Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)Distorted by the timing of the July 4th holiday, initial jobless claims for the week ended 7/5 fell to 227k from 232k and that was 8k less than expected.

2)With the passage of the BBB, income tax rates are now permanent and companies have tax incentives to invest in their business. Though slow the rate of spending? That only really begins in a few years in another can kick.

2)The Atlanta Fed's Wage Tracker showed 4.2% y/o/y growth in June vs 4.3% in May. Part of this is just an easy comp as it was up by 5.3% in June 2024 and still remains above the 3-4% range seen pre Covid. For a 'job stayer', the stat was similar, up 4.2% vs 4.3% in May. For a 'job switcher', wages grew by 4% from 4.1% and that actually is back in line with the pre Covid trend.

4)From the NY Fed’s Consumer Expectations Survey: "Perceptions about households’ current financial situations compared to a year ago improved markedly with a smaller share of households reporting a worse financial situation and a larger share of households reporting a better financial situation. Year-ahead expectations about households’ financial situations also improved, with a smaller share of households expecting a worse financial situation and a larger share of households expecting a better financial situation in one year from now."

5)Influenced by the July 4^th holiday in terms of timing, the MBA said purchase applications rose 9.4% w/o/w and refi's were higher by 9.2%.

6)From Delta: "Turning to demand. The environment has been stable since resetting to a lower growth rate earlier this year. Overall demand for air travel remains similar to last year, with softness largely contained to main cabin and particularly during off-peak periods…Our core consumer is in good shape and continues to prioritize travel...This is evidenced by the sustained strength of our premium products and our industry leading co-brand card, with consumer spend growth on the Delta AmEx card up double digits in the first half of the year…Premium revenue continued to outpace main cabin, growing 5% on a y/o/y basis...International revenue grew 2% during the quarter...Corporate demand environment remains steady."

7)From Levi Strauss: "We saw broad based revenue growth across channels and categories as well as strong margin expansion driven by the consistent execution of our strategic priorities…While the global operating environment has become more challenging with uncertainty around tariffs and broader consumer behavior, we are navigating this period from a position of strength."

8)Both the Reserve Bank of New Zealand and Bank of Korea each kept rates unchanged as expected.

9)Consumer prices in China in June continue to see true price stability as they rose .1% y/o/y vs the estimate of down one tenth. Prices ex food and energy rose .7% y/o/y vs .6% in the month before.

10)Still trying to ship as much product as possible during the reciprocal tariff pause, which is about to come to an end, resulted in a 34% y/o/y rise in Taiwanese exports in June, more than the estimate of a 27% gain. It follows a 39% y/o/y spike in May. Exports to the US were up by 91% in particular.

Negatives,

1)Not influenced by the holiday were continuing claims for the week ended 6/28 and they rose 10k w/o/w to 1.965k as expected but at a new cycle high going back to November 2021.

2)With new tariffs on copper imports and newly announced high figures for other countries, what exactly is the overall goal at this point?

3)The June NFIB Small Business Optimism index fell slightly to 98.6 from 98.8 in May and 95.8 in April. It peaked post election at 105.1 in December. The bottom line from the NFIB was this, "Small business optimism remained steady in June while uncertainty fell. Taxes remain the top issue on Main Street, but many others are still concerned about labor quality and high labor costs."