Economic Update 07/29/13

CONSUMER SENTIMENT CONTINUES TO RISE

In 12 months, the University of Michigan’s index of consumer sentiment has gained almost 13 points. At 85.1, July’s final edition of the index was up 1.0 points from the final June reading. Two notable details: the percentage of respondents saying their home values had increased hit a six-year peak, and more respondents expected their inflation-adjusted incomes to rise in the coming year than at any time since 2007.

TWO DIFFERENT HOME SALES STORIES

Existing home sales declined 1.2% in June with shrinking inventory, but the median sale price was up 13.5% from a year ago, according to the National Association of Realtors. Even as supply fell short of demand, anticipation of rising mortgage rates no doubt contributed to an 8.3% jump in new home buying in June, as well as the greatest yearly improvement in new home sales since 1992 – a 38.1% annual gain.

DURABLE GOODS ORDERS UP 4.2%

June’s impressive overall advance didn’t tell the whole story. Minus the oft-volatile transportation category, core hard goods orders were flat last month.     

DOW ADVANCES FOR A FIFTH STRAIGHT WEEK

While the S&P 500 lost 0.03% across five days to settle at 1,691.65 Friday, the DJIA (+0.10% to 15,558.83) and NASDAQ (+0.71% to 3,613.16) pulled higher. Gold settled at $1,321.70 on the COMEX Friday, oil at $104.70 on the NYMEX.

THIS WEEK: Earnings from Express Scripts, Hertz, Hartford Financial and Herbalife arrive Monday, and NAR reports June pending home sales. Tuesday brings earnings from Symantec, BP, Chrysler/Fiat, Take Two Interactive, NYSE Euronext, Pfizer, Barclays, Deutsche Bank, Merck, UBS, Aetna, Amgen and Aflac; May’s Case-Shiller Home Price Index and the Conference Board’s July consumer confidence poll also appear. The Federal Reserve makes a policy announcement Wednesday; the end of the month also brings the July ADP employment report, the federal government’s first estimate of Q2 GDP, and earnings from MetLife, Comcast, Honda, MasterCard, Hess, Humana, Sodastream, Allstate, CBS, Marriott, Whole Foods, Dreamworks Animation and Yelp. ISM’s July manufacturing index comes out Thursday, plus the July Challenger job-cut report, new initial claims figures, and earnings from P&G, LinkedIn, Time Warner Cable, Clorox, AstraZeneca, Cigna, ConocoPhillips, ExxonMobil, Royal Dutch Shell, Barrick Gold, AIG, Kraft Foods and Leap Wireless. Friday sees the release of the Labor Department’s July jobs report and the Commerce Department’s June consumer spending report, plus quarterly results from Chevron, Toyota and Viacom.