Succinct Summation of the Week's Events

On Tuesday I will publish relevant comments from all the notable earnings calls out late this week and thus won't be included below.

Succinct Summation of the Week's Events:

Positives,

1)Q2 GDP was revised up to 3.3% growth from initially 3.1% and when combined with the Q1 GDP decline of .5% means that first half growth was a modest 1.4% annualized, though better than 1.25% under the first GDP print. Without the AI infrastructure buildout, economic growth would be barely positive.

2)Core durable goods orders grew by 1.1% m/o/m in July, above the estimate of up .2% and June was revised up by 2 tenths to a drop of .6%. Gains were broad in terms of industry with increases in autos/parts, computers/electronics, machinery, electrical equipment and metals. We of course hope that this is a sustainable trend, particularly in response to the tax incentives passed in the BBB with regards to immediate expensing.

3)Initial jobless claims were a hair under the estimate of 229k vs the forecast of 230k and last week was revised down by 1k to 234k. The 4 week average did rise to 229k from 226k. Continuing claims dipped slightly to 1.954mm from last week's cycle high of 1.961mm.

4)July personal income and spending rose .4% and .5% respectively as forecasted. The savings rate held at 4.4% and at this level for 4 months in the past 6. Private sector wages/salaries in particular grew by 5.4% y/o/y (which is an aggregate income number rather than hourly/weekly figure), the best since December 2024.

5)The August consumer confidence index from the Conference Board fell to 97.4 from a revised 98.7 in July (from 97.2 initially) but that was just above the estimate of 96.5. For perspective, this figure has averaged 96.8 year to date. The Present Situation was down slightly while the Expectations component was up a bit. One year inflation expectations did lift to 6.2% from 5.7% in July and 5.9% in June. On the rise in inflation expectations, the Conference Board said “Consumers’ write-in responses showed that references to tariffs increased somewhat and continued to be associated with concerns about higher prices. Meanwhile, references to high prices and inflation, including food and groceries, rose again in August.” The answers to the Current labor market questions did weaken again with those saying jobs were Plentiful slipping to just off the least since March 2021. Those that see jobs as Hard to Get rose 1.1 pts to 20, the highest since February 2021. As for 6 month Expectations of the labor market, after rising in July, those that see ‘more jobs’ fell by .1 pt m/o/m while those that see ‘fewer jobs’ rose to a 4 month high. Income expectations fell .4 pts after rising by 1.1 pts last month. Spending intentions were mixed.

6)July new home sales totaled 652k vs 656k in the month before but that was 22k more than the consensus expected and June was revised up by 29k. Smoothing out this very volatile figure puts the 3 month average at 646k vs the 6 month average of 658k and the 12 month average at 669k. Months’ supply held at 9.2 while the median home price fell 5.9% y/o/y with mix always a big influence.

7)With little change for a 2nd week in the average 30 yr mortgage rate at 6.69%, mortgage applications were mixed. Purchases were up by 2.2% w/o/w after a flat print last week. Refi's fell by 3.5% w/o/w, down for a 2nd week but after popping 23% in the week before that.

8)From PVH: "Raising outlook to increase slightly to up low single-digits compared to flat to increase slightly previously. Reaffirms outlook of flat to increase slightly on a constant currency basis...We are reaffirming our full year non-GAAP earnings guidance despite ongoing macroeconomic uncertainty, including the evolving global trade landscape, while also increasing our investment in brand building initiatives."