Currently second quarter corporate earnings are up around 23%. Expectations were that 190,000 jobs would be added in July. However, only 157,000 jobs were added. It is important to note that a little over 30,000 of these jobs stem from Toys R Us going bankrupt. With this being the case, we could see these 30,000 individuals making their way back into the job market. An interesting note is that the largest loss of jobs came from the government level, at 13,000 jobs. Manufacturing added 37,000 jobs in July which came in stronger than expected. After breaking down the logistics, one can argue that this could actually be a strong jobs number.
Domestically we look very good thanks to a strong GDP number and strong jobs market. However, there are alarms overseas. In Europe we saw a slowdown in the first and second quarter. Brexit talks are starting to fall apart and, in turn, are already affecting third quarter growth in Europe. In Japan, the consumption tax that is supposed to take effect next year is keeping consumers off the sidelines. The Bank of Japan seems to be out of the monetary tools for economic growth. In China, the tariffs are starting to have an impact on their economy. As strong as we are domestically, it’s important to keep an eye on the international level.
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