• The June payrolls figures came in below expectations for the first time in over a year. Nonetheless, the report was sufficiently robust to ensure a Fed rate hike this month.

 

 

 

  • The NFIB small business compensation index declined sharply in May.

 

 

  • Part-time employment for “economic reasons” jumped.

 

 

  • By the way, unemployment, a lagging indicator, is typically flat during the 12 months leading up to a recession.
  • Labor force participation among prime-age women reached a record high.
  • But participation among Americans 55 and older declined further.

 

 

  • Consumer credit growth slowed sharply in May.

 

 

  • Average credit card rate climbed above 22%, a new high.
  • Nonetheless, credit card balances continue to climb, as households increasingly rely on plastic to maintain their spending.

 

 

  • Non-revolving consumer credit (mostly auto loans and student debt) declined for the first time since the pandemic shock.
  • The NFIB report signals slower wage growth ahead.
  • The Johnson Redbook index of same-store sales is now down year-over-year for the first time since the 2020 COVID shock.

 

 

  • Mortgage rates are hovering around 7%. Adjustable rate mortgages have doubled.
  • Monthly payments:

 

 

  • How much home can you buy with a $2,500 monthly mortgage payment?

 

 

  • Here is a look at housing affordability across states.

 

 

  • The median listing price is slightly below 2022 levels.
  • The June CPI report surprised to the downside, pointing to a broad slowdown in consumer inflation.

 

 

  • The core CPI increase was the lowest since early 2021.

 

 

  • Despite the positive inflation news, the market still expects the Fed to raise rates this month.
  • But the July hike could mark the end of the hiking cycle.
  • Treasury yields declined sharply.

 

 

  • The dollar tumbled
  • The dollar’s weakness boosted commodities like Gold and Silver
  • Stocks climbed, with the S&P 500 hitting the highest level since early 2022.
  • Freight costs continue to fall.

 

 

  • Rail traffic remains soft.
  • The Fed’s Beige Book signaled slow growth but no recession for now.

 

 

  • Here is the Oxford Economics Beige Book sentiment index.

 

 

  • The stock market is signaling a stabilization in US manufacturing activity.

 

 

  • Mortgage applications remain depressed due to high rates.
  • The PPI report provided further evidence of easing inflationary pressures, with the June headline and core figures coming in below forecasts.
  • On a year-over-year basis, the headline PPI is about to enter deflation.

 

 

  • Upstream prices are declining.
  • The US will import some disinflation from China.
  • The US dollar is crashing after benign inflation reports.

 

 

  • The budget deficit is much wider this year than in 2022, …

 

 

  • as federal receipts shrink while outlays continue to grow.

 

 

Market Data

 

  • Compared to Treasuries and corporate bonds, stocks appear progressively less appealing.

 

 

  • The VIX/MOVE ratio (equity vol vs. rates vol) hit the lowest level since 1996.

 

 

  • Global investors are very bearish on US stocks.

 

 

  • How do global investors see sector performance over the next 30 days?

 

 

  • Gold is entering a seasonally strong period.

 

 

  • Analysts expect earnings growth to reaccelerate.

 

 

  • The S&P 500 forward P/E ratio is back above pre-COVID levels, nearing 20x.

 

 

  • Banks have been less willing to lend to consumers, which typically coincides with recessions.

 

 

Quote of the Week

 

Clouseau: Does yer dewg bite?

Inn Keeper: No

Clouseau: Nice Doggy (bends down to pet a dachshund – it snarls and bites him) I thought you said yer dewg did not bite!

Inn Keeper: Zat . . . iz not my dog!

 

Picture of the Week

 

Castelmezzano, Italy

 

 

 

All content is the opinion of Brian Decker