September 18, 2019

The HCM-BuyLine® remains firmly above any area of concern. However, we are hitting some short-term resistance. As previously mentioned, we expect a small pullback of 1-4% to let the market build up steam and break out new highs, and we do expect the market to break out. We mentioned a market break out about a month ago, but trade news scuttled the rally, so only time will tell.

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U.S. and China made small concessions on the next round of tariff increases as both sides talk about the meeting of principals in early October. Politics surrounding 2020 elections and Trump’s need to carry rural voters are part of the equation. The week experienced continued back and forth phone calls between trade negotiating teams in Washington and Beijing. The Chinese asked President Trump for a delay in the next round of tariff hikes, scheduled for October 1st due to national celebrations in China. The President responded with a two-week delay. The Chinese, in what has become a tit-for-tat style exchange announced that they would delay their next round of tariff increases on soybeans and pork in response to the positive actions taken by the U.S.

Both sides remain committed to a meeting in DC early next month. The October 15th delay by the Trump Administration appears to indicate that they expect a meeting, and perhaps some action, before that date.

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Jobless Claims Drop             

The four-week average of claims fell 4,250 to 212,500, hovering near its lowest level since 1969. The jobs market remains as tight as ever, with businesses reluctant to lay off workers, despite some signs of softer economic growth. Continued solid labor demand reduces the risk of recession in the near-term.

Consumer Comfort Continues to Trend Up

The Bloomberg Consumer Comfort Index ticked down .2 points last week to 63.2, as the buying climate deteriorated somewhat. Even so, both comfort and its 52-week average are close to their highest levels since late-2000/early-2001. This describes a buoyant U.S. consumer and implies a positive outlook for consumer spending growth for the rest of the year.

Attack on Saudi Oil Facilities

The biggest takeaway, in our view, of the attack on Saudi oil facilities, is the relative strategic vulnerability of the oil supply chain.  The $2 trillion of oil consumed annually is disrupted by a few drones dropping less than $1 million of ordnance.

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