Money Talk Podcast

Kyle Tetting, Art Rothschild & Mike Hoelzl talk about stalled inflation, stingy consumer sentiment and more.

Kyle Tetting, Adam Baley & Steve Giles discuss the latest news affecting long-term investors.

The latest news affecting long-term investors discussed by Kyle, Tetting, Dave Sandstrom and Tom Pappenfus.

Enlightening investment talk with Kyle Tetting, Art Rothschild and Kendall Bauer.

Talk of interest rates, retail sales and what they mean to long-term investors. Dave Sandstrom and Kendall Bauer join Kyle Tetting.

Kyle Tetting talks with Art Rothschild and Adam Baley about the latest developments affecting investors.

Advisors on This Week’s Show

Kyle Tetting

Steve Giles

Mike Hoelzl

(with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik)

Week in Review (Feb. 26-March 1, 2024)

Significant Economic Indicators & Reports

Monday

While a relatively small part of the total housing market, new home sales showed signs of improvement in January. The C0mmerce Department said the seasonally adjusted annual rate of sales reached 661,000 units in January, up 1.5% from December and 1.8% ahead of the year-ago pace. As opposed to new houses, the annual sales rate of existing houses was 4 million. Inventories reached 8.3 months’ worth of new houses for sale, remaining above the pace just before the pandemic and well ahead of the average of 6.6 months’ since 1963.

Tuesday

The Commerce Department said durable goods orders fell 6.1% in January, the biggest decline in the volatile indicator since a 19.3% drop in April 2020. An expected plunge in commercial aircraft orders accounted for the bulk of the January setback. Excluding the transportation industry, demand for long-lasting manufactured items was down just 0.3% from December and was up 1.8% from the year before. Core capital goods orders, a proxy for business investments, rose 0.1% from December but were 0.2% below January 2023.

Housing prices continued to accelerate in December, according to the S&P CoreLogic Case-Shiller home price index. Compared to the year before, the index rose 5.5%, as opposed to a 5% increase in November. It was the seventh consecutive gain. An analyst for S&P described broad-based pricing gains, with all composite city indexes advancing for the first time in 2023. Despite increased mortgage rates over the past year, S&P reported solid and steady growth in housing prices.

The Conference Board said its consumer confidence index declined in February for the first time in four months. Consumers said they worried less about inflations, although it remained their chief concern. They registered greater unease about the labor market and political environment. The business research group characterized the slip in confidence as broadly based, with drops both in current assessments and expectations. Since consumer spending drives about two-thirds of U.S. gross domestic product, confidence suggests how willing consumers are to fuel the economy.

Wednesday

The U.S. economy grew at a 3.2% annual pace in the fourth quarter, slightly slower than initially estimated, according to the Bureau of Economic Analysis. Expansion of the gross domestic product was down from the previous report of 3.3% growth, which was down from 4.9% in the third quarter. The government said the updated figures showed less inventory buildup than previously estimated, partly offset by a faster pace of consumer spending. Consumer expenditures rose at an annual rate of 3% in the fourth quarter, compared to the initial report of 2.8%.

Thursday

The Federal Reserve Board’s preferred measure of inflation dipped to its lowest level in nearly three years, according to a report from the Bureau of Economic Analysis. The Personal Consumption Expenditure index rose 2.4% from January 2023 to January 2024, down from a 2.6% increase in December and a four-decade high of 7.1% in June 2022. The rate remained above the Fed’s long-range target of 2%. The report also showed consumer spending slowing in January even as personal income accelerated, led by a 3.2% increase in Social Security benefits.

The four-week moving average for initial unemployment claims declined for the second  week in a row, falling to the lowest level in four weeks and 42%  below the 57-year average, signifying the historically strong job market. The Labor Department reported that total jobless claims declined 2% in the latest week to 2.1 million, up more than 8% from the year before.

Commitments to home ownership slipped in January, according to the pending home sales index of the National Association of Realtors. The trade group said demand dropped 4.9% from December and was 8.8% lower than in January 2023 – despite a solid job market and record wealth due to higher stocks prices and home values. The Realtors cited steeper mortgage rates for increased reluctance among home buyers. Although rates have receded from around 8% in November, the average rate for a 30-year fixed-rate loan has been just under 7% recently, compared to under 4% two years ago.

Friday

The manufacturing sector contracted for the 16th month in a row in February, according to the Institute for Supply Management. The trade group’s index showed manufacturers easing up on production amid slower demand. Hiring receded for the fifth month in a row, and at a steeper pace. Based on past experience, the ISM said, its index suggested the U.S. economy is growing at a 1.5% annual rate.

The annual pace of construction spending fell slightly in January, dropping for the first time since the end of 2022. The rate was still up nearly 12% from its level in January 2023. Residential construction spending, which made up 43% of the total, rose marginally from December and was 12.5% ahead of its year-ago pace. The amount manufacturing spent on construction rose more than 36% since January 2023.

Consumers in the U.S. expected further declines in inflation rates while also seeing the overall economy hold steady, the University of Michigan reported. The university’s longstanding consumer sentiment survey fell slightly in February, but most of its components were near three-year highs after hitting an all-time low in mid-2022. The overall index was about 8% below the 46-year average.

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 16275, up 278 points or 1.7%

Standard & Poor’s 500 – 5137, up 48 points or 0.9%

Dow Jones Industrial – 39087, down 44 points or 0.1%

10-year U.S. Treasury Note – 4.18%, down 0.08 point

Advisors on This Week’s Show

Kyle Tetting

Tom Pappenfus

(with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik)

Week in Review (Feb. 19-23, 2024)

Significant Economic Indicators & Reports

Monday

Markets closed for Presidents Day

Tuesday

The Conference Board is no longer forecasting a recession for 2024 but says it expects next to no growth in the U.S. economy in the middle half of the year. The business research group said its index of leading economic indicators declined by 0.4% in January, double the dip in December. But the latest six-month read of the index fell 3%, compared to a decline of 4.1% in the prior six months. Also – for the first time in two years – more than half of the index’s components were positive for the six-month period.

Wednesday

No major releases

Thursday

The four-week moving average for initial unemployment insurance claims declined for the first time in four weeks, remaining 41% below the 57-year average, according to new Labor Department data. Nearly 2.2 million Americans claimed jobless benefits in the latest week, up 0.5% from the week before and up 9.6% from the same time in 2023.

The National Association of Realtors heralded a rise in existing home sales in January as the beginning of a comeback for housing. The annual rate of unit sales rose 3.1% from the pace in December with a 2% increase in inventory and the seventh consecutive year-to-year gain in prices. Home sales ended 2023 at the lowest level in about three decades, but mortgage rates have declined since peaking in October. The supply of houses for sale remained below their level in January 2023. The median sale price was the highest ever for January: $379,100.

Friday

No major releases

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 15997, up 221 points or 1.4%

Standard & Poor’s 500 – 5089, up 83 points or 1.7%

Dow Jones Industrial – 39132, up 504 points or 1.3%

10-year U.S. Treasury Note – 4.26%, down 0.04 point

Advisors on This Week’s Show

Adam Baley

Dave Sandstrom

(with Max Hoelzl and Joel Dresang, engineered by Jason Scuglik)

Week in Review (Feb. 12-16, 2024)

Significant Economic Indicators & Reports

Monday

No major announcements

Tuesday

The pace of inflation continued to ease in January, though the decline was slowing. The Bureau of Labor Statistics said its Consumer Price Index rose 3.1% from January 2023. The rate was still above the Federal Reserve’s long-term target of 2%, but it was the lowest rate since March 2021 and down from a 41-year high of 9.1% in June 2022. Shelter costs accounted for two-thirds of the 0.3% increase in the index from December, the biggest monthly gain since September. A 3.3% decline in the price of gasoline helped offset higher housing costs. Excluding volatile food and energy costs, the core CPI rose 3.9% from the year before, the lowest since May 2021.

Wednesday

No major announcements

Thursday

Harsh weather and a falloff from holiday shopping helped lower retail sales in January. The value of goods and services sold dropped 0.8% from December as nine of 13 retailer categories posted lower sales, the Commerce Department reported. In particular, car dealers and home-and-garden stores had fewer customers as winter storms struck various region. Sales at gas stations declined because of lower prices. Smoothing out some of the one-offs, the latest three months showed retail sales up 0.1% from the preceding three-month period. Adjusted for inflation, retail sales declined by 1.1% in January, the third setback in four months.

The Federal Reserve reported that industrial production dipped in January. The Fed cited winter storms as deterrents for both the manufacturing and mining sectors. Output for utilities expanded as a result of the extraordinary winter conditions. Lower demand overall meant industries’ capacity utilization shrank in January, down to 78.5%, the lowest in more than two years and well below the 50-year average of 79.6%. High capacity rates can indicate rising inflation.

The four-week moving average for initial unemployment claims rose for the third week in a row to the highest point since early December. An indication of employers’ reluctance to let go of workers, the rolling average stayed 40% below the long-term average. Total jobless claims dropped 2.4% from the week before to 2.1 million, which was up 10.6% from the same time in 2023.

Friday

Inflation on the wholesale level rose 0.3% in January, reversing a slight decline in December. Prices for goods sagged, especially for food and energy items, partly offsetting gains in service costs. The Bureau of Labor Statistics said the Producer Price Index increased 0.9% from the year before, down from a peak of 11.7% in March 2022. The core PPI, which excludes volatile prices for food, energy and trade services, rose 0.6% from December, the most in a year. The core was up 2.6% from January 2023.

The Commerce Department showed monthly weakening in housing in January, as the annual rate of building permits and housing starts trended lower, but remained at or above pre-pandemic levels. Indicators were stronger for single-family houses, which made up 75% of starts and 69% of permits. Single-family permits, which indicate plans for future construction, were 36% higher than the year before and the highest level in nearly two years. The annual rate of houses under construction hovered near record levels dating back to 1970.

The University of Michigan reported that its consumer sentiment index rose slightly in February, strengthening an upward trend built on reassurance from slowing inflation. The survey-based indicator was up about 30% from November, though still 6% below its long-term average, dating back to 1978. Economists see consumer confidence as a precursor to consumer spending, which accounts for about two-thirds of the U.S. gross domestic product.

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 15776, down 215 points or 1.3%

Standard & Poor’s 500 – 5006, down 21 points or 0.4%

Dow Jones Industrial – 38628, down 43 points or 0.1%

10-year U.S. Treasury Note – 4.30%, up 0.11 point

Advisors on This Week’s Show

Kyle Tetting

Steve Giles

Tom Pappenfus

(with Max Hoelzl and Joel Dresang)

Week in Review (Feb. 5-9, 2024)

Significant Economic Indicators & Reports

Monday

The largest segment of the U.S. economy showed continued expansion in January with the Institute for Supply Management’s service index reaching its highest level since September. Based on surveys with supply managers, the index signaled growth for the 13th month in a row. Among the highlights were faster growth in new orders, employment and supplier deliveries. The trade group said supply managers reported steady business and were optimistic because of potential interest rate cuts from the Federal Reserve. Executives also expressed caution about inflation and geopolitical conflicts.

Tuesday

No major releases

Wednesday

The U.S. trade deficit narrowed in 2023 from a record high in 2022, as the value of imports declined. The Bureau of Economic Analysis reported that the 2023 trade gap was $773.4 billion, down 18% from the year before. Exports grew 1.2% in the year while imports fell 3.6%. Trade deficits detract from economic output, as measured by the gross domestic product. For the year, Mexico ranked first in imports to the U.S., displacing China for the first time in 20 years.

The Federal Reserve reported a slower increase in consumer credit card debt outstanding in December. So-called revolving credit debt rose at a 1% annual rate in December, the 31st gain in 32 months - and the slightest advance in that period. For the fourth quarter, credit card debt rose at a 6.8% annual rate, down from 10.1% in the third quarter. Economists look at credit card debt as a sign of consumer confidence. Consumer spending accounts for about two-thirds of U.S. economic activity.

Thursday

The four-week moving average for initial unemployment claims rose for the second week in a row, although it still reflected a historically tight hiring market. Data from the Labor Department showed the latest four-week average was 42% below the all-time average, dating back to 1967. As an early measure of layoff trends, new jobless claims have suggested employers’ reluctance to let workers. Total claims rose 6% from the week before to 2.2 million, which was 14% higher than the year before.

Friday

No major releases

MARKET CLOSINGS FOR THE WEEK

Nasdaq – 15991, up 362 points or 2.3%

Standard & Poor’s 500 – 5027, up 68 points or 1.4%

Dow Jones Industrial – 38671, up 17 points or 0.0%

10-year U.S. Treasury Note – 4.19%, up 0.15 point