Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)June CPI unexpectedly fell one tenth headline vs the estimate of up one tenth. The core rate was higher by one tenth vs the estimate of up two tenths. Versus last June, headline CPI is up 3% and the core rate by 3.3% vs 3.3% and 3.4% respectively in May. A 2% drop in energy prices m/o/m for a 2^nd month was the main driver of the headline decline. Services inflation ex energy also slowed to a one tenth gain m/o/m, though still up 5% y/o/y. On the core goods side, prices were little changed again m/o/m, down .1% and lower by 1.8% y/o/y.

2)Digging into the NY Fed's Survey of Consumer Expectations for June saw the one yr inflation forecast dip by 2 tenths m/o/m to 3% while the 3 yr guess rose one tenth to 2.9%. The longer 5 yr crystal ball read fell 2 tenths to 2.8%. Hopefully realized, there were drops in price expectations for homes, gasoline, food, medical care, rent and college. 

3)After a steady rise in initial claims, for the week ended July 6^th they came in at 222k vs the estimate of 235k. That said, because of the July 4^th holiday I’ll pay attention to next week’s figure instead.

4)The June NFIB small business optimism index rose to 91.5, up 1 pt from May. While still well under its long term average of 98, it is the best read since December when it was at 91.9. The bottom line from the NFIB is still blaming inflation and higher costs for the challenged outlook. "Inflation is still the top small business issue, with 21% of owners reporting it as their single most important problem in operating their business, down one point from May." The high was 37% in July 2022 when the rate of change in inflation was peaking. It however was 1% in February 2020. From Bill Dunkelberg, "Main Street remains pessimistic about the economy for the balance of the year. Increasing compensation costs has led to higher prices all around. Meanwhile, no relief from inflation is in sight for small business owners as they prepare for the uncertain months ahead." 

5)After a dramatic move higher over the past 11 weeks, container prices were flattish for the week ended 8/11. The Shanghai to Rotterdam trip saw the price dip by $8 w/o/w to $8,048. As a reminder, it started the year just under $1,700 and was about $2,000 in February 2020. The Shanghai to LA route saw a $40 price increase w/o/w to $7,512.

6)The Dodge Momentum Index for June, measuring US construction, saw a jump to 198.6 from 179.9 in May. They said "Data centers continued to dominate planning projects in June - fueling another strong month for commercial planning." They mentioned "moderate growth in retail, hotels, and warehouse projects." And, "On the institutional side, weaker healthcare planning was offset by an improvement in education activity."