miss; Employee Compensation Plunges
On the surface, today’s Personal Income and Savings data was not pretty: with Incomes and Spending both rising at 0.1% in July, both missed the expected growth rate of 0.2% and 0.3% respectively. This also meant that the US consumer’s savings rate was unchanged at 4.4% in the month, and the downtrend from recent highs continues as more and more of the savings buffer has to be depleted.
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Banks set to cut Q3 GDP estimates on weak Income/Spending data
ISM Milwaukee 48.21, Exp. 53.00
Unless spending picks up in August and September, the economy could show somewhat slower growth in the third quarter. Economists had been forecasting the U.S. to expand around 2.5%, matching the pace of growth in the second quarter.
Consumers account for more than two-thirds of U.S. economic activity. When Americans buy more goods and services, businesses generate higher sales and profits and can afford to hire extra workers. That puts more money into the economy and further boosts spending and growth.
If August Was Bad For Stocks, September May Be Even Worse…(Get Out Of All Things Paper!)
Even though it may be quiet in markets Friday, anxiety has been building ahead of September, historically the worst month for stocks. This September will be especially difficult to navigate with the monthly employment report next week and the Fed’s decision whether to taper its bond buying or not, expected Sept. 18. Syria has entered the picture as another potential negative in just the last week.
“That’s what’s roiling the market now, both pro and con,” said Milton Ezrati, market strategist and senior economist at Lord Abbett. “If the Syrian situation looks like it’s calm, and nobody’s going to act in any violent way…then it will be quiet” ahead of the long weekend.
“They will be taking a wait and see attitude. If the president can find a channel where he doesn’t look like he’s dithering, or inviting war, that could make the market scream higher,” Ezrati said.
Read more: http://www.cnbc.com/id/100998127#ixzz2dSUZYzQH
Consumer sentiment declines in August
WASHINGTON (MarketWatch) — A gauge of consumer sentiment declined to a final August reading of 82.1 from a final July reading of 85.1, according to Friday reports. A preliminary reading for the University of Michigan/Thomson Reuters consumer-sentiment index pegged the level at 80. Economists polled by MarketWatch had expected a final August reading of 80.5.
Chicago PMI 53.0, as expected
Investors Are Dumping Emerging Markets At An Accelerating Pace
The brutal financial asset sell-off in the Emerging Markets picked up this week.
And it’s all reflected in the fund flows reports.
“Emerging Markets debt-dedicated funds recorded net outflows of $2,013MM (0.84% AUM) for the week ending on August 28, 2013, reports EPFR,” said Morgan Stanley’s Robert Habib. “Outflows increased for the third consecutive week and were the highest since they peaked late in June at nearly $6bn (2.2% of AUM). The total outflows since these commenced late in May now amount to $22.4bn. In line with the large outflows, prices of EM-dedicated funds extended their negative trend and fell 0.72% during the week.”
European Unemployment Remains At All Time High: Ranges From 4.8% To 27.6%