Rover’s Weekly Market Brief — 10/27/2017

Economy

As in previous months, a strong increase in commercial aircraft orders (+31.5%) was a major contributor to the +2.2% gain in September’s new orders for durable goods ^[6]. Increases in shipments (+1.0%) and unfilled orders (+0.2%) were also led by the transportation component. New orders for core capital goods, which exclude the transportation and military components and serve as a measure of business investment, were up +1.3%, matching the rate for both July and August. In addition to the increase in commercial aircraft orders, September orders increased for manufacturing (+2.9%), communications equipment (+4.8%), and military aircraft (+2.4%), while orders decreased for computers (-5.5%), machinery (-0.2%), and primary metals (-0.1%).

In September a +$1.7 billion increase in imports outpaced a +$0.9 billion increase in exports to widen the trade deficit ^[7] +1.3% to $64.1 billion. Wholesale inventories increased to $609.1 billion (+0.3%), and retail inventories decreased to $618.0 billion (-1.0%), largely due to a -2.6% drop in automotive inventories. Exports increased for “other goods” (+5.7%), and industrial supplies (+4.8%), which includes petroleum and petroleum products, and dropped for automotives (-6.0%), capital goods (-0.6%), and consumer goods (-0.4%). Imports increased notably for food (+1.6%), industrial supplies (+2.1%), and capital goods (+2.2%) and only dropped for automotives (-2.0%).

The advance estimate for Q3 GDP showed less hurricane related weakness than expected and beat analyst estimates at +3.0%, down from +3.1% in Q2. GDP was aided by increases in consumer spending (+2.4%), business investment (+3.9%), exports (+2.3%) and federal government spending (+1.1%), and decreases in imports (-0.8%). These contributions were partially offset by decreases in residential fixed investment (-6.0%), and state and local government spending (-0.9%). While consumer spending was up for the quarter, disposable personal income rose at a slower +2.1% rate in Q3 vs. +3.6% in Q2, and the personal saving rate dropped to +3.4% in Q3 vs +3.8% in Q2.

Upcoming Economic Reports:

Monday October 30 – Personal Income and Outlays

Friday November 3 – Employment Situation

Earnings Calendar:

 

Monday	Tuesday	Wednesday	Thursday	Friday
Mondelez International (MDLZ) [8]	Pfizer (PFE) [9]	Facebook (FB) [10]	Apple (AAPL) [11]	Berkshire Hathaway (BRK.B) [12]
Roper Technologies (ROP) [13]	Mastercard (MA) [14]	Kraft Heinz (KHC) [15]	Alibaba Group (BABA) [16]	Mitsubishi (MSBHY) [17]