Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)Net worth as a % of disposable income in Q2 rose to the 2nd highest on record at 785%. 

2)The August PPI was about in line with expectations when we include the July revisions. The headline rate was up 1.7% y/o/y vs 2.1% in July. The core rate grew by 2.4% y/o/y vs 2.3% in the month before. Core goods prices were up by .2% m/o/m and 2.1% y/o/y. On the service side, prices rose .4% m/o/m and 2.6% y/o/y. 

3)Import prices in August fell .3% m/o/m, one tenth more than expected. Ex petro saw prices all one tenth vs the estimate of up .2%. It also fell one tenth ex fuel/food. Versus last year, headline import prices are up .8% and by 1.1% core. 

4)With another drop in mortgage rates to 6.29%, purchases lifted for a 3rd week, up by 1.8% w/o/w. Refi's were higher by .9% w/o/w. 

5)Container shipping rates continue to cool, certainly a good thing as companies are rushing to get product ahead of the holidays. The World Container Index price for a 40 ft box in the trip from Shanghai to Rotterdam fell by $1,067 w/o/w to $5,152, the least since May. It still though is well above the about $1,700 level it stood at in the beginning of 2024. The route to LA saw prices fall by $403 w/o/w to $5,627, also the lowest since May but up from $2,100 at year end 2023.

6)The preliminary September UoM consumer confidence index rose a touch m/o/m to 69 from 67.9. The estimate was 68.5. This compares with the 101 print in February 2020 and the June 2022 low of 50 (which coincided with the peak in inflation). Both main components were higher. The one year inflation expectation figure was 2.7% from 2.8% but the longer term view rose to 3.1% from 3%. The internals were mixed as employment expectations fell to match the lowest level since June 2023 and the income component softened too. "A rising share of consumers reported hearing negative news about unemployment, from 25% last month to 29% in September, the highest since May 2023." Also of note, while inflation expectations fell and because higher income expectations did too, the mean % of those 'expecting family income will beat inflation over next 5 years' fell to just 25.5%, the smallest figure on record dating back to 1997. There was a bounce in spending intentions, helped by lower price expectations of durable goods, and hopes for lower interest rates.  

7)From ABM Industries: "on the labor front, we're feeling really good because wages haven't been rising to the same extent as they were in the last couple of years. And that's been widely publicized, you could read about that. So, that's playing through for us. And also, availability of labor is getting much better for us, as well, in terms of getting people on board quicker."