Morning Report: Retail Sales disappoint

Posted on July 18, 2023 by Brent Nyitray

Vital Statistics:

Stocks are flattish this morning as earnings season begins in earnest. Bonds and MBS are up.

Retail Sales rose 0.2% MOM in June, which was well below the Street consensus. On a year-over-year basis, they rose 1.5%. This number is not adjusted for inflation, and gasoline was a big driver of the decline. Consumers are spending money on health care products and restaurants. Consumption will probably begin to struggle as we approach the resumption of student loan payments in October.

Manufacturing took a step back in June, according to the Fed. Industrial production fell 0.5%, while manufacturing production fell 0.3%. May’s numbers were revised lower. Capacity Utilization fell to 78.9% which is more or less at the historical average.

Bank of America reported better-than-expected earnings this morning. Mortgage origination volume rose to $5.9 billion compared to $3.9 in Q1. This was still well below last year’s volume of $14.5 billion in Q222. Home Equity originations were flat YOY at $2.5 billion.

Delinquencies in the consumer book increased, however they are still below pre-pandemic levels. Commercial Real Estate provisions increased as well.

Homebuilder confidence improved one point in July, according to the NAHB Housing Market Index.

“Although builders continue to remain cautiously optimistic about market conditions, the quarter-point rise in mortgage rates over the past month is a stark reminder of the stop and start process the market will experience as the Federal Reserve nears the end of the ongoing tightening cycle,” said NAHB Chief Economist Robert Dietz.

Given that shelter inflation accounts for roughly 40% of the Consumer Price Index, Dietz added the best way to ease this largest source of inflationary pressure is to build additional for-rent and for-sale housing. “There’s been some commentary linking gains for housing construction with increased concerns for additional inflation, but this has the economics backwards,” he said. “More housing supply is good news for future shelter inflation readings in the market. Furthermore, higher interest rates increase the cost of financing for building homes and developing lots.” 

Filed under: Economy |

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11 Responses

  1. Scottc's avatar
    Scottc, on July 19, 2023 at 8:01 am said:

    More from Taibbi on the government/media deception campaign about the origins of covid.

    https://www.racket.news/p/so-friggin-likely-new-covid-documents

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  2. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on July 19, 2023 at 9:34 am said:

    Completely different you seditious Trump-humpers!

    Our aims are true and just.

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    • lmsinca's avatar
      lmsinca, on July 19, 2023 at 7:39 pm said:

      https://plus.thebulwark.com/p/our-last-chances-to-hold-trump-accountable?utm_source=substack&utm_medium=email

      I know it’s not popular here but I do hope Trump finally faces some kind of justice!

      Also, in case any of you are interested…………….you may remember from the early days here that our youngest daughter graduated summa cum laude with a degree in Chemistry, then went on to get a degree in Geology and was funded by Chevron to attend grad school at the School of Mines in Golden, CO, where she also graduated summa cum laude. She was hired as “The Golden Girl” who received the most job offers of her graduating class and landed the plum job with Anadarko in Denver. That was about 11 years ago now. Since then she became the lead geologist on carbon sequestration at Occidental and a leader in both development and exploration in the oil and gas basins of CO, WY and MT.

      Last year she was approached by a start up in drilling for hydrogen backed by Bill Gates and lots of other investors. She couldn’t sign on until this April but they waited for her to join the team. She’s the lead geologist in development but also working with the exploration team because that’s really where she excels!

      An article in Forbes today threw them out of stealth mode. I can’t link it but it’s called “Bill Gates is Backing a Secret Startup Drilling for Limitless Green Energy”. She has a stake in the company and if you can find the article you might be interested to read more!

      They’re still developing their website and so far are only listing the majors in the company because the geologists are still kind of in stealth mode developing areas that will produce the hydrogen they’re looking for. The company is called Koloma and eventually you will see her bio there…………….Kassandra Sendziak.

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