Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)Powell & Co gave us their ‘risk management’ rate cut but unless the rate of inflation falls notably from here and/or the labor market further weakens, which of course could happen, I only see a few more cuts left.

2)After last week’s initial claims jump to 264k (revised up by 1k and influenced by Texas but gave some of that jump back), they fell back to 231k for the week ended 9/13, 9k below expectations. The 4 week average was little changed at 240k vs 241k in the week before, around a multi month high. The number of those on continuing claims fell to 1.92mm and that is the least since May BUT, it came to be that North Carolina mistakenly said that just 205 people remained on benefits vs 20,500 in the week before. They’ve acknowledged the error.

3)The September manufacturing Philly index jumped to +23.2 from -.3 and well above the estimate of +1.7. The internals were all over the place for both current and the 6 month outlook.

4)The drop in long rates with the average 30 yr mortgage rate falling by another 10 bps w/o/w to 6.39% drove a 58% pop in refi applications w/o/w while purchase apps were higher by a much more modest 2.9%.

5)Core retail sales in August rose .7% m/o/m, 3 tenths above the estimate and after a .5% rise in July. Above this line item, vehicle sales rose .5% m/o/m while building materials were little changed, up .1% after a drop in the month before of .9%. Versus last year, vehicle sales were up by 3% y/o/y while building materials were lower by 5.7%. To what extent we are seeing pull forward with EV’s ahead of the end of the tax credit we’ll see after they expire.

6)From Darden: "Specific to casual dining, all our casual dining brands saw an increase in visits y/o/y from guests across all income groups, but specifically those in higher income groups...that could have been some trade down, but it could be trade up from the lower income groups to a great value in casual dining. We are seeing a few shifts in behavior and that guests are going towards that price certainty, so they know what they're going to pay before they come in, or greater perceived value, even if the item is high priced."

7)From Cracker Barrel: "Turning to our fiscal '26 outlook. I'll start with an update on traffic trends to date in the first quarter. Traffic for the first half of August was down approximately 1%. Since August 19, the date of the initial logo change, traffic has declined approximately 8%. As similar trends continue for the remainder of the quarter, we anticipate a Q1 traffic decline of approximately 7% to 8%."