Seven Peaks and GDP

Our annual Client Appreciation Party is coming up in two weeks and I want to make sure that you get it on your calendar.  We will have the whole park rented out for just our fantastic clients!  I’ll be getting a ticket mailed out to you just prior to the event that will get your whole family into the park and get you tubes too so watch your mailbox.

The U.S. GDP was released today showing a annualized growth rate of 1.2% for the 2nd quarter of the year.  The Fed’s target is a 2.0-2.5% rate, so today’s data combined with the 1.1% 1st quarter reading has them wringing their hands wondering what to do.  One thing they’ll do for sure is keep interest rates low for the foreseeable future.

The Fed and Inflation

The Fed left interest rates unchanged at yesterday’s meeting, though they acknowledge that the economy here in the U.S. has been improving, and that they will gradually need to hike rates to keep up with inflation.  Maybe.  Inflation has been in the toilet recently.  Second quarter GDP will be released tomorrow morning and is anticipated to show a 2.6% appreciation rate.  The first quarter settled in at a meager 1.1% advance.  With Stocks at all-time highs and Bonds at all-time lows, the Fed has their work cut out for them to ensure that this whole thing doesn’t blow up.

Buying Durable Goods

I am a fan of durable goods.  Meaning, I enjoy spending my money on things that will last at least a year.  Particularly, I enjoy shopping for watches and pens (the kind that last indefinitely).  This watch pictured here was made in 1987 and made it into the hands of Eric Clapton two years later for a price of $513,688.  Mr. Clapton wore it on occasion and sold it in 2012 for $3,650,000.  It had appreciated a modest 8.65% during those 23 years and allowed Eric Clapton to retire comfortably. Well, that and selling almost 150 million albums over the last 50 years of course.  This watch would be considered a durable good.

Durable Goods Orders are tracked like every other economic statistic, and this month they declined 4.0% from the previous month, which was also down 2.8% from the month before.  So though our society is still spending plenty of money, it’s for disposable stuff that won’t last.  That is a sad commentary.

Speaking of commentary, the 8x per year Fed meeting concludes today, after which Chair Yellen will read a prepared statement over-viewing the current status and future direction of the economy.  It is anticipated that during that statement, she will state that the Fed is leaving its Cost of Funds rate at 0.375%. 

Attention Shoppers!

Consumer Confidence is up higher than anticipated, but lower than last month’s survey, indicating that economists are not quite as optimistic as retail shoppers.  So either the experts know something that we don’t know, or “retail therapy” is doing its job keeping the customer satisfied.

The Case-Shiller 20 City Home Price Index shows that home values continue the steady march upward.  The 5.2% year-over-year gain is just shy of last month’s 5.4% reading.

Tomorrow’s Monetary Policy statement read at the conclusion of the Fed meeting is what is really captivating the everybody’s attention right now.  Nobody expects a rate increase tomorrow, but the tone of the message will certainly be scrutinized to ascertain the anticipated timing of when rates will come up.  Where several countries are dealing with negative interest rates, I am not sure that we’ll see a hike anytime too soon by the Fed.

The Show

My wife and I saw Keith Urban last night at the Usana Amphitheater.  If you weren’t one of the 20,000 people there, you need to know two things: 1. Keith can shred on a guitar.  I mean, wow, probably one of the best guitarists I have ever seen. 2.  He comes across as a really, really nice guy.  All that makes for a terrific show, even if, unlike everyone else in the entire venue, we didn’t know all of the words to all of the songs.

So speaking of country, let’s compare that experience to the show being put on by the two current candidates running for the highest elected office in our country.  Wait, let’s not.  Does anyone know about the cost of living in Australia?

Economic news has been pretty light this week.  The Fed meets next week and there is a zero percent chance that they’ll raise interest rates, but their prepared statement may give us a clue regarding the future of the Fed Funds Rate.  Until then, rock on!  –or whatever cowboys tell one another.

Crunch Time

It’s getting to be that time of year when fewer homes are listed for sale as more people are on vacation and parents are priming for the kids to head back to school.  Existing Home Sales did rise 1.1% last month.  It’s amazing that our already scant inventory is slimming down even further.

The Philly Fed index, measuring the manufacturing sector, came in at a net loss -2.9%, while a gain of 5.0% was expected.  Stocks and Bonds are both mixed/flat so far today.

Retail Gas prices are down about 10% from this time last month, making now a great time to take that summer road trip–or trip to the mall to buy school clothes.  With triple digit temperatures expected again today, might I suggest heading north?

The American Dream

I’d like to think that this picture accurately portrays the excitement that everyone feels when buying a home.  After all, it’s the American dream.  It’s what we work for and fight for and plan for.  And sign for.  And jump through lots and lots of hoops for.  And sometimes it feels like this:

girl

But in the end, its still the best investment that a family can make to secure a healthy financial future for themselves.  Especially now when interest rates are so amazingly terrific.

England: Don’t Miss a Single Episode

This is the Bank of England, or something like that.  Today the Bank of England left its core interest rate unchanged, after the financial world thought that they would cut rates at the conclusion of today’s meeting.  That’s two surprises in two weeks from the Mother Land.  It’s like they have taken cues from the media and are prepping to sell their own advertising.

The Producer Price Index, measuring inflation at the wholesale level, rose 0.5% this morning.  The consumer/retail inflation numbers come out tomorrow.  Inflation hasn’t been a concern now for over a decade here in the U.S., though bond yields (including mortgages) are continuing to rise as they must compete for the same investment dollars that are causing stocks to reach all-time-highs.

Big House, Tiny Lot

The National Association of Home Builders reports that lot sizes for new homes are still shrinking.  The average new single-family detached home is built on a a parcel that’s only 8,600 square feet, or .19 acres.  Interestingly, the size of homes has grown by 150 square feet in the last six years.  And that is why children don’t play outside anymore.

Another All-Time-High

The DOW hit an all-time high this morning.  Everybody is wondering how much lower interest rates will go, but for now, they are taking a breather as money is coming out of Bonds and into Stocks. There are no economic reports being published today. PPI and CPI come out later this week.