{"id":210471,"date":"2024-08-16T13:05:32","date_gmt":"2024-08-16T17:05:32","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=210471"},"modified":"2024-08-19T04:17:52","modified_gmt":"2024-08-19T08:17:52","slug":"construction-activity-tanks-but-recovery-awaits","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/construction-activity-tanks-but-recovery-awaits\/","title":{"rendered":"Construction Activity Tanks but Recovery Awaits: Aug. 16, 2024"},"content":{"rendered":"\n

Stocks are taking a break from this week\u2019s terrific comeback in the aftermath of the Japanese carry trade carnage with this morning\u2019s conflicting economic data generating investor hesitation. On the one hand, consumer sentiment progressed for the first month in five, but on the other, construction activity plunged to depths last seen near the peak of COVID-19 in the spring of 2020. The cross currents have traders sitting on their hands as they await next week\u2019s central banking developments with hopes that policymakers will offer clues on the path forward. We are certainly looking forward to a long list of Fed speakers, ECB commentary and Chief Powell\u2019s presentation in Jackson Hole, Wyoming.<\/p>\n\n\n\n

Consumers Are Going All-In on Harris, Trump<\/strong><\/h2>\n\n\n\n

Today\u2019s University of Michigan consumer sentiment survey release showed a modest improvement for August, with the gauge climbing from 66.4 to 67.8 month over month (m\/m) and reaching the tallest level since June. While the figure exceeded the Wall Street consensus of 66.9, the IBKR Forecast Trader nailed the threshold at exactly 67.8.\u00a0The report, however, showed bifurcated trends across the current conditions and consumer expectations sub-indices, with the former shifting south from 62.7 to 60.9 while the latter flew north from 68.8 to 72.1. Inflation expectations remained unchanged though, with both 1- and 5-year projections steady at 2.9% and 3%. Households are incredibly polarized when providing election opinions and their economic outlooks. Democrats believe the economy will fall apart if Harris doesn\u2019t win, while Republicans believe if Trump fails to regain the helm, their financial fortunes will suffer.<\/p>\n\n\n\n

\"Consumer<\/figure>\n\n\n\n

Real Estate Suffers from More Than Summer Doldrums<\/strong><\/h2>\n\n\n\n

Last month\u2019s real estate activity was dismal, but lower rates this month and loftier lumber costs point to a recovery around the corner. Housing starts and building permits plunged to 1.238 million and 1.396 million seasonally adjusted annualized units, missing the median estimates of 1.33 million and 1.43 million. July\u2019s figures were worse than June\u2019s 1.329 million and 1.454 million.<\/p>\n\n\n\n

\"Housing<\/figure>\n\n\n\n

Starts were mixed across single- and multi-family properties while permits, which are filed prior to shovels hitting the ground, reflected widespread weakness. For starts, the pace of construction sank 6.8% m\/m, hampered by the single-family segment dropping 14.1%. But the multifamily sector saw an increase of 11.7% and served to offset a heavy chunk of the sluggishness. Similarly, a 42.6% m\/m increase in the Northeast blunted declines of 13.6%, 12% and 1.7% in the South, West and Midwest. Regarding permit applications, single- and multi-family declined 0.1% and 14.6% m\/m and were also helped strongly by the Northeast, which saw a 16.2% bump. But the Midwest, West and South came in weak with declines of 12.6%, 5.3% and 4.2%.<\/p>\n\n\n\n

Brute Computing Clout Isn\u2019t Enough for AI<\/strong><\/h2>\n\n\n\n

Companies that are developing artificial intelligence (AI) are looking for increased energy efficiency in computing systems, which is creating demand for Applied Materials\u2019 products. In other earnings news, H&R Block reported strong quarterly results, causing its shares to rally more than 8% last night. Consider the following quarterly highlights:<\/p>\n\n\n\n