Economic news was on the light side today with just the June Durable Orders report being released showing that orders for products lasting at least three years rose by 0.7%. The 0.7% was a rebound after the decline seen in May and above the 0.3% expected. Gains were seen in demand for commercial aircraft and machinery. For 2014, orders are up 3.5% over the same period last year. Most analysts expected a pick up in factory production in the second half of the year, which should bolster economic activity.
RealtyTrac reported yesterday that 9.1 million residential properties across the U.S. were seriously underwater in the second quarter of 2014. This occurs when the combined loan amount secured by the property is at least 25% higher than the property’s estimated value, which represents 17% of all properties with a mortgage. The big price gains that were seen in 2013 have been easing in 2014 in many of the markets with the most underwater homes. This has been “slowing the pace at which homeowners are recovering equity lost during the Great Recession,” said a RealtyTrac spokesperson. RealtyTrac is the nation’s leading source for comprehensive housing data.
A recent report from the George Institute for Global Health at the University of Sydney revealed that even though it has been prescribed often by doctors for the relief of back pain, acetaminophen does not help to treat back pain. The drug is most commonly found in Tylenol. Researchers have found that the drug was no more effective than a dummy pill and also does not help to improve sleep woes tied to back pain, nor did it improve patients’ overall quality of life, reports WebMD.
The National Association of Realtors reported on Tuesday that June Existing Home Sales rose by 2.6% from May to an annual rate of 5.04 million units, which was above the 5.0 million expected. However, sales are 2.3% below the 5.16 million recorded in June of 2013.
Home price appreciation in the past few years may have topped out, says a report from Bank of America Merrill Lynch. The bank said that Americans should prepare for a few years of stagnant prices. Home prices were undervalued by 6% at the end of 2011, says the report, but are now nearly 10% overvalued. Merrill Lynch doesn’t feel like this is a housing bubble like the one back in 2006 when prices were overvalued by 59%, which resulted in price declines of 35% over the next six years.
With summer at full blast, the season calls for outdoor grilling on your propane tank grill. Your propane gas grill could be a ticking time bomb if not used correctly. Each year there are 7,000 gas grill fires, according to the National Fire Prevention Association, many from leaking propane. People continue to turn on the gas, leave the cover down, then hit the grill igniter and they get an explosion from a buildup of gas. The proper way to light the grill is to open the cover, turn on the gas and quickly hit the igniter. And don’t lean over the grill for fear of your face getting singed or worse. Be safe this summer.
Wall Street Stock prices are lower to begin the week due to the ongoing geo-political news out of Russia and the Gaza Strip. The European Union minister meeting is this week and one of the main topics being considered is whether or not further sanctions are to be levied against Russia over its alleged involvement in the downing of Malaysia Flight 17 last week and its continued military presence in Ukraine.
The National Association of Home Builders reported on Wednesday that its July Housing Market Index rose four points to 53 and above the 50 expected. It was the first reading above 50 this year, which indicates sales conditions as good. Below 50, indicates poor conditions. The index covers newly built single family homes.
The New York Manufacturing Index surged in July to 25.6 versus the 13.2 expected and up from the 19.28 recorded in June. It was the highest level in more than four years, readings above zero indicates expansion. In addition, the employment index rose to 17.05 from 10.75 in June. All around, a solid report for the economy. New York business owners said that the strong pick-up in activity seen in May continued in June.
Consumers continued to spend in June, though at a slower pace than in May due to a surprise decline in auto sales. The June Retail Sales disappointed, falling to 0.2% from the 0.5% recorded in May and below the 0.7% expected. It was the lowest level since the near -1.0% recorded in January. Retail Sales account for about one-third of consumer spending, one of the main drivers of US economic activity. In the past year, Retail Sales have risen by 4.3%.
In corporate earnings news, JPMorgan Chase reported that while its earnings and revenues declined, the earnings per share of $1.46 easily beat the estimate of $1.29. The bank did report that core lending was up 8% from the same period last year. Investment bank Goldman Sachs rose more than expected, despite the forecast of a decline. The Wall Street juggernaut reported earnings per share of $4.10 versus the $3.10 expected led by investment banking revenues, investing and lending units.
Capital Economics reported today that it sees the economic recovery in the nation shifting into “a higher gear” due to household debt falling to more manageable levels and property prices having recovered. The report went on to say that it won’t be long until we see the tighter labor market trigger a rise in wage growth, which should feed through to higher core inflation. Capital Economics is a leading independent macroeconomic research company.
Banking giant Citigroup reported earnings today that were better than expected, but it did take a $3.8 billion charge due to its settlement with the Department of Justice over the bank’s mishandling of Mortgage Backed Securities. Citigroup earned $1.24 per share, above the $1.05 that was expected. The bank said that despite the uneven economic environment, it grew loans in its core business and reduced operating expenses.
The closely watched S&P 500 Stock Index has been hitting new highs in 2014 due to a recovering economy. Wall Street powerhouse firm Goldman Sachs lifted its year-end target for the index to 2,050 from 1,900. The index hit 666 back on March 9, 2009 at the height of the Great Recession and is currently at 1,979, a near triple rise.
The U.S. Energy Information Administration (EIA) reports that in 2015, domestic crude oil production is likely to be the highest since 1972. The boom has dramatically lowered petroleum imports. The U.S. and Canada are expected to account for most of the world’s projected growth in the production of oil and other liquid fuel through 2015, while China and less developed countries will drive most of the growth in consumption, according to the EIA’s July forecast. Texas and North Dakota now account for half of the total US oil production.
The Mortgage Bankers Association reported on Wednesday that its Market Composite Index, a measure of total loan application volume, rose by 1.9% in the latest week after a steep 9% plunge in the previous week. Home loan rates continue to hover just above all-time lows due to the ongoing efforts of the Federal Reserve’s program geared towards keeping rates low. The refinance index inched up 0.4%, while the purchase index rose by 4%.
The kickoff for the corporate quarterly earnings season took place after the close of trading yesterday with giant aluminum maker Alcoa reporting results. Alcoa said that excluding the impact of special items, earnings per share came in at 18 cents versus the 12 cents that was expected. The company reported that all business segments were profitable during the quarter. Alcoa is usually the first S&P 500 company to report earnings and since aluminum is a key component for many businesses, some see Alcoa as a bellwether for earnings season.