July Federal Reserve Meeting Shows Bankers Set on Raising Rates but More Cautious… The minutes included language that suggested the bankers were watchful of overshooting by raising rates too much, but nothing suggested that they would not raise rates again in September.
What it means— We’re in the game that we knew we would have to play, asking ourselves how high they will raise rates at the next meeting and if they will signal a pause if the economy shows weakness. It’s a horrible way to run monetary policy, but it’s the system we have. Today, investors are banking on a 50–basis point increase in September and a slowdown in the fall, which would signal no more rate hikes. That seems overly optimistic. The markets rebounded very fast this summer, and we haven’t seen the worst of the economic and inﬂation numbers in Europe, which we expect to get this fall. Be careful.
Housing Starts Fell 9.6% Last Month and 8.1% Over Last Year… Building permits fell just 1.3%.
What it means— Single-family home starts fell 10.1% and multi-family home starts fell 10%, showing that builders are playing their inventory close to the vest. That said, it is interesting that permits didn’t drop off of a cliff. Builders want the ﬂexibility to ramp up construction if we get a sharp turnaround. Given that we still need millions of new units and the unemployment rate remains well below 4%, we might see buyers quickly return, although the crazy price gains of the past two years probably won’t return.
Existing Home Sales Fall for Sixth Straight Month in July… The move pulled sales down 20.2% over this time last year; this is the longest contraction since 2013.
What it means— There’s no question that sales have dropped dramatically, but prices haven’t followed. The National Association of Realtors reported that the median sales price remains near a record at $403,800, and units are still ﬂying off the shelf. Properties remained on the market just 14 days in July, the same as in June, and 82% of homes sold last month were on the market for less than 30 days. That’s not exactly a deep freeze. In a bit of good news for buyers, a few more sellers appear to be testing the market, as inventory rose to 1.31 million units. That brings inventory up to 3.3 months at the current sales pace. As a reminder, six months of inventory is considered balanced, so we’d need more than one million more homes on the market, or many fewer sales, to make that happen.
Retail Sales Flat Last Month but up 0.7%, Excluding Gasoline and Auto Sales… Quickly falling gasoline prices gave consumers more money to spend on other items. Overall, retail sales were 10.2% higher than at this time last year.
What it means— People have money, they’re willing to spend it, and it’s tough to watch your standard of living go backward. A little less pain at the pump has been great, but let’s keep an eye out for the holidays. If Americans ring up a bunch of credit card debt this fall, we might be looking at a muted holiday season, which wouldn’t be good for earnings.
Snake Bites Two Year Old on Lip, who Then Bites Snake Until It Dies… Neighbors in Bingol, Turkey, heard a child screaming as she played in the yard. They found the girl suffering from snake bite wounds on the lip, and the snake suffering from bite wounds of its own as it hung in the girl’s mouth. Apparently, after the snake bit her, the toddler exacted her revenge. The girl was taken to the hospital for observation but suffered no lasting effects. While it must have been terrifying to see your daughter bitten by a snake, there must have been some gratiﬁcation that she wouldn’t back down. The young boys in the village should take notes for later.
Data supplied by HS Dent Research
“When the facts change, I change my mind.
What do you do?” ~ John Maynard Keynes
Our plan is “the plan will change.”
What is your plan?
Relative strength measures the price performance of a stock against a market average, a selected universe of stocks or a single alternative holding. Relative strength improves if it rises faster in an uptrend, or falls less in a downtrend. It is easily applied to individual positions in your portfolio and to sectors and asset classes.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Investor Resources, Inc. (“Investor Resources”), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Investor Resources. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Investor Resources is neither a law firm, nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of Investor Resources’ current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://www.investorresourcesinc.com/. Please Note: If you are a Investor Resources client, please remember to contact Investor Resources, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Investor Resources shall continue to rely on the accuracy of information that you have provided. Please Note: If you are an Investor Resources client, Please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.