• Holy earnings week, Batman!

    Not a total disaster The first read on second quarter GDP came in at 2.1%, down from the 3.1% growth we saw last quarter. Components of GDP growth tell the tale of two cities we’ve been seeing through other economic indicators. Consumers seems fine as their spending jumped to its highest level in 1.5 years, coming in at 4.3% (from 1.1% last quarter) driven by spending on cars and trucks, food and drinks, and clothing (guilty as charged). Businesses, however, were less optimistic with fixed investments falling 0.8%, the steepest decline in 3.5 years.  Moral of the story: Consumer spending accounts for the majority of GDP growth and it’s still coming in at…

  • Guess who’s back, back again

    *Add to Cart* Retail sales rose for the fourth straight month in June, hopefully indicative of a rebound in consumer spending. Sales increased by 0.4% last month, surpassing economists’ estimates. Gains continued for internet retailers, restaurants, grocers, and home furnishings while department stores continued down the path to their slow and steady demise (insert depressing music here). Sales also fell pretty sharply at gas stations due to falling oil prices. If you normalize results for falling oil prices, retail sales actually would have increased by 0.7% in June.  Moral of the story: It seems like consumer spending has come back after taking a break. Given this is such a large part…

  • Because it’s all about that rate

    If it walks like a duck… The Fed has a dual mandate – keep prices stable and employment high. Inflation (aka pricing pressure) has continuously fallen lower and lower below the Fed’s 2% target rate. Boosting inflation might be rationale for cutting rates in July. But the latest CPI report showed core inflation (a measure that strips out food and energy) jumped up 0.3% compared to the prior month, which is the largest increase in 18 months. Moral of the story: Despite the 18-month-high increase in core CPI, annual prices only increased 2.1%, which is significantly lower than the ~3% number we were recording a year ago. While the Fed uses the PCE…

  • HBD America

    Sitting, Waiting, Wishing Due to the holiday, it’s been a fairly slow week for the markets and most Americans. We started the week with ISM’s June manufacturing index indicating US manufacturers grew at the slowest pace in over two years. Tbh this is not surprising given results from the Philly and New York Feds’ surveys measuring similar activity. The index dropped to 51.7 in June, only 1.7 points away from contractionary territory. The services side of the economy is still showing strength (albeit at the lowest levels in almost two years) with the services index coming in at 55.1 for June.  Moral of the story: Tariffs on Chinese goods and…