ICYMI, it’s palindrome week

Houston, we have a debate

The third Democratic presidential debate in Houston this week was the first time Joe Biden and Elizabeth Warren shared a debate stage. Expectations for drama were obviously quite high. Topics of “discussion” included universal pre-K, universal health care, taxes, minimum wages, and climate change. Variations on a theme included the need to remove Trump from the White House and the love of Obama. 

Moral of the story: The Democratic Party still has a long way to go before any one candidate emerges as a clear winner but a few agenda items seem to be universal across the board. Trump’s policies benefit energy, infrastructure, and defense related companies while a Democratic winner would put more pressure on these sectors in addition to cracking down further on health care. For these industries, the general uncertainty in the market is multiplied by policy uncertainty as well, doesn’t sound like a great business environment…Godspeed.

We found the missing inflation 

Housing costs continue to pressure inflation upward as core consumer prices increased 2.4% compared to the same time last year. Fun fact, the last time core inflation was higher than 2.4% was in 2008. Costs continued to rise for medical care – in fact, this has increased in the last year at the fastest pace in the last two and a half years – no surprise it’s such a hot button issue for the Democratic candidates. In addition to a solid core inflation print, hourly wages also increased 1.5% in the last year, boding well for the US consumer. 

Moral of the story: While inflation has recently climbed back toward the Fed’s target, it is unlikely to impact their decision to cut the interest rate in September. The FOMC’s current concern is still focused around the impact of the trade war with China.

Stepping off the accelerator 

Retail sales increased 0.4% in August mainly driven by auto sales, which increased 1.8% in the month. Online retailers and home and garden stores also saw a solid bump in sales while restaurants, department stores, and clothing stores saw receipts decline by around 1%. 

Moral of the story: While it seems that consumers cut back on spending toward the end of the summer, the increase in auto sales still suggests a confident consumer. People tend to steer away from making such large purchases if they’re not confident about their jobs and financial future. Sorry not sorry the puns just kept coming…