Tuesday, August 28, 2012

Mixed Economic News ...

The Case/Shiller home price index for June surprised to the upside.  Unfortunately, even though the market is up slightly, the positive reaction was not as significant as some may have expected as such news was too good for the market.  As a reminder, this data was for June.  Consumer confidence for Aug. was also released this morning indicating declining confidence in nearly everything.  The bad news offset the good news, which is why the market is up.  Anticipation of what will come out of Bernanke's mouth this weekend and after the Sept. FOMC is pushing the market higher.
Case/Shiller home price index
  • 10-city index up 0.1% and 2.2%, Y/Y and m/m, respectively.
  • 20-city index up 0.5% and 2.3%. Y/Y and m/m, respectively.
  • Y/Y decline in prices were evident in Atlanta (-12.1%), Chicago (-1.7%), Las Vegas (-1.8%), Los Angeles (-0.6%), New York (-2.1%), and San Diego (-0.2%).  In terms of a Y/Y price increase, Phoenix led the way with a 13.9% Y/Y change in home prices.
  • The biggest monthly price increase was in Detroit, followed by Minneapolis and Chicago.
The Conference Board Consumer Confidence
  • The Aug. consumer confidence index declined to 60.6 from a downwardly revised 65.4 in July.  The Aug. figure is the lowest since last Nov.
  • What is alarming is that the expectations sub-index represented nearly this entire decline as it dipped to 70.5 from 78.4; while the present situation sub-index declined to 45.8 from 45.9 in July.
  • Consumer sentiment regarding the labor market deteriorated within the expectations and present situation indexes.  Only 15.7% said they expected an increase in their incomes.  While this figure is very low, it represented a slight improvement from the prior month.
The market remains in the black with the S&P 500 up nearly 2 points.  XHB is not displaying much reaction to the good news regarding the Case/Shiller index.  The ETF is up only 0.13%.  The consumer discretionary ETF, XLY, is leading the way, up 0.3%, followed by financials (XLF) and consumer staples (XLP) both up 0.25%.  This alone indicates the anticipation of some magic words from Bernanke this weekend or during the third week of Sept. 

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