Succinct Summation of Week’s Events:
Positives:
1) Pending home sales in April rose 3.4% m/o/m, better than expectations of a gain of .9%. Y/o/y improvement was 13.4%.
2) Purchase applications were up 1.2% w/o/w off a 5 week low last week. The index though is still up 13.8% in the important spring selling season.
3) New home sales in April totaled 517k annualized, slightly above the estimate of 508k and up from 484k in March (revised up by 3k). Months supply fell to 4.8 from 5.1 in March and vs 4.6 in February. Home price gains were aggressive, rising by 8.3% y/o/y and 4.1% sequentially.
4) Durable goods orders ex transportation in April rose .5% m/o/m, two tenths more than expected and March was revised up by 2 tenths from the previous revision. On an absolute dollar basis, core goods orders totaled $69.1b in April vs $71b in January and vs an average of $71.3b in 2014.
5) Conference Board Consumer confidence in May rose 1.1 pts to 95.4, about in line with the estimate of 95. The level is still near the highest in this expansion but off the 103.8 seen in January and 101.4 in March. One year inflation expectations rose to 5.1% from 4.9% last month vs the 6 month average of 5%.
6) May UoM consumer confidence was 90.7 (final) but it’s still down from 95.9 in April and at a 6 month low. One year inflation expectations were 2.8% vs 2.6% in April and vs 2.9% initially reported for May.
7) Richmond manufacturing index improved to basically flat line as it was +1 vs -3 in April. The one yr average is +5.
8)Thanks to QE, the quantity of money is flowing into the eurozone money supply veins as M3 rises 5.3% in April y/o/y, above the estimate of 4.9%, vs 4.6% in March and it’s the fastest pace of gain since February 2009.
9) The euro zone economic confidence figure for May was unchanged at 103.8, a touch above the estimate of 103.5 and just shy of the best level since July ’11.
10) For the 8th month in a row, consumer confidence in Germany was higher with the outlook for June rising to the best level since 2001. German April retail sales rose 1.7% m/o/m, above the estimate of up 1%. This though comes after two months of declines. Low prices HELPED consumer confidence and spending.
Negatives:
1) While not as bad as feared, Q1 GDP was revised down to a contraction of .7% vs the initial print of up .2%. Yes this will be seasonally adjusted again but as it mostly only rotates the distribution of growth rather than the overall pace, growth in the first half of 2015 will still be around 1%.
2) Chicago PMI fell back below 50 at 46.2 from 52.3 last month. The estimate was 53 and it marks the 3rd month in the past 4 below 50.
3) Dallas manufacturing index was -20.8 vs -16 in April and compares with the estimate of -12.4. The index is at the weakest level since June 2009.
4) Markit’s index of US services in May fell 1 pt m/o/m to 56.4. It’s the lowest since January and compares with the 12 month average of 57.6.
5) US Initial jobless claims totaled 282k, 12k more than expected and up from 275k last week. It remains though well below the year ago level of 313k. Continuing claims rose 11k off the lowest level since 2000.
6) With another tick up in the average 30 yr mortgage rate to 4.07%, the highest since the first week of December, refi applications fell 3.9% to the lowest level since early January. The y/o/y gain is down to 8.4% vs a 30% run rate a few months ago.
7) French consumer confidence in May fell 1 pt to 93. The estimate was 95 and 94 last month matched the best level since 2007. French April consumer spending was up just .1% m/o/m vs the estimate of up .4%.
8) Due to the weakness in the euro, German import prices in April rose .6% m/o/m after a 1% rise in March. The y/o/y decline of .6% was the least since December ’12.
Peter Boockvar
Chief Market Analyst
The Lindsey Group LLC
peter-at-thelindseygroup.com
