Outside the Markets

It’s the Economy… Stupid

The Inflation Virus continues to plague the consumer and worry the Fed. Cleveland Fed President, Mester stated in a Bloomberg interview that she thinks inflation is still a problem despite some recent positive data. CPI excluding food and energy was up 0.2% in May and 3.4% year over year. Yet the Fed overall still believes inflation will remain sticky for the foreseeable future. The Fed’s target for inflation remains at 2%. As seen below the consumer confidence reading dropped to a seven-month low. Again, the consumer is feeling the pinch of higher prices despite the White House proclamations of how great the economy is. This in turn hurts the economic outlook and could impact stock prices in the future equally.

Tuesday: 1) Retail Sales May M/M 0.3% expected versus 0% prior. Retail Sales Y/Y May 3.04% prior. 2) Industrial Production M/M 0.3% expected versus 0% prior. Y/Y -0.38% prior. 3) Manufacturing Production M/M 0.3% expected versus -0.3% prior. 4) Retail Inventories Ex Auto May 0.3% expected versus -0.1% prior.

New York Empire State PMI June: -6.0 versus -13 expected versus -15.6 prior. Highest reading in four months. While negative it did show improvement. One month is not a trend but maybe it is the start.

Friday: 1) Export Price Index Y/Y 0.6% versus -1% prior. 2) Export Price Index M/M -0.6 versus 0% expected versus 0.5% prior. 3) Import Price Index M/M -0.4% versus 0.0% expected versus 0.9% prior. Y/Y 1.1% versus 1.1% prior. 4) Michigan Consumer Sentiment June 65.6 versus 72.1 expected versus 68.8 prior. 5) Fed out speaking on Friday. Negative consumer sentiment as it was much lower than expected. Import/Export prices show better than expected numbers. Overall this month we have seen improvement in the data helping the outlook for the Fed to cut rates as many want.

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