July 30, 2013

About the FOMC Meeting

July 30, 2013

About the FOMC Meeting

S&P Case-Shiller Home Price Index (May 2013)

– 20-city, Seasonally Adjusted Month/Month +1.0%. Previous was +1.7%  – 20-city, not Seasonally Adjusted Month/Month 2.4%. Previous was +2.6% – 20-city, NSA Year/Year 12.2%. Previous was +12.3%.

Hopefully, the slowing in the growth of housing prices is another sign of the housing market returning to normal as investors make up a smaller portion of buyers.  The increase in prices is healthy because it decreases the number of people who are underwater and have been enslaved by their home.

What we need in order to achieve GDP growth is for prices to increase at a more modest pace so that folks are not spending such a large part of their income on housing.


ICSC-Goldman Store Sales (week ended 7/27/2013)

– Store Sales Week/Week -1.6%. Previous was +1.4%

– Store Sales Year/Year +2.2%. Previous was +2.1%.

Redbook (week ended 7/27/2013)

– Store Sales Year/Year +2.9%. Previous was +3.3%.

The Consumer Metrics Absolute Demand Index  (a near real-time indicator of online discretionary spending) has been near dead flat from 7/21-7/28.

Consumer Confidence (July 2013)

– Consumer Confidence 80.3. Previous was 81.4.

This is the Conference Board’s Confidence metric.

This report has a mixed set of details. Those surveyed still do not have a positive view about the jobs market but 12.2% thought that jobs were plentiful as contrasted with 11.3% in June.

My view is that these survey metrics of Consumer Confidence as a sign of predisposition to spend in the near future are flawed.  But even flawed data affects the markets.

FOMC meeting starts today. Two points:  the Fed is not going to change rates and the discussion about the rate of increase in Money Supply entirely misses the point.  Essentially 100% of the increase in Money Supply this year is still parked at the Fed as excess reserves doing absolutely nothing.  As that pile grows, more banking regulation comes out (Dodd-Frank, Basel III) discouraging lending and rendering the increase in Money Supply impotent.