Advisor Login Contact Us


Once again monthly US job gains fell outside the range of estimates.  Strong back to back surges in nonfarm payrolls in June and July helped alleviate concerns that the labor market is faltering in response to slow growth.  The May swoon which rattled all is looking more and more as a one off event.

Strong job gains coupled with a rise in the length of the average workweek and a larger than expected increase in average hourly earnings will result in an aggregate gain in employment income, essential to lifting household spending and economic growth in the second half of the year.

Because of the above, the Atlanta Fed increased their forecast for third quarter GDP to 3.8%, the greatest quarterly growth rates since the 5.0% pace registered in 3Q14.

If third quarter growth increases to this level, how will it impact the election?  Will most think the data is skewed as 70% of society thinks the country is headed in the wrong direction? If the incumbent party utilizes the data as evidence of positive economic stewardship, will the party be regarded as out of touch with society?

Or will the data be viewed positively, given an electoral edge to the incumbent presidential party as some are already suggesting?  I must write the two greatest consecutive of growth that occurred in the last eight years was the second and third quarter of 2014.  The economy grew by 4.0% and 5.0% respectively.

The Democratic Party, who controlled the Senate and the Executive branch, was trounced at every level.  It was a resounding defeat partially predicated by the electorate believing those in power were out of touch with reality.

Returning back to the data and market reaction, many viewed the statistics in a goldilocks manner…not to hot or too cold, non-threatening to monetary policy assumptions and increased corporate cashflows thus markets traded higher.

The Treasury market was crushed on the data.  The dollar traded higher which negatively impacted commodities.

What will happen this week?  Statistics released include retail sales, inflation data and several sentiment surveys.

Last night the foreign markets were up.  London was up 0.05%, Paris up 0.48%  and Frankfurt up 0.98%.  China was up 1.06%, Japan up 2.44% and Hang Sang up 1.57%.

The Dow should open nominally higher as commodities are rallying on growth optimism. The 10-year is unchanged at 1.59%.

Return To Index Page
Ken Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.