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Here in the midst of the heart of Q2 earnings season, we also get a few key metrics on the domestic economy — all of which were notably better than expected. And as we’ve seen Q2 unfold somewhat better than expected overall, this strength in econ data may bring about a conundrum for the Fed regarding what to do with interest rates.
Durable Goods Orders for June came in at a robust 2.0%, well ahead of the +0.7% expected, and fathoms beyond the downwardly revised -2.3% in the previous month. That low May number was somewhat of an anomaly, however, beset as it was by a dearth in orders for Boeing’s troubled 737 MAX. Even still, it was revised down 100 basis points since its initial release; it represents a goods order crater we’ve hopefully recovered from.
Subtracting transportation costs, this headline moves down to +1.2%, still better than the +0.2% analysts were seeking, while ex-Defense blossomed to +3.1% last month. These are much stronger figures than the original print on “core” last month of +0.5%. In other words, nothing but strength in new durables orders. Will the ongoing trade war and global economic slowdown blow another headwind in the near future? It would have to be a pretty big one.
Speaking of global economics, President Mario Draghi of the European Central Bank (ECB) this morning said interest rates in the European Union (EU) would be left unchanged for now. Draghi also stated the ECB “stands ready to adjust all instruments,” including asset purchases, going forward. While he said geopolitical factors continue to impact sentiment, that there hasn’t been another rate cut for the EU shows some faith in the strength of the European economy for now.
Initial Jobless Claims dropped again to the low-end of the range of the past couple years to 206K — much better than the 218K estimated and the unrevised 216K reported last week. Continuing Claims went from 1.689 million to 1.676 million in its latest (a week in arrears) read, also near historic lows. With revisions, Continuing Claims have not registered above 1.7 million for several weeks now, and we are now at the lowest point in this survey since before Michael Jackson went solo.
Yesterday, PMI Manufacturing for July was slightly lower than estimates, while Services were higher. A slowdown in domestic manufacturing — seen in this data and elsewhere lately — is about the only negative in the vast expanse of U.S. business. As a result, it may make discussions regarding an interest rate cut by the Fed next week — certainly whether to cut 50 basis points — much tougher slogging for the voting members.
Q2 Earnings Update
This is also the busiest day of Q2 earnings season, with companies like Alphabet (GOOGL - Free Report) , Amazon (AMZN - Free Report) , Intel (INTC - Free Report) and Starbucks (SBUX - Free Report) , among many, many others, reporting after the bell today. In today’s pre-market, here’s just a sampling of what we’ve seen:
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Image: Bigstock
More Robust Econ Data; Rate Cut in Doubt?
Thursday, July 25, 2019
Here in the midst of the heart of Q2 earnings season, we also get a few key metrics on the domestic economy — all of which were notably better than expected. And as we’ve seen Q2 unfold somewhat better than expected overall, this strength in econ data may bring about a conundrum for the Fed regarding what to do with interest rates.
Durable Goods Orders for June came in at a robust 2.0%, well ahead of the +0.7% expected, and fathoms beyond the downwardly revised -2.3% in the previous month. That low May number was somewhat of an anomaly, however, beset as it was by a dearth in orders for Boeing’s troubled 737 MAX. Even still, it was revised down 100 basis points since its initial release; it represents a goods order crater we’ve hopefully recovered from.
Subtracting transportation costs, this headline moves down to +1.2%, still better than the +0.2% analysts were seeking, while ex-Defense blossomed to +3.1% last month. These are much stronger figures than the original print on “core” last month of +0.5%. In other words, nothing but strength in new durables orders. Will the ongoing trade war and global economic slowdown blow another headwind in the near future? It would have to be a pretty big one.
Speaking of global economics, President Mario Draghi of the European Central Bank (ECB) this morning said interest rates in the European Union (EU) would be left unchanged for now. Draghi also stated the ECB “stands ready to adjust all instruments,” including asset purchases, going forward. While he said geopolitical factors continue to impact sentiment, that there hasn’t been another rate cut for the EU shows some faith in the strength of the European economy for now.
Initial Jobless Claims dropped again to the low-end of the range of the past couple years to 206K — much better than the 218K estimated and the unrevised 216K reported last week. Continuing Claims went from 1.689 million to 1.676 million in its latest (a week in arrears) read, also near historic lows. With revisions, Continuing Claims have not registered above 1.7 million for several weeks now, and we are now at the lowest point in this survey since before Michael Jackson went solo.
Yesterday, PMI Manufacturing for July was slightly lower than estimates, while Services were higher. A slowdown in domestic manufacturing — seen in this data and elsewhere lately — is about the only negative in the vast expanse of U.S. business. As a result, it may make discussions regarding an interest rate cut by the Fed next week — certainly whether to cut 50 basis points — much tougher slogging for the voting members.
Q2 Earnings Update
This is also the busiest day of Q2 earnings season, with companies like Alphabet (GOOGL - Free Report) , Amazon (AMZN - Free Report) , Intel (INTC - Free Report) and Starbucks (SBUX - Free Report) , among many, many others, reporting after the bell today. In today’s pre-market, here’s just a sampling of what we’ve seen:
https://www.zacks.com/stock/news/449242/comcast-cmcsa-q2-earnings-top-estimates
https://www.zacks.com/stock/news/449362/3m-mmm-q2-earnings-and-sales-beat-estimates-down-yy
https://www.zacks.com/stock/news/449241/bristolmyers-squibb-bmy-q2-earnings-and-revenues-beat-estimates
https://www.zacks.com/stock/news/449485/raytheon-rtn-q2-earnings-top-sales-improve-yy-view-up
https://www.zacks.com/stock/news/449218/southwest-airlines-luv-q2-earnings-beat-estimates
https://www.zacks.com/stock/news/449207/valero-energy-vlo-tops-q2-earnings-and-revenue-estimates
Mark Vickery
Senior Editor
Questions or comments about this article and/or its author? Click here>>
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
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