It is a big week for economic data. The punditry will be analyzing the Trump tax proposal. Everyone will be drawing conclusions about how these factors may be linked with stock prices. Expect people to be asking:
Does economic strength equal stock market strength?
Last Week Recap
My expectation for last week was right on target. Attention rapidly turned to the Trump tax proposal. More on that in today’s Final Thoughts.
The Story in One Chart
I always start my personal review of the week by looking at this great chart from Doug Short via Jill Mislinski. She notes the weekly gain of 0.68%. While the range was slightly higher than last week, it was still less than 1.5% on an intra-day basis.
Doug has a special knack for pulling together all the relevant information. His charts save more than a thousand words! Read the entire post for several more charts providing long-term perspective, including the size and frequency of drawdowns.
The Silver Bullet
As I indicated recently I am moving the Silver Bullet award to a standalone feature, rather than an item in WTWA. I hope that readers and past winners, listed here, will help me in giving special recognition to those who help to keep data honest. As always, nominations are welcome!
Each week I break down events into good and bad. For our purposes, “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too!
The economic news remained quite positive.
- Q2 GDP registered a revised gain of 3.1%. This is backward looking, but an improved base for the rest of the year. The third quarter does not look as promising. Jill Mislinski’s “inside the GDP” story is a great look at the impact of individual GDP components.
- North Korea and the US are in direct contact (BBC). The back-channel discussions will probably be more fruitful than the contact via tweets.
- Serious mortgage delinquencies declined again. Fannie Mae (via Calculated Risk) notes that the level is at its lowest since November, 2007.
- Jobless claims “defy nature” reports Bespoke. Their well-designed chart illustrates the point. New Deal Democrat’s “weather adjusted” calculation puts initial claims at 237K.