

World View & Market Commentary.
Forest first; Trees second.
Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.
Highlights
The economy got a downgrade for the second quarter but it was in line with expectations. The Commerce Department's second estimate for second quarter GDP growth was nudged down to a modest gain of 1.0 percent annualized, compared to the initial estimate of 1.3 percent and to first quarter growth of 0.4 percent. Analysts had projected a revision to 1.1 percent annualized.
Final sales of domestic product were revised to an annualized 1.2 percent from the initial estimate of 1.1 percent. Final sales to domestic purchasers were revised up to 1.1 percent from the original estimate of 0.5 percent annualized.
Economy-wide inflation was revised up marginally to 2.4 percent annualized, compared to the original estimate of 2.3 percent and the first quarter rise of 2.5 percent. The consensus forecast was for 2.3 percent.
While GDP growth was revised down, the more important measure of momentum---final sales-were revised up slightly. But today's numbers do not say much for the current status of the economy. Equity futures were little changed on the news as traders await Fed Chairman Bernanke's speech at Jackson Hole at 10:00 a.m. ET.
Highlights
Initial jobless claims rose 5,000 in the August 20 week to an adjusted total of 417,000 but were skewed higher by a labor strike at telecom provider Verizon that has since ended. The Labor Department says there are at least 8,500 claims related to the strike in the week and at least 12,500 in the prior week (these levels are before adjustment). The adjusted total for the August 13 week is revised 4,000 higher to 412,000. The four-week average ended its seven-week run of declines, rising 4,000 to a 407,500 level that shows a 7,000 improvement from the month-ago comparison.
Continuing claims for the August 13 week fell 80,000 to 3.641 million for the lowest level since September 2008 and the financial meltdown. The four-week average is down 20,000 to 3.701 million with the month-ago comparison showing little change. The unemployment rate for insured workers, at 2.9 percent, has been inching back and forth between this level and 3.0 percent since February.
Markets are showing little initial reaction to the report which, outside of the Verizon strike, points to mildly improving conditions in the labor market.
Highlights
July home sales proved disappointing and MBA's purchase index points to further bad news for August. The purchase index fell steeply for a second week, down 5.7 percent in the August 19 week and now at its lowest level in 15 years. Low interest rates aren't helping with applications falling across the board including a 15 percent fall for jumbo loans and an eight percent fall for government housing programs. Low rates had triggered a surge in refinancing applications which however eased back 1.7 percent in the latest week. Rates moved slightly higher in the week with the 30-year up seven basis points to 4.39 percent.
Highlights
A monthly surge in new orders for motor vehicles & parts, the best in eight years, headlines a strong durable goods report for July. New orders for durable goods surged 4.0 percent in the month with the motor vehicle component up 11.5 percent in what appears to be the well anticipated Japanese-related snap back. Aircraft orders, which nearly always show wide month-to-month swings, rose 43 percent and together with motor vehicles made for a 14.6 percent jump in the transportation category. Excluding transportation, new orders rose a solid 0.7 percent following 0.6 and 0.8 percent gains in the two prior months.
A surge in overall shipments is another big plus for this report, up 2.5 percent on top of June's 1.1 percent gain. Primary metals show a third straight month of shipment strength as do motor vehicles and aircraft. Capital goods also show gains in shipments in what offers an early signal of strength for third-quarter business investment.
Other details show a steady 0.8 percent gain for overall inventories with unfilled orders showing an increasing rate of build, from 0.3 percent in June to 0.7 in July. But the one factor that limits the impact of this report on the economic outlook is that it's data for July. Early looks at August conditions, that is from the New York, Philly, and Richmond Feds, show significant contraction making it too soon to say whether manufacturing, which has been the economy's backbone, is once again re-accelerating.
New Data Supports Previous Fairewinds Analysis, as Contamination Spreads in Japan and Worldwide
We all need to get REAL folks, and stop supporting the criminals who brought this mess to you.
Highlights
Growth remained below historical trend in July but only slightly. The Chicago Fed's national activity index improved to minus 0.06 from an upwardly revised minus 0.38 in June (minus 0.46 first reported). The improvement is led by a plus 0.28 contribution from production-related indicators, well up from a very slight plus 0.03 contribution in June. Employment-related indicators came in at plus 0.05 vs June's minus 0.10. Consumption & housing was minus 0.33 in July, barely changed from minus 0.34 in June. Sales, orders & inventories are a negative in the month, at minus 0.06 vs June's plus 0.03.
The three-month moving average improved sharply in July, to minus 0.29 from minus 0.54 (upwardly revised from minus 0.60). Improvement in this report is of course welcome but whether it will extend into this month is uncertain given that July's strength is concentrated in manufacturing where early indications for August, that is from last week's Empire State and Philly Fed reports, are decidedly weak.