Stewart Greenlee, Center Bank
Executive Summary: Markets and interest rates continue to be volatile (albeit within a fairly tight range) signally that participants are looking for evidence of direction in the economy. Consumer spending is up while consumer confidence is down. Hawks are calling for increased rates yet inflation numbers are innocuous. The economy continues its slow course in the right direction.
Quote of the week: “If you look at the jobless claims, it is still pretty much indicating that the jobs market expansion is continuing, and that is key," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York --MSN Money September 25, 2014
Quote of the week: “If you look at the jobless claims, it is still pretty much indicating that the jobs market expansion is continuing, and that is key," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York --MSN Money September 25, 2014
| Interest Rates: | 9/30/14 | Last Month | Last Year |
|---|---|---|---|
| Prime | 3.25 | 3.25 | 3.25 |
| 5 year treas. | 1.75 | 1.63 | 1.39 |
| 5 year swap | 1.93 | 1.78 | 1.57 |
| 30 year mtg. | 4.2 | 4.1 | 4.32 |
National:
Sales of newly built homes climbed 18.0% MoM to a seasonally adjusted rate of 504k in August beating the consensus estimate of a 4.4% MoM increase. July’s originally reported decline of 2.4% was revised upwards to a gain of 1.9% MoM, while June was revised slightly downward. August’s reading signals the largest monthly increase since 1992 and the highest rate of new home sales since May 2008. New home sales now stand 33% higher year-over-year in August, but are slightly skewed due to the fact new home sales slumped around the same time last year. At August’s sales pace it would take 4.8 months to clear existing inventory of new homes, which is down from 5.6 months in July.-- STIFEL-DISPATCH THURSDAY, SEPTEMBER 25, 2014
U.S. consumer confidence fell in September to its lowest level since May on concerns over the job market and economic growth, according to a private sector report released on Tuesday. The Conference Board, an industry group, said its index of consumer attitudes fell to 86.0 from a upwardly revised 93.4 the month before. Economists had expected a reading of 92.5, according to a Reuters poll. August's reading was originally reported as 92.4. The dip in September came after four straight months of improvement. "A less positive assessment of the current job market, most likely due to the recent softening in growth, was the sole reason for the decline in consumers' assessment of present-day conditions," Lynn Franco, director of economic indicators at The Conference Board, said in a statement. "All told, consumers expect economic growth to ease in the months ahead."-- Reuters September 30, 2014
Chicago Federal Reserve President Evans was quoted as saying that he favored keeping the fed funds rate near zero until the start of 2016, helping to bring yields down as well. Personal spending increased 0.5% MoM in August, one-tenth higher than the median projection. Personal income rose 0.3% MoM in August, in line with expectations. PCE inflation was flat on a MoM basis bringing YoY headline inflation to 1.5% or one tenth lower than last month. Revisions to prior months along with the marginally better than expected data suggests stronger consumption. Durable goods spending rose 1.8% MoM, nondurable goods spending slipped 0.3% MoM, and spending on services rose 0.5% MoM in August. The better than expected consumer spending reports were aided by a low inflation environment, as energy prices have fallen 2.7%. The low inflation readings allow the Federal Reserve leeway to be patient while contemplating next steps for monetary policy.-- STIFEL-DISPATCH TUESDAY, SEPTEMBER 30, 2014
U.S. Bancorp Chief Executive Officer Richard Davis expressed an unreservedly bullish view of the American economy on Tuesday, comparing current conditions to the period just before the long expansion of the 1990’s. Davis attributed his optimism largely to the Federal Reserve Board’s growing commitment to raising interest rates. “It’s getting sooner. It’s going to happen. And so that’s going to be a catalyst. I think it will be next year things take off.”—American Banker September 23, 2014
U.S. single-family home prices rose in July on a year-over-year basis but fell short of expectations, a closely watched survey said on Tuesday. The S&P/Case Shiller composite index of 20 metropolitan areas gained 6.7 percent in July year over year, shy of expectations for a 7.5 percent rise. Non-seasonally adjusted prices rose 0.6 percent in the 20 cities on a monthly basis, disappointing expectations for a 1.1 percent rise. "The broad-based deceleration in home prices continued in the most recent data," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement. "While the year-over-year figures are trending downward, home prices are still rising month-to-month although at a slower rate than what we are used to seeing over the past couple of years." A broader measure of national housing market activity that S&P/Case-Shiller is now releasing on a monthly basis rose at a slower pace year over year, coming in at 5.6 percent
Local:
BB&T Corp. Monday said it agreed to buy the Bank of Kentucky for $363 million in cash and stock. The deal would give Winston-Salem, North Carolina-based BB&T its entrance to the Cincinnati market, pending shareholder and regulatory approval. BB&T is the nation's 17th largest bank holding company with assets of $184.7 billion, according to Federal Deposit Insurance Corp. data. BB&T CEO Kelly King said Greater Cincinnati is an attractive growing market with a diverse $100 billion economy that is contiguous with his company's footprint. He said the bank will pursue large, medium and small commercial customers here." Cincinnati's got all that – it is very, very attractive to us," King told The Enquirer in an interview. He added none of Bank of Kentucky's 346 jobs will be cut as a result of the acquisition. BB&T's deep pockets transforms Bank of Kentucky from a bank operation that could make a maximum loan of about $20 million to one that can easily lend a large business $200 million to $300 million.—Cincinnati Enquirer September 8, 2014
Sales of newly built homes climbed 18.0% MoM to a seasonally adjusted rate of 504k in August beating the consensus estimate of a 4.4% MoM increase. July’s originally reported decline of 2.4% was revised upwards to a gain of 1.9% MoM, while June was revised slightly downward. August’s reading signals the largest monthly increase since 1992 and the highest rate of new home sales since May 2008. New home sales now stand 33% higher year-over-year in August, but are slightly skewed due to the fact new home sales slumped around the same time last year. At August’s sales pace it would take 4.8 months to clear existing inventory of new homes, which is down from 5.6 months in July.-- STIFEL-DISPATCH THURSDAY, SEPTEMBER 25, 2014
U.S. consumer confidence fell in September to its lowest level since May on concerns over the job market and economic growth, according to a private sector report released on Tuesday. The Conference Board, an industry group, said its index of consumer attitudes fell to 86.0 from a upwardly revised 93.4 the month before. Economists had expected a reading of 92.5, according to a Reuters poll. August's reading was originally reported as 92.4. The dip in September came after four straight months of improvement. "A less positive assessment of the current job market, most likely due to the recent softening in growth, was the sole reason for the decline in consumers' assessment of present-day conditions," Lynn Franco, director of economic indicators at The Conference Board, said in a statement. "All told, consumers expect economic growth to ease in the months ahead."-- Reuters September 30, 2014
Chicago Federal Reserve President Evans was quoted as saying that he favored keeping the fed funds rate near zero until the start of 2016, helping to bring yields down as well. Personal spending increased 0.5% MoM in August, one-tenth higher than the median projection. Personal income rose 0.3% MoM in August, in line with expectations. PCE inflation was flat on a MoM basis bringing YoY headline inflation to 1.5% or one tenth lower than last month. Revisions to prior months along with the marginally better than expected data suggests stronger consumption. Durable goods spending rose 1.8% MoM, nondurable goods spending slipped 0.3% MoM, and spending on services rose 0.5% MoM in August. The better than expected consumer spending reports were aided by a low inflation environment, as energy prices have fallen 2.7%. The low inflation readings allow the Federal Reserve leeway to be patient while contemplating next steps for monetary policy.-- STIFEL-DISPATCH TUESDAY, SEPTEMBER 30, 2014
U.S. Bancorp Chief Executive Officer Richard Davis expressed an unreservedly bullish view of the American economy on Tuesday, comparing current conditions to the period just before the long expansion of the 1990’s. Davis attributed his optimism largely to the Federal Reserve Board’s growing commitment to raising interest rates. “It’s getting sooner. It’s going to happen. And so that’s going to be a catalyst. I think it will be next year things take off.”—American Banker September 23, 2014
U.S. single-family home prices rose in July on a year-over-year basis but fell short of expectations, a closely watched survey said on Tuesday. The S&P/Case Shiller composite index of 20 metropolitan areas gained 6.7 percent in July year over year, shy of expectations for a 7.5 percent rise. Non-seasonally adjusted prices rose 0.6 percent in the 20 cities on a monthly basis, disappointing expectations for a 1.1 percent rise. "The broad-based deceleration in home prices continued in the most recent data," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement. "While the year-over-year figures are trending downward, home prices are still rising month-to-month although at a slower rate than what we are used to seeing over the past couple of years." A broader measure of national housing market activity that S&P/Case-Shiller is now releasing on a monthly basis rose at a slower pace year over year, coming in at 5.6 percent
Local:
BB&T Corp. Monday said it agreed to buy the Bank of Kentucky for $363 million in cash and stock. The deal would give Winston-Salem, North Carolina-based BB&T its entrance to the Cincinnati market, pending shareholder and regulatory approval. BB&T is the nation's 17th largest bank holding company with assets of $184.7 billion, according to Federal Deposit Insurance Corp. data. BB&T CEO Kelly King said Greater Cincinnati is an attractive growing market with a diverse $100 billion economy that is contiguous with his company's footprint. He said the bank will pursue large, medium and small commercial customers here." Cincinnati's got all that – it is very, very attractive to us," King told The Enquirer in an interview. He added none of Bank of Kentucky's 346 jobs will be cut as a result of the acquisition. BB&T's deep pockets transforms Bank of Kentucky from a bank operation that could make a maximum loan of about $20 million to one that can easily lend a large business $200 million to $300 million.—Cincinnati Enquirer September 8, 2014
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