Auto Sales Lost Speed in July
Overall U.S. auto sales dropped by 3.7%, according to analysts, due in part to one fewer selling day in July compared with the same month last year. (…)
This CalculatedRisk chart shows the cyclical topping process:
U.S. Construction Spending Unexpectedly Falls in June
The value of construction put-in-place unexpectedly fell in June, declining 1.1% m/m (+6.1% y/y) following solid, upwardly revised increases in both April and May. The April rise was revised from the initially reported 0.9% m/m increase to 1.7%; the May gain was revised from the initially reported 0.4% m/m to 1.3%. The consensus from the Action Economics Survey had expected a 0.3% m/m increase in June. For all of Q2, total construction spending rose 2.3%, down slightly from the 2.6% increase posted in Q1.
The weakness in June was widespread across all major categories—as was the significant upward revisions to April and May. (…)
- Commercial construction spending has stalled. (The Daily Shot)
Fed Holds Rates Steady, Says Economy Is Strong The Federal Reserve held short-term interest rates steady and offered an upbeat assessment of the economy’s performance, suggesting another interest-rate increase is likely at its next meeting.
(…) In June, Fed officials penciled in plans to raise rates two more times this year and three times next year, which would push their benchmark rate above 3%. Officials estimate that moving rates about that level would effectively be tapping brakes on economic growth. (…)
Treasury Plans to Boost Borrowing as Trillion-Dollar Deficits Loom Projected trillion-dollar federal deficits are prompting the U.S. Treasury to increase its borrowing substantially, which could restrain a fast-growing economy as the cost of credit also rises.
On a day the yield of the 10-year Treasury note climbed above 3% for the first time since June, the Treasury Department announced Wednesday it would boost auctions of U.S. debt by an additional $30 billion over the next three months, in part by adding an additional $1 billion each month to its auctions of two-year, three-year and five-year notes.
Over the remainder of the year, the Treasury plans to borrow $329 billion from July through September—up $56 billion from the agency’s April estimate—and $440 billion in October through December. The figures are 63% higher than what the Treasury borrowed during the same six-month period last year.
The Treasury’s Borrowing Advisory Committee, made up of representatives from investment funds and banks, said the size of monthly debt auctions would need to continue ratcheting higher to fund the government’s deficits in coming years. (…)
The Treasury Department said last month that tax receipts fell 7% in June compared with the same month a year ago, including a 33% drop in gross corporate taxes.
“That’s part of the equation people haven’t been talking about,” said Ian Lyngen, head of U.S. government bond strategy at BMO Capital Markets. “The notion that tax reforms are going to pay for themselves is being tested right now.” (…)
China’s Central Bank Steps Up Effort to Boost Lending
EARNINGS WATCH
327 companies in, 81% beat rate and a +5.1% surprise factor. Q2 EPS now seen up 23.2% (+20.2% ex-Energy) from +20.7% on July 1.
Q3 forecasts rising to +22.8% (+19.8% ex-Energy).
Trade Noise Aside, Earnings Are Perking Up Again in Europe
With about 40 percent of Europe’s market value having reported second-quarter figures, the region’s profit growth has accelerated to 6 percent for the latest quarter from no growth at all in the prior three-month period, according to a Deutsche Bank note out on Friday. It’s nothing like the double-digit growth seen in early 2017 or in the U.S., but at least the dip in economic data earlier this year hasn’t translated into a huge hit to profits, which are now expected to pick up pace in the second half of the year.
Yeah! Sure!. We have hear the euro earnings recovery story many time before…
European stocks have decoupled from the US.
Quote of the day:
“If he doesn’t tweet for a while, this market can easily rally another 10, 15 or even 20 percent based on the very good earnings,” said Peter Reddman, a portfolio manager at Peh Wertpapier AG in Frankfurt. “We’ve seen a good set of results and the only slowdown is a bit on the outlook, where a lot of companies remain conservative, particularly related to geopolitical issues.” (…)