Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)This would be a negative for those who believe the Fed should be cutting now but I think Jay Powell and Co have PTSD over missing the 2021 and 2022 inflation spike and why they are being patient until they gain greater confidence in the outlook. I think they cut in September and December.

2)Core retail sales in May rose .4% m/o/m, one tenth above expectations and April was revised up by one tenth to down .1%. But, sales of the big ticket items of autos and building materials were soft and the breakdown of the rest was mixed.

3)The May US Architecture Billings Index rose 4 pts to 47.2, though remaining below 50. The increase was led by commercial/industrial and multi family. The chief economist there said “Business conditions remained sluggish nationwide in May, with nonresidential construction activity continuing to decline in several major metro areas. Firms across all specializations reported declining billings this month. However, the pace of decline slowed at firms specializing in multifamily residential projects. These, along with institutional work, are likely to be the first to return to growth when conditions begin to improve.”

4)From Jabil: Revenue grew 16% y/o/y with "Upside strength in revenue was primarily driven by cloud and data center infrastructure."

5)From Cava: “We’ve seen input costs to be pretty benign as it relates to COGS or labor and that’s what we really worked to pass along those savings to our guests. We only took a 1.7% menu price increase in the beginning of this year. No plans to take further price increases. We’ve been able to under price inflation, under price CPI over 800 basis points in the past few years. Really trying to drive that value proposition for consumers when they are in that fog or feeling other price pressures around them.”

6)The June German ZEW investor confidence index in their economy jumped to 47.5 from 25.2 and 12.5 pts above expectations. Almost the entire gain was in the Expectations component which rose by almost 24 pts. The Current Situation was still deeply negative at -72 but less so vs the -82 in May. ZEW said, "Recent growth in investment and consumer demand have been contributing factors. This development also seems to strengthen the assessment that the fiscal policy measures announced by the new German government can provide a boost to the economy. Combined with the recent interest rate cuts by the ECB, this could bring economic stagnation in Germany, which has lasted for almost three years, to an end."

7)The French business confidence index held at 96 as forecasted. Manufacturing slipped by 1 pt and back to matching the lowest since last October. Services rose 1 pt after falling by 3 pts in May. Employment was up 3 pts but fell 3 pts last month. Retail rose 1 pt while construction declined by 1 pt.