U.S. Retail Sales Up 0.5% in July, June Gains Revised Lower to 0.2%… The monthly average over June and July was 0.35%, which is in line with expectations.
What it means – The lower number for June will take a bite out of second-quarter GDP, but the bump to the July figure will boost the third-quarter number, making it something of a wash.
Car sales were lower than previously forecast in June, up a mere 0.1%, and eeked out a modest 0.2% gain in July. Restaurant sales were up 1.3%, on top of 1.6% and 2.8% gains in the prior months, but it wasn’t because people were living it up. Restaurant traffic remained flat as did orders per ticket. The difference was higher prices as restaurants simply increased their charges.
Industrial Production Increased 0.1%, Missing Expectations of 0.3%… The Fed revised June’s 0.6% expansion upward to 1.0%, outpacing July’s miss.
What it means – Mining, which includes oil and gas, dipped a bit last month, pulling down the headline number, and utilities slipped for the third straight month. Manufacturing remains the bright spot, including business equipment.
We’re still making stuff because consumers keep buying it, as noted in the retail sales numbers above. Capacity utilization remains under the long-run average of 80%, sitting at 78.1% for both June and July.
Chinese Retail Sales Up 8.8% Over Last Year… The growth missed expectations of 9%, continuing a trend of weak reports.
What it means – The Chinese economy is strong, but not as strong as it used to be, even though the government continues to push lending. Weaker-than-expected retail sales are the latest example of disappointing results, and they stretch across many categories, from clothing to communications equipment. Auto sales fell for the year, but less than their dip in June.
The investment world is holding its breath over China, which is the second largest economy on the planet behind the U.S. On the one hand, the Chinese are vowing to stand tall against Trump’s trade tariffs, but on the other hand their economy is weakening. If the Chinese and Americans stick to their guns, we could end up restricting growth. That’s probably why the largest Chinese stock index is down 25% from its recent high.
But news of upcoming trade talks lifted the gloom of slow growth in China and drove the markets higher on Thursday. Maybe the president’s tactics are working.
Housing Starts Up 0.9% in July, But June Starts Revised Down 1.3%… Compared to last year, housing starts are down 1.4% and completions are off by 0.8%.
What it means – Homebuilders note that they can’t get materials and can’t find skilled labor, which holds back construction. it shouldn’t escape their notice that home sales are taking a breather. Sellers in L.A., Seattle, Chicago, and New York were busy cutting their prices last month even as those across the South were holding steady. It looks like homebuilders are simply playing it safe by keeping inventory low.
On a positive note, building permits rose 1.5% on the month, and permits for single-family homes increased 4.2% from last year. Builders might not be picking up the pace in a meaningful way, but at least they’re turning out inventory at a steady rate.
SEC Subpoenas Tesla over Elon Musk Tweet… The SEC wants to know what Elon Musk was thinking when he tweeted about taking the company private. The CEO and Founder noted that funding was secure, even though that is not the case.
What it means – If Musk intended to goose the stock price and hurt short sellers, he could be in trouble. How could it be anything but a move to crush the shorts?
Musk owns 20% of Tesla, so he personally gained more than $800 million when the stock jumped on the news. But he’s lost that and more in the days that followed. This appears to be a clear case of price manipulation, but not for the purpose of cashing out. Instead, it was spite. We’ll see if that’s enough to get Musk in trouble with the regulatory agency.
Santa Marta, Colombia, Health Secretary Julio Salas Urged Residents and Tourist to Refrain from Sex During the Day… In the midst of a heatwave with temperatures reaching 104 degrees Fahrenheit, Salas noted that people should remain hydrated and avoid strenuous activity, including sex, during the hottest part of the day.
The American Heart Association notes that sex is a moderate physical activity, like climbing two flights of stairs. Perhaps instead of abstaining, they should simply purchase air conditioners.
Data supplied by Dent Research/Delray Beach Publishing
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