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Home Building Material Sales Are Likely to Sag Further<\/h2>\n\n\n\n
This Thursday\u2019s NAHB Housing Market Index report and Friday\u2019s release of construction permits and housing starts data will provide insight into the real estate market after cautious comments from Home Depot (HD) that were echoed by James Hardie (JHX), a national provider of exterior building materials. Home Depot\u2019s earnings per share (EPS) and revenue exceeded analyst consensus expectations. Overall sales climbed 0.6% y\/y, with results supported by the company\u2019s acquisition of building supplier SRS Distribution. On a comparable sales basis, which excludes the impact of new store openings, closures and other one-time events, revenue fell 3.3%. Chief Financial Officer Richard McPhail told CNBC that customers continue to defer home buying and renovations because of high finance costs. In the recent quarter, however, shoppers became more cautious with overall spending due to increased uncertainty about the economy. The company now expects full-year comparable sales to drop as much as 4% relative to 2023. It previously provided guidance for a 1% drop. Home Depot shares initially fell 4% following the earnings release. James Hardie\u2019s EPS beat the consensus forecast for its fiscal first quarter ended June 30, but revenue underperformed expectations despite net sales climbing 5% y\/y. The increase resulted from higher average net prices and a small increase in unit volume sales. James Hardie CEO Aaron Erter said the current quarter and the final quarter of this year are likely to be challenging. With the market for exterior housing products declining in the low-to-mid single digits during the company\u2019s current fiscal year. James Hardie, however, maintained its previous guidance.<\/p>\n\n\n\n
PPI Energizes Market Bulls<\/h2>\n\n\n\n
Bulls are charging aggressively and picking up stocks and bonds as they progress forward. All major US equity indices are gaining on the session led by the Nasdaq Composite, S&P 500, Russell 2000 and Dow Jones Industrial benchmarks which are travelling north by 1.7%, 1%, 0.7% and 0.5%. Sectoral participation is broad with nine out of eleven segments higher on the session. Piloting the upside are technology, consumer discretionary and communication services, which are gaining 2.3%, 1.4% and 0.9%. Energy and consumer staples are missing the party; they\u2019re losing 1.2% and 0.2%. Treasurys are catching a bid with the 2- and 10-year maturities seeing their yields lower by 6 and 5 bps as the instruments change hands at 3.96% and 3.86%. The dollar is being hampered by wagers pointing to a friendlier Fed and the greenback is depreciating relative to all of its major counterparts, including the euro, pound sterling, franc, yen, yuan and Aussie and Canadian dollars. The US currency benchmark is off by 22 bps. In commodity land, price action is softer with crude oil, silver, and copper down 1.2%, 1% and 0.5% but lumber and gold near the flatline. WTI crude is journeying south following a five-day winning streak. It\u2019s trading at $78.80 per barrel mainly because an expected Middle Eastern escalation hasn\u2019t materialized and to a lesser degree from OPEC+ lowering its demand outlook. <\/p>\n\n\n\n
Don\u2019t Forget CPI Tomorrow<\/h2>\n\n\n\n
Today\u2019s equity market celebration may lead some participants to forget about lurking risks around the corner, but ForecastEx players are standing off on tomorrow\u2019s largely awaited Consumer Price Index (CPI) for July. And while some of our other contracts are ripe for arbitrage, we are looking at a stalemate for tomorrow\u2019s CPI, ladies and gentlemen. Anchored by the Wall Street economist consensus at 2.9% y\/y, the Yes crowd is being met forcefully by the No crew, with the highest bids for yes and no at 49% on each side. It\u2019s a toss-up folks, and we\u2019ll all be watching impatiently on the edge of our seats at 8:29 am Eastern Time for the CPI results. While it\u2019s a close call, I am favoring the Yes crowd here, with my in-house model pointing to 3% y\/y. Good luck! <\/p>\n\n\n\n