Welcome to August all! I’d say stay cool, but that doesn’t seem like a thing that’s going to happen…
After a nice July, where we saw most markets climb (see below) for the first time in a significant way since April, August greeted the markets with a big meh (but with lots of interesting data).
August, at least in US markets, started with a bit of a fizzle. US markets ended the day between flat and -.2%, which though being unremarkable feels pretty sane coming off the year we have had so far.
Interesting and impactful data
On the data side, the US saw the largest slow down in housing price increases since at least the 70’s.
A cooling market may not be the worst thing in the end. Mortgage expenses on the west coast were tracking at 35%+ of income as of May, and prices only increased from there. It is hard to take away any concrete economic hints from the data that came out today given how crazy real-estate has been since the pandemic started.
At the same time that housing prices slow their meteoric price increases, US construction spending dropped across the board in an unexpected decrease, but still remains higher than the same time last year. Again, I’m not sure this is a huge data item, but certainly something to watch if the trend continues.
Of more note, the US ISM index dropped somewhat from June, but bettered the expectations of analysts. Drops in orders could be foreboding, as already high levels of inventory in the supply chain continue to grow. Economically this points to decreasing demand for products, and in turn implies a decline in spending / increased worry about future finances. But, from the consumer side..
Off to Europe
Across the pond economic data is a bit worse. Today we saw manufacturing data releases from the bulk of Europe and the numbers were… not the best. European economies are seeing a definitive downturn in manufacturing activity, with the bulk of countries reporting the lowest level in 20+ months. European markets and economies have lagged the US in a huge way over the last decade.
There are a lot of factors outside the control of European corporations that have driven this differential growth. There are a lot of reasons to believe in the future of Europe on the investment side, but recent issues have made the short term case less appealing.
Odds and ends
Cathy Wood has a good month!
Second COVID boosters are less likely to make you sick!
Watch Yo-Yo Ma perform with forest birds as backup!
What to look for tomorrow
Tomorrow CAT, UBER, DD, and JBLU all report earnings, in additions to slews of other companies. Reports from CAT & DD could be informative about global demand for equipment and chemicals. UBER and JBLU are better indicators for consumer travel demand.
On the economic side the biggest item is the release of Job Openings tomorrow. Other than that, it’s a slower day.
Till tomorrow,
Nathan
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