Rover’s Weekly Market Brief — 12/1/2017

Economy

In the Census Bureau’s Advance Economic Indicators Report ^[6] for October, a -$1.3 billion drop in exports and +$2.9 billion increase in imports widened the trade deficit in goods by a larger than expected 6.5% to -$68.3 billion. The largest drops in exports were for food (-$1.3 billion), capital goods (-$1.3 billion), and automobiles (-$0.3 billion), while industrial supplies exports, which include petroleum products, increased +$1.9 billion. Imports decreased for capital goods (-$0.3 billion), but jumped for military goods (+$1.1 billion), industrial supplies (+$1.5 billion), and consumer goods (+$0.7 billion). Over the past 12 months, the trade goods deficit has widened +$6.3 billion, with a +7.1% increase in imports (+$13.0 billion) surpassing the +5.5% increase in exports (+$6.7 billion).

The second estimate of 2017 Q3 GDP was revised upwards from +3.0% to a +3.3% annual rate with contributions from upwardly revised figures for business investment (from +3.9% to +4.7%), government spending (from -0.1% to +0.4%), and inventories (from +0.73% to +0.8%). Consumer spending dropped to a downwardly revised +2.3% compared to Q2’s +3.3% rate, and yearly growth in after tax income, adjusted for inflation, was upwardly revised +0.1% to +0.6%. The report included the first estimate on Q3 corporate profits, which hit an all time high at a seasonally adjusted annual rate of +$1.86 trillion, up +10.0% from Q3 2016.

In October, pre-tax personal income increased +0.4%, with after tax disposable personal income (DPI) up by +0.5%, and real DPI, which is adjusted for inflation, up +0.3%. The seasonally adjusted annual rate of personal consumption expenditures (PCE) was up +$11.4 billion for goods, with spending increases ^[7] for goods in the “other” category, which includes prescription drugs and recreational items (+$5.2 billion), and for food (+$3.2 billion), and a drop in spending for motor vehicles and parts (-$4.7 billion). In services, spending increased at an annualized +$2.7 billion, with increases for “other services”, which includes communication services and passenger fares for foreign travel (+$3.2 billion), and for health care (+$2.6 billion), and decreases for recreation (-$3.2 billion), and financial services and insurance (-$2.4 billion). The core PCE price index, which excludes food and energy and is the Federal Reserve’s preferred measure for inflation, was up +0.2% in October, but remained unchanged from September’s +1.4% yearly rate.

Upcoming Economic Reports:

Tuesday December 5 – International Trade

Friday December 8 – Employment Situation

Earnings Calendar:

 

Monday	Tuesday	Wednesday	Thursday	Friday
Murata Manufacturing (MRAAY) [8]	HDFC Bank (HDB) [9]	Broadcom (AVGO) [10]	Dollar General (DG) [11]	Johnson Outdoors (JOUT) [12]
AAC Technologies Holdings (AACAY) [13]	KDDI (KDDIY) [14]	HeidelbergCement (HDELY) [15]	Dell-VMware Tracking (DVMT) [16]	Virco Manufacturing (VIRC) [17]