Boockvar on Yen Effort, Earnings Comments
The following is from Peter Boockvar:
There must be follow thru for this to hold/Don’t debate on inflation & only talk consumer prices
I believe this fresh attempt to rally the yen will be fleeting unless the BoJ hikes rates in September and signals more to come thereafter. And the use of the Fed’s Foreign and International Monetary repo facility by the Japanese to intervene to buy yen has to be paid back and where is that money going to come from?
The BoJ rate hike odds for the September meeting has increased to about 50% from 27% last Wednesday right before the intervention. The JGB 2 yr yield is at a fresh 31 year high today and the 10 yr yield is just 2 bps from a 29 yr high. This is helping to drag the US 10 yr yield back to 4.70% while European yields are little changed. We’re all in this bond boat together I continue to believe.
2 yr JGB Yield
With a bunch of earnings to touch upon, let’s get right to it with still evidence of an uneven economy that we’ve been hearing about for a few years now.
From Boise Cascade, the wood products company that sells right into the new single family residential construction end market, along with multi family construction, repair and remodel and light commercial activity:
“During the second quarter, the operating environment remained uneven and competitive. Ongoing geopolitical uncertainty, volatile treasury yields and mortgage rates, and persistent inflation continue to weigh on the macroeconomic outlook. Against this backdrop, residential construction remains subdued, as affordability constraints and low consumer sentiment pressure market conditions.”
“In response, homebuilders have relied on incentives to stimulate demand while maintaining discipline around starts and spec inventory.”
From Whirlpool:
In North America, The 8% sequential sale growth was “primarily driven by successful execution of previously announced pricing actions.”
Also in North America, The 1.5% y/o/y sales decline was “driven by lower volume resulting from industry decline, partially offset by favorable price/mix” and their “EBIT margin decreased y/o/y, pressured by volume decline and the unfavorable impact of tariff, raw material inflation and fuel costs, partially offset by favorable price/mix.”
From Clorox, the maker of everything from cat litter, garbage bags, cleaning products, salad dressing (Hidden Valley Ranch) and charcoal:
“Throughout fiscal year 2026, we operated in a dynamic environment, marked by heightened value seeking behavior, increased competitive activity, inflationary pressures, and ongoing macroeconomic uncertainty.”
“We expect the categories to continue to be muted given what’s going on from a macroeconomic perspective and consumers continuing to engage in value seeking behaviors, largely consistent with what we saw in 2026.”
With respect to the cost pressures they are dealing with, “we expect fiscal year ‘27 inflation to be above $200 million. So for perspective, it’s about more than double our historical range, which has been in the $75 million to $100 million.”
And, “it’s not just energy or commodity stories. While commodities remain a significant driver, we are also seeing inflation across broader areas of supply chain, including supplier costs, ocean freight, trucking costs, and other logistic related expenses. So as a result, it’s fair to say that inflationary pressures are proving more persistent and should extend well beyond what is just reflected in the headlines for the oil price.“ I bolded to emphasize
I’ll argue again, do not debate me on inflation and only talk about consumer prices. And I hope the Fed fully widens its inflation analysis to include both producer prices and consumer prices.
This is from the just reported McDonald’s press release and whose numbers seemed mixed:
In the US, “Comparable sales results were driven by positive check growth, including favorable product mix, partly offset by negative comparable guest counts.”
Internationally, “Most markets reflected positive comparable sales, led by Germany, Australia and the UK, partly offset by France.”
From Caterpillar, who had a great quarter and the stock is jumping pre-market:
Not surprisingly, Power & Energy saw sales up 17%. In Power Generation, “Sales increased in large reciprocating engines and in turbines and turbine-related services, primarily in data center applications.”
On the apartment rental side, this was from Camden Property Trust last week, a stock we own and who focuses solely on the Sunbelt states (after selling their California properties) and that has had the most supply over the last few years to absorb:
“Rental rates for the second quarter, now excluding California, had effective new leases down 3.3% and renewals up 2.8% for a blended rate growth of negative .2%.”
The bottom though seems to be in. “We also saw a 140 bps improvement in blended rate growth from negative 1.6% in the first quarter 2026 to negative .2% for the second quarter 2026 and our blended rate growth turned positive in both June and July.”
“Renewal offers to residents with August and September expiration’s were sent out with an average increase of 4.2%. Occupancy has also shown improvement and has been trending slightly ahead of budget, with second quarter averaging 95.7% vs 95.1% in the first quarter of 2026. July occupancy was 95.8%.”
“Turnover rates across our portfolio remain very low with second quarter 2026 annualized, net turnover consistent with second quarter 2025 at 39%…And move outs for home purchases also remain low at 10.4% for the second quarter.”
From Marriott and whose stock fell 7% yesterday on more muted guidance relative to expectations because of the Middle East:
“RevPAR in the US and Canada region rose 5%, the highest quarterly increase in 13 quarters, with strength in World Cup and non-World Cup markets. Excluding the World Cup, second quarter RevPAR rose 4%.”
“Luxury and resort hotels continued to lead in the region in the quarter, with luxury RevPAR up over 9%. Importantly, strength was pervasive across chain scales with select service RevPAR increasing over 4%.”
“With the conflict in the Middle East weighing on results, second quarter international RevPAR declined slightly y/o/y…RevPAR in Europe rose over 4% in the second quarter, driven by strength in leisure, particularly in the Mediterranean countries, including Italy, Spain and Greece.” In APAC, RevPAR rose 5% and by 3% in China in particular with luxury in Hong Kong, Taiwan and Hainan “the key drivers.”
Looking forward, “In the US and Canada, we expect the strong demand trends that extended into July across chain scales and customer segments to continue. Third quarter RevPAR is expected to be helped by the strong World Cup performance, while the fourth quarter could see a small negative impact from November’s mid-term elections.”
And they expect the Middle East to continue to be a drag. “The challenge in Q4 is that by far the Middle East, that is the largest quarter for revenue. It’s something like 35% of the Middle East full year revenue happens in Q4.”
From On Semiconductor, jumping pre-market:
“As we anticipated, the recovery continued to take shape during the quarter with continued strength in our AI data center business.”
“We also saw multiple indicators of strengthening demand with China, BEVs and automotive, for example, and energy infrastructure and medical and industrial already showing over-market growth.”
“Supply is tightening in several growth areas, lead times are extending, and we are seeing increases in both orders placed within lead time and customer escalations, all signs of a healthy recovery across the board.”
Positions: None.
