Boockvar’s Weekly Summation
From Peter Boockvar:
Positives,
1) Initial jobless claims totaled 215k, 10k below expectations and down from 227k. Because of the holiday, we’ll combine this with next week’s print to smooth it out. Until then, the 4 week average of 224k is little changed with the previous week.
2) May personal income rose .7% m/o/m after no change in April and above the estimate while spending was higher by .7% m/o/m as expected when including the revision in the prior month. The savings rate at 3% combines this, unchanged with April but at the lowest level since June 2022.
3) Core durable goods orders in May rose 1.6% m/o/m, well above the estimate of up .6% and follows a .7% fall in April (revised down from 1%) . Shipments of core goods were as expected though.
4) The S&P Global manufacturing PMI rose again to 55.7 from 55.1. S&P Global said, “While there is better news from the manufacturing sector, we remain concerned as factory growth continues to be temporarily buoyed by inventory building amid supply fears. Supply delays grew more widespread in June.” With pricing, “Although manufacturing input cost inflation moderated from May’s recent peak, it was the second highest for almost four years.” Prices charged were little changed m/o/m but at one year highs.
5) Still bouncing along record lows but June UoM consumer confidence did lift to 49.5 from 44.8 in May and vs 49.8 in April “as gas prices moderated” they said. “Still, sentiment remains in unfavorable territory at 13% below the February 2026 reading prior to the start of the Iran conflict, and nearly 20% less than a year ago. The cost of living remains at the forefront of consumers’ minds; for the third straight month, over half of consumers spontaneously mentioned that high prices are weighing down their personal finances.”
6) The US crude oil rig count continued to rise as of 6/26 with an increase of 7 rigs to 440, the most in a year.
7) The June KC manufacturing index rose to 11 from 8. The estimate was 6.
8) From Micron: “DRAM and NAND industry demand continues to significantly exceed industry supply. We expect tight conditions to persist beyond calendar 2027, as a result of AI driven demand across all segments, coupled with structural supply…We are excited to announced that we have now signed 16 strategic customer agreements or SCAs, which we expect will fundamentally transform our business model. The memory industry has been structurally transformed by the proliferation of AI.”
9) From Darden Restaurants: On their consumer, “we really haven’t seen a whole lot of change, based on what we’ve been saying for the last couple of quarters. Consumer spending remains pretty resilient. Overall, the mood with consumers is still a little cautious. But as we’ve said a couple of times before, the weaker consumer sentiment hasn’t necessarily translated into reduced spending. A little bit different this quarter, our casual brands saw an increase in visits y/o/y from all income groups, including the bottom quartile. Some of that might have been tax refunds, but they did see some increase y/o/y from all income groups. We did see a little softness in guests under 35.”
10) From Commercial Metals: “As related to end markets, the outlook continues to be positive. More than 50% of the IIJA (Infrastructure Investment and Jobs Act) funding is yet to be spent, supporting highway construction and general infrastructure spending across our core markets remaining steady. While residential demand remains broadly subdued, pockets of resilience persist in markets such as Charlotte and parts of the Mid-Atlantic. Multi family construction continues to outperform and is expected to remain stronger than single family. For non-residential markets, demand is increasingly being driven by a growing pipeline of large scale megaprojects. Investments across data center, semiconductor capacity and energy networks are driving a multiyear pipeline of construction activity with a significant concentration of these projects in our Sunbelt and East Coast footprints.”
11) From FedEx: They saw 14% revenue growth, “supported by yield strength across all services, and volume growth aligned with our commercial strategy. This growth includes a 5 percentage point benefit from fuel price driven surcharge revenue.” To what I keep hearing about order pull forwards and have been highlighting here, “I do think that there’s a little bit of inventory buildup and restocking going on, but phenomenal, successful quarter.”
12) From FedEx Freight: “As expected, volume was softer y/o/y. However, trends have improved sequentially. We’re encouraged by these early signs that demand may be stabilizing for our services, supported by improving manufacturing indicators, truckload trends, and higher y/o/y contractual increases.”
13) The June German IFO business confidence index rose a touch to 85.6 from 85 and about as expected but only a bit off its recent lows. Most of the gain was in the Current Assessment component with Expectations up slightly. The IFO said simply, “Firms perceive business environment as less uncertain. German companies are hoping for geopolitical tensions to ease.” Manufacturing expectations improved but the current situation was a touch lower and “The number of new orders declined again.” With German services, “the business climate improved…The transport and logistics sector was able to continue its recovery. In tourism, by contrast, the situation remains difficult.” In trade, “the road to recovery is still long” and in construction, “Many companies complain about a lack of orders.”
14) Japan’s PMI rose for both with manufacturing at 54.9 vs 54.5 and services increasing to 51.8 from 50.0. S&P Global said, “it is important to note that the current period of growth is partly being driven by stock piling efforts amid the war in the Middle East, and these efforts are likely to fade in the months ahead as warehouses fill and cost pressures bite…Furthermore, the latest PMI survey signaled the sharpest rise in input costs for nearly four years in June. Subsequently, the rate of selling price inflation eased only slightly from May’s survey record as many firms looked to pass on higher expenses to clients.”
15) Australia saw a gain in both too with manufacturing at 51.2 vs 50.7 and services about at the flat line at 49.9 vs 48.7 in the month before.
16) India’s weakened a bit but still remains strong with manufacturing at 54.5 vs 55 and services at 57.3 vs 59.8.
17) The strength in the June Eurozone composite index m/o/m was in manufacturing with it at 51.3 vs 51.6 in the month before. The services component remained below 50 but rose to 48.9 from 47.7. The combined composite index is at 49.5, up 1 pt. Germany’s composite index came in at 48 with a 46.8 print in services while manufacturing was exactly at 50. France’s service index lifted to a still weak 47.4 from 44.3 while manufacturing rose 1 pt to 50.7. On the services side for the Eurozone, tourism and leisure related industries saw “signs of recovering demand after the initial disruptions from the war in the Middle East.” In manufacturing, it “continues to benefit from inventory building as customers front run future price rises or supply issues amid ongoing supply fears linked to the war.” With pricing, “Encouragingly, lower energy prices are already filtering through to businesses and rates of input cost and selling price inflation have moved lower in June as a result, hinting at a potential peaking of the recent price spike.”
Negatives,
1) In May, the headline PCE rose .4% m/o/m and 4.1% y/o/y while the core rate was higher by .3% m/o/m and 3.4% y/o/y. Both about as expected due to rounding and up from 3.8% and 3.3% y/o/y gains seen in April.
2) Continuing claims, delayed by a week, totaled 1.821mm, up 21k w/o/w. That’s the highest since March but still well off its recent highs.
3) The June Philly services index remained deeply negative at -25.8 vs -23.6.
4) Strange to see the notable price rises in electronic products from Apple and Microsoft after getting used to persistent price declines, which marks the history of technology.
5) Hopefully we’ll get some relief soon with the Strait reopening but at least thru 6/25, container shipping prices continue to jump. The Shanghai to NY trip rose another 5.6% w/o/w, up for an 8th straight week to $7,149 for a 40 foot container. That’s the highest since last June. The price for the route to LA rose by a similar amount and less so to Rotterdam.
6) New home sales in May totaled 580k, 60k below expectations and down from 626k in April. That’s just 4k from the least since 2022. About all of the weakness was in the West region. Months’ supply rose to 10.3 from 9.3.
7) With little change in the average 30 yr mortgage rate at 6.59%, purchase applications fell .6% w/o/w but up 2.8% y/o/y. Refi’s rose 3% w/o/w after a 4.5% drop in the week before and higher by 17% y/o/y.
8) The June Richmond manufacturing index fell to 4 from 13.
9) The US May goods trade deficit was much wider than expected at $105.8b, $20b more than expected with an unexpected 5.4% decline in exports. Expect Q2 GDP estimates to get cut after this.
10) From Kroger: “The customer is under pressure. Higher gas prices and reduced SNAP benefits are squeezing budgets. Customers are managing spend carefully and shopping with real intent. That pressure is showing up in the market. Food-at-home growth decelerated 100 bps compared to the last quarter. Encouraging news is that our work on affordability is starting to resonate and you can see it in the data…Traffic is up. Customers are coming through our doors more often, which tells me our value messaging is starting to land…Food inflation came in at the low end of our expectations, down sequentially from the fourth quarter. Egg deflation was a meaningful headwind to identical sales without fuel, representing 64 bps of pressure…Looking ahead, we expect inflationary pressure to increase as the year progresses, reflecting the broader macro environment.”
11) From KB Homes: “Although buyers continue to demonstrate the desire for homeownership and the ability to qualify, consumer confidence remains low, driven by a variety of factors, from elevated mortgage interest rates and affordability pressures to rising inflation and geopolitical uncertainties. We continue to attract a healthy level of traffic to our communities, signaling both consumers’ interest in purchasing a home and the appeal of our locations and products, and our cancellation rate was stable, reflecting high quality, committed buyers who can close. However, market conditions precipitated a less than optimal conversion of traffic to sales as many consumers lacked the confidence to purchase, resulting in a community absorption rate of four net orders per month.”
12) From Carnival: “while we are incredibly resilient to major external shocks, we are not immune, and near term disruption can affect the timing of results, especially when it persists for an extended period of time. Accordingly, our second quarter operational outperformance and accelerated cost efforts are offsetting the moderation we’ve incorporated into our back half outlook given the impact of the prolonged conflict. Specifically, this moderation was concentrated on our European deployments, particularly in the Med region, which were closest to the conflict. And it was further exacerbated by elevated airfares and reduced international flight capacity for North American guests. So yes, this did put a bit of a dent in our trajectory.”
13) From Accenture: With regards to corporate IT budgets, “Even with AI, they’re spending it differently, but they haven’t been increasing.” Also of note from their call, “we were impacted by the conflict in the Middle East. We saw a revenue impact of approximately $100 million compared to our expectations, which was all consulting type of work, split evenly between the direct impact on our Middle East business and indirect effects outside of the region. In the last few weeks of the quarter, we saw this indirect impact globally in products and to a lesser degree in resources, mostly in discretionary spend.” As an example of the ‘indirect impact’, “some of the industries are dealing with kind of longer-term issues, so think about automotive, where we have a large presence. They were already challenged. And now with the higher gas prices, that’s added to it.”
14) The June Tokyo CPI rose 1.7% headline y/o/y and 1.9% ex food and energy, both one tenth above expectations and helped by consumer energy subsidies.
15) The trimmed mean CPI in May in Australia was higher by 3.6% y/o/y vs 3.4% in April and one tenth above the estimate.
16) The UK June PMI was little changed at 49.4 vs 49.7 in May. Manufacturing was 53.1 vs 53.9 while services came in at 48.7 vs 49.3. “Price pressures remain elevated as companies point to the energy shock and supply squeeze from the war in the Middle East as exacerbating existing cost pressures from government policies” but they also said “Some of the war related price pressures have started to moderate, however, largely thanks to lower energy prices.” S&P Global also mentioned the same factor lifting manufacturing, “as demand here is being temporarily buoyed by the building of safety stocks amid ongoing war related supply worries.”
17) Maybe that pull forward has run its course as the June UK CBI industrial orders index softened to -45 from -41 and CBI said “Manufacturers are facing an increasingly difficult trading environment, with order books now at their weakest since 2020 and output continuing to fall. While selling price expectations have eased from their peak in May, they remain elevated, highlighting the cost pressures still facing the sector.”
18) Agree with how he ran monetary policy or not, we lost an economic and finance legend in Alan Greenspan.
Position: None
