Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)Initial jobless claims totaled 224k vs 227k in the week before and about as expected. The 4 week average was little changed at 222k vs 221k in the week before. Off the cycle high, continuing claims fell to 1.953mm from 1.968mm.

2)Core retail sales in July rose .5% m/o/m, one tenth more than expected and June was revised up by 3 tenths to an .8% gain. Above the core, auto sales rose 1.6% m/o/m while building materials fell by 1.3%.

3)July import prices which DO NOT include the tariffs, were about as expected when we include the June revisions. Headline import prices rose .4% m/o/m after two months of declines and are flattish y/o/y. Ex food and fuels saw import prices higher by .3% m/o/m after a one tenth drop in June, no change in May and a .4% rise in April. They are up .8% y/o/y.

4)The August NY manufacturing index was above zero for a 2nd month at 11.9 vs the estimate of zero.

5)With the 10 bps w/o/w drop in mortgage rates to 6.67% on average for a 30 yr, the benefit mostly accrued to those looking to refi as refi's jumped 23% w/o/w while purchases were higher by just 1.4%.

6)The July NFIB Small Business Optimism Index did improve to 100.3 from 98.6 and that is the best since February. The NFIB's bottom line was this, "Optimism rose slightly in July with owners reporting more positive expectations on business conditions and expansion opportunities. While uncertainty is still high, the next six months will hopefully offer business owners more clarity, especially as owners see the results of Congress making the 20% Small Business Deduction permanent and the final shape of trade policy. Meanwhile, the labor quality has become the top issue on Main Street again."

7)July US industrial production was as expected with the June revision. The manufacturing component was a bit better.

8)From ZipRecruiter: "While the broader labor market remains soft, ZipRecruiter continues to see early signs of momentum." They've seen quarterly paid employers or QPEs rise sequentially since Q4 2024.” But the caveat, "That is not to say that the labor market is rebounding. That is to say that it is stabilizing." And what's the impact on the jobs market from AI?, "If you look at the category that would be most likely impacted by AI, you'd look at technology. It's the one that's had the most headlines. It's the one that's had the most discussion. And that was down 5% y/o/y on a job posting basis...And if you look at that down 5% that puts it squarely in the category of ordinary, meaning that if you look at the broad spectrum of job categories, what you see is that makes it a very average decline, putting it nearly effectively the median, which means so far both quantitatively and qualitatively, we're not seeing significant disruption and/or impact from AI in terms of the number of jobs being posted."

9)From Birkenstock: "Our demand is strong across all product categories and target groups…In the Americas, revenue was up 16% in constant currency, with both the B2B and D2C channels growing double digits...Importantly, we saw no pushback or cancellations following the July 1^st price increases implemented in response to tariffs.” As their shoes are in high demand, "we don't see any slowdown in consumer demand or anything. We are at the moment struggling with capacity. That's our biggest issue."

10)From Ralph Lauren: "Our strong first quarter results were once again broad based, driven by every geography and channel. We delivered double digit top line growth in both Asia and Europe and high single digit growth in North America with global comps up 13%."

11)From Advance Auto Parts: Comps were flat for the quarter "and our performance was driven by strength in the Pro business, which continued to deliver positive comp growth. In our DIY business, we are encouraged by emerging signs of stabilization as comparable sales were consistent with Q1 and improved on a two year basis. Notably, we concluded the quarter on a strong note with both Pro and DIY delivering positive results, and this momentum has continued into the first four weeks of Q3."

12)From Madison Square Garden Entertainment: "While we're certainly keeping an eye on the macro environment, we continue to see strong consumer demand. A number of factors that support this view is we are seeing strong demands for the Christmas Spectacular 2025 holiday run. And our advanced tickets are pacing well ahead of last year at this time."

13)From Madison Square Garden Sports: "Driven by sustained consumer and corporate demand for the Knicks and Rangers, we saw increases in key in-game revenue categories, including ticketing, sponsorship and suites…This past regular season, both combined average ticket yield and average paid attendance were up, which helped drive growth in ticketing revenue. And the upcoming 2025-'26 seasons, the average combined season ticket renewal rate is currently at approximately 90%."

14)From Sphere Entertainment: Coming soon is The Wizard of Oz at Sphere and "we have sold over 120,000 tickets to date and expect to reach 200,000 by the opening later this month…We're also seeing increasing demand from artists across a variety of genres, which are driving renewed interest in their music by playing Sphere in Las Vegas. We have continued to add shows to our calendar and now expect to host more than 100 concerts this year, up from 70 in 2024."

15)From Live Nation: "Global expansion continues to drive touring growth, with fan attendance hitting new highs and ticket buying strong at every price point from VIP to the back row…"Over 130 million tickets sold for Live Nation concerts, up 6%, led by the strength of our international markets with double digit attendance increases across stadiums, arenas, and theaters and clubs.” Also, "Strong ticket sales at every price point from premium to budget friendly seats: Over 40% of global stadium shows sold out 95% of tickets in the first week, up double digits. Over 10% of seats across stadiums, arenas, and amphitheaters in the US priced closer to market value. Ticket to Summer promotion sold 1.5 million $30 lawn seats, consistent with historical levels…Continued growth in onsite spending across all venue types, including concession spending at large amphitheaters up double-digits."

16)From Brinker: Chili’s continues to be a casual dining standout. Their comps jumped 24% y/o/y, "outperforming a stronger casual dining industry by 1,890 bps…So we're still growing all income levels, so that's the good news. We saw growth in low, medium, and high, especially when we have traffic numbers like we've had...And so far as frequency goes, what I will tell you is we've had a huge influx, obviously, of new and lapsed users, and our frequency is actually staying flat."Their Maggiano's brand saw just a mediocre quarter with comps down .4% y/o/y.

17)From Restaurant Brands: "While the consumer environment remains dynamic, we've seen encouraging signs of improvement across many of our largest businesses." But, "Beef is about 25% of our cost basket and we're seeing around 15% inflation on the year to date."

18)From Texas Roadhouse: "Strong traffic growth throughout the quarter drove a 5.8% increase in same store sales....driven by 4% traffic growth and a 1.8% increase in average check."

19)From Hapag-Lloyd: "Looking at the market, I'd say that the US trade policies have certainly caused a fair bit of volatility, both in demand and also in short term pricing...What I would say though that in the end, the first half was probably a bit better than many people feared."

20)From ON Holdings: "We saw strength across every region, channel and product category."

21)From CDW: "In a dynamic and complex environment, the team delivered double digit top line growth, even as federal and education markets faced evolving headwinds…Once again, healthcare was a standout performer with net sales up 24% as we continue to help our customers address clinical continuity…Consistent with recent trends, commercial customers prioritized mission critical hardware investments that could not be postponed, and public customers dealt with shifts in government priorities and funding."

22)From Expedia: "The US travel market was muted in the second quarter. Consumers at the higher end of the market remained resilient with those at the lower end taking a more cautious approach to discretionary spending. That said, since the beginning of July, we've seen an uptick in overall travel demand, particularly in the US."

23)The UK economy in Q2 grew by .3% q/o/q and 1.2% y/o/y which were both 2 tenths above expectations. More government spending helped as did trade. Consumer spending was about as expected.

24)The UK saw another drop in July payrolls but not as much as expected and June was revised up to less of a negative. Also, jobless claims were down in July. Thru June, their unemployment rate held at 4.7% which is the highest since 2021. Wage growth continued to be solid, rising 5% y/o/y ex bonus, as expected and above the rate of inflation.

25)Both the BoT and RBA cut rates as expected.

Negatives,

1)The July CPI rose .2% headline and .3% core m/o/m as expected. Versus last year the y/o/y gains were 2.7% and 3.1% (estimate was 3%) respectively vs 2.7% and 2.9% in the month before. Services inflation ex energy were up .4% m/o/m and 3.6% y/o/y. Core goods prices rose .2% m/o/m for the 2nd month and are now up 1.2%, the highest since June 2023.

2)The July PPI jumped by .9% m/o/m, well above the estimate of up .2%. The core rate was higher by .9% too vs the forecast of up .2%. The y/o/y increases are now 3.3% and 3.7% respectively and vs 2.3% and 2.6% in the month before. Headline goods prices were up .7% m/o/m and core goods prices rose .4% m/o/m vs a .2% gain in June and .3% increases in the 3 months prior and is now up 2.8% y/o/y. Services prices accelerated to a 1.1% increase in the month from June with trade jumping by 2% and transportation/warehousing costs higher by 1%. Services wholesale prices are now up 4% y/o/y. The BLS said “30% of the July rise in prices for final demand services can be traced to margins for machinery and equipment wholesaling, which jumped 3.8%.”

3)The preliminary July UoM consumer confidence index fell to 58.6 from 61.7 and that was below the estimate of a slight gain to 62. For reference, this was at 102 in February 2020. Almost all of the drop was in the Current Conditions component which dropped 7 pts while Expectations were lower by .5 pt. One year inflation expectations jumped to 4.9% from 4.5% while those guessing on the 5-10 view rose to 3.9% from 3.4%. This even though less people think that gas prices are going higher. Also, “The increase was seen across multiple demographic groups and all three political affiliations.” In addition to inflation, also weighing on confidence are concerns about the labor market as those expecting ‘more’ unemployment rose 5 pts to a 3 month high. The net income component was zero with the same amount of people seeing a rise in income vs those seeing lower income. Spending intentions worsened with plans to buy a home, a vehicle and a major household item all declining. The bottom line from the UoM, “This deterioration largely stems from rising worries about inflation…Overall, consumers are no longer bracing for the worst-case scenario for the economy feared in April when reciprocal tariffs were announced and then paused. However, consumers continue to expect both inflation and unemployment to deteriorate in the future.”