10 Things You Need To Know: July 23, 2024
Key data releases this week include: existing home sales (Tue), new home sales (Wed), Q2 GDP (Thu), durable goods orders (Thu), personal income and spending (Fri), PCE Deflator (Fri), and consumer sentiment (Fri.)
Haver
July 16, 2024
Total retail sales were unchanged (+2.3% y/y) during June after increasing 0.3% in May. A 0.2% June decline had been expected in the Action Economics Forecast Survey. Sales in the retail control group, which excludes autos, building materials, gasoline stations, and food services, rose 0.9% (4.1% y/y) last month following a 0.4% rise in May.
Haver
July, 18 2024
The U.S. Leading Economic Index fell 0.2% in June (-4.8% y/y) after a 0.4% May decline. A 0.3% decline had been expected in the Action Economics Forecast Survey. Four of ten indicators made negative contributions to the overall index in June.
Reuters
July 17, 2024
The Federal Reserve’s latest Beige Book survey indicates slight growth as the economy heads into the third quarter, with several regions reporting flat or declining activity. Employment has increased slightly, but labor turnover has declined, and businesses have become more selective in hiring. Inflation has cooled, with consumer spending little changed, the survey shows.
The Wall Street Journal, Financial Times
July 18, 2024
The European Central Bank held its deposit rate at 3.75%, but President Christine Lagarde stated the next interest rate meeting in September is “wide open” and “If that data actually confirms the disinflationary process that is at work in the moment, it will reinforce our confidence” that inflation is falling to the 2% target.
Bloomberg
July 16, 2024
Tariffs of 60% on all Chinese exports to the US would cut China’s annual growth rate by more than half. A 60% tariff was reportedly being considered by Donald Trump if he returned to the White House, and would cut 2.5 percentage points from China’s GDP, according to UBS.
Barron’s
July 22, 2024
The previous long-run underperformance of the Russell 2000 is deserved. Only the very worst companies are left in the small-cap space. The best new companies don’t need to go public, as they’re staked by venture capital and private equity, which in turn is funded by private credit. By contrast, 42% of Russell 2000 cohorts reported losses in the past 12 months.
Barron’s
July 22, 2024
Trump’s tax-cut-heavy economic agenda is stimulative, and the stock market may respond positively to the prospect of his victory, particularly as the economy slows. The bond market, on the other hand, is likely to struggle to absorb the supply of new debt a Trump Treasury will need to issue, partly to offset new tax cuts. That is likely to drive up interest rates on long-term government debt.
Barron’s
July 22, 2024
Analysts have set a high bar for second-quarter profits. They’re forecasting 15.9% growth from companies in the S&P 500’s Information Technology sector, and an 18.7% gain for the Communications Services group. Overall S&P 500 earnings are expected to grow by 9.7%.
Capital Economics
July 22, 2024
The recent set of mild inflation data and growing concerns among Fed officials about downside risks to the labor market reinforce our view that the first interest rate cut will come in September. We forecast that core PCE inflation will return to the 2% target in early 2025. That should allow the Fed to cut rates again in December and by even more next year, although November’s election creates significant policy uncertainty.