Summer’s busiest economic week is over: Here’s everything we learned

The impact of the past seven days will reverberate over the next several weeks Around the deserted halls of Wall Street and Washington, D.C. as politicians and investors retreat to the Hamptons or Martha’s Vineyard or wherever they are the summer.
Are we in a recession? It’s hard to say, but hopefully by September the knowledge we gained during this treacherous week will be fully absorbed, and our understanding of the US economy will be clearer.

So what are we doing here? Let’s summarize.

  • The Federal Reserve raised interest rates by another 75 basis points. The market expected this move but it was a historically high rise. The Fed’s actions increased the rate that banks charge each other to borrow overnight to a range of 2.25% to 2.50%, the highest level since December 2018.
  • Key inflation measures have shown that prices remain high. The PCE price index rose 6.8% in June – the largest 12-month move since January 1982.
  • Consumer spending was higher, which is usually a sign that the economy is still going strong. But this time around, the increase is likely due to higher prices, not wallets getting thicker. Personal consumption expenditures rose 1.1% for the month, above estimates of 0.9%.
  • The economy contracted for the second consecutive quarter. GDP contracted at an annual rate of 0.9%. This decline represents a major symbolic limit to the more popular – albeit unofficial – definition of a recession as two consecutive quarters of negative economic growth.
  • Americans are becoming more pessimistic about the economy. The Conference Board’s index of consumer confidence fell in July for the third month in a row. About 43% of the 3,000 people who answered the survey said they believed there was a greater than 50% chance that the United States would fall into a recession in the next 12 months, while only 13% said so in April.
  • Home price growth slowed for the second month in a row. Prices in May were still strong, up 19.7% from the same month last year, according to the S&P CoreLogic Case-Shiller National Home Price Index. But the market is slowing down due to high mortgage rates and inflation concerns. In April, it grew by 20.6%.
  • Congress passed a $280 billion package to support the domestic chip industry. The bill would increase production of basic computer chips in the United States to prevent future supply chain problems and increase competition with China.
  • Senators Chuck Schumer and Joe Manchin reached a $700 billion deal on a comprehensive climate, tax and healthcare law. The plan includes $370 billion on energy and climate, deficit reduction by about $300 billion, subsidies for Affordable Care Act premiums, and tax changes.
  • 170 companies announced second-quarter results including Microsoft (MSFT)And the the alphabet (The Google)And the meta pads (FB)And the apple (AAPL)And the Amazon (AMZN). The results were mixedAnd the With many companies warning of inflation and slower growth in the future. However, the markets managed to finish the week and month on the upside.
That’s a lot to digest. Especially in the constant intense heat wave.

Unfortunately, we have another week full of data before we get a break.

Profits continue next week with Starbucks (SBUX)And the Uber (Uber) and Airbnb reports.

We also expect some important economic data to be released: JOLTs (jobs), and the Purchasing Managers’ Index (PMI), a leading indicator of US economic activity, are all on our way.

So refrain from wearing swimwear and SPF for the time being. Or don’t, and bring the beach to your desk. Vacation is a state of mind isn’t it?

Ducati takes the world

My CNN colleagues Jonathan Hawkins recently had the opportunity to sit down with Ducati CEO Claudio Domenicali in Misano, Italy, as Ducati World Week attracted nearly 80,000 enthusiastic fans and owners over the course of three days.

The Volkswagen-owned company announced Friday that it generated record revenue of 542 million euros ($552 million) in the first half of 2022 and boosted operating profit by about 15%.

But the Ducati boss described a difficult mix of working conditions that made it difficult to meet the increased demand for the bikes.

Domenicali said the supply chain problems since the pandemic have been a “complete nightmare.”

“It was a very complicated mix of everything,” he said, noting that the time it takes to move a container from Asia to Europe has doubled, while lockdowns in China have made it difficult to secure necessary parts.

However, he has fallen back on the idea that supply chains should become more local, citing the flaws of reversing decades of globalization.

“When you do business for the whole world, you stay in touch more,” Domenicali said.

Amidst the uncertainty, the company has an advantage. The cheap euro, which fell to parity with the US dollar in July for the first time in two decades, benefits exporters like Ducati, as it makes their goods cheaper for foreign customers.

“It’s a help,” Domenicali said, “not a problem.”

He said that the company, one of the most famous Italian brands, was not affected by the collapse of the government of Prime Minister Mario Draghi. Ducati used to carry out its long-term plans without relying on the government, according to Domenicali.

next one

Monday: ISM Manufacturing PMI (July).

Tuesday: JOLTs (June); Starbucks, Airbnb and Uber earnings report.

Wednesday: ISM Non-Manufacturing PMI (July).

Thursday: Initial weekly jobless claims.

Friday: unemployment rate (June); Berkshire Hathaway earnings reports.

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