Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)Core retail sales in July rose 1% m/o/m, twice the estimate and vs a .5% gain in June (revised down by one tenth) and a .6% rise in May (revised up by 3 tenths). Amazon’s prime day helped with online retail sales up 1.9% m/o/m and almost 12% y/o/y.

2)The August Philly manufacturing index rebounded to +12 from -13.5 and that was well better than the forecast of -10. It's the first time we've seen a plus sign in this figure since August of last year.

3)In the NY manufacturing survey for August, the 6 month outlook, rose to 19.9 from 14.3 and likely due to the expected rebuild in inventories and new orders. Capital spending plans improved too.

4)While a headwind for markets, the Fed’s balance for the week ended 8/16 fell by $62.5b on the week to $8.14 trillion, the biggest one week decline since early April.

5)Single family starts were 983k and the 3 month average to help smooth all these figures out is 972k vs the 6 month average of 907k and the 12 month average of 885k. As for permits, they rose a touch for single family to 930k from 924k.

6)US industrial production in July rose 1% m/o/m, well more than the estimate of up .3%, partly offset by a 3 tenths downward revision to June. Manufacturing in particular few by .5% vs the estimate of no change but June was revised lower by 2 tenths. Utility output also helped IP. Capacity utilization ticked up to 79.3% from 78.6%.

7)From the NY Fed’s consumer expectations survey, one yr inflation expectations fell to 3.5% from 3.8% and that is the least since April 2021. The 3 and 5 yr opinion fell to 2.9% from 3%. Home price gains are still expected, by 2.8% but down one tenth from June but "remaining well above the series 12 month trailing average of 2%." While gasoline prices keep rising, consumers expect that to end and they also think prices for food, healthcare, college education and rent to fall too. This is of particular note, "the mean probability that the US unemployment rate will be higher one year from now decreased by 1 percentage point to 36.7%, the lowest reading since April 2022." Conflicting though was there was a drop in the mean perceived probability of losing one's job and if one does, a rise in the expectations of finding a new one. Income expectations were unchanged m/o/m and spending intentions improved to 5.4% from 5.2% but "remains well below its 12 month trailing average of 6.1%."

8)From TGT: “Within the quarter, comp trends softened in the 2nd half of May into June before we saw meaningful recovery in both traffic and comps in July. In the month, we were especially pleased with trends around Independence Day holiday, along with Circle Week, which also resulted in the addition of more than 1.5 million new Target Circle members."