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Weekly Economic and Stock Market Commentary

Weekly Economic and Stock Market Commentary – September 13, 2021

Market Commentary

As for the stock market specifically: September arrived on Wall Street, and stock markets around the world. Each of the major market averages lost more than a percentage point. And, the Dow Jones Industrial Average lost more than 2 percent for the short week.
To put things in perspective, despite the losses last week, the Standard and Poor’s 500 is less than 2% from the record. No one should lose sleep over that difference.
Last week saw “our friends in Washington” blather (I thought about using the word “discuss,” but couldn’t dignify the language to that degree) about changes to the tax code.
History tells us that each newly elected president has ideas about how the tax code should change. History also tells us that many of the blathering comments are meant to appeal to a constituency rather than act as a serious proposal intended to become law.
We Americans have become very accommodating of allowing our elected officials to spend $1.32 for each new dollar of revenue collected. I contend that the new tax ideas floating through the halls of Congress will have a similar result.
We can disagree as to which federal spending is worthwhile or garbage, but we as a nation would not have accumulated as much debt as we have without routinely spending more than the Treasury collects. That simply is the reality of math.
The NYSE Bullish Percent Index never did hit the reversal mark last week. That is life on Wall Street. In fact, all the indicators finished down for the week. We start the week with a split recommendation of WEALTH PRESERVATION for NYSE stocks, and WEALTH ACCUMULATION on the OTC side.
Remember, Xs mean OFFENSE or wealth accumulation, while Os mean DEFENSE, or wealth preservation.
Below is where our indicators stand as of September 10, 2021 (Courtesy Dorsey, Wright, and Associates).
Indicator Overview
On a general note:  The Department of Labor announced August producer prices rose 8.3%. This was the 5th consecutive record increase. I assert that is not a record one wishes to surpass on a regular basis. The good news is that tracking on this report is only 11 years old. The 8.3% gain applies to year-over-year movements, while the index rose 0.7% during the month. The core rate of producer inflation was “only” 6.7%. So much for the income gains many of us thought we had.
The Treasury Department announced some “good news” on the budget deficit for the first 11 months of the fiscal year. The deficit through the end of August was $2.7 trillion dollars. This compares with a deficit of $3.0 trillion dollars through August 2020. Spending rose 4% to $6.3 trillion dollars. Tax collections rose 18% to $3.6 trillion.

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