Financial and Economic Brief - July 18, 2017by © Liberty Publishing, Inc.
NY Manufacturing Slows
According to The Federal Reserve Bank of New York, manufacturing in New York State grew in July but at a much slower pace than June and remains at a “mostly healthy level”. New orders and shipments fell as its Empire State manufacturing index slipped to 9.8 from 19.8 in June. The measure of new orders dropped to 13.3 from 18.1, while a gauge of shipments dropped to 10.5 from 22.3. Readings above zero signal expansion. The index reached a two-year high in June. While the index measures sentiment among New York firms, it is closely followed because it provides an early read on nationwide factory output.
This Week’s Financial News
This week is an “unusually” light week of economic news but does include the kickoff of the second-quarter earnings season. Also this week, CNBC is reporting that S&P Capital IQ expects record profits for S&P 500 companies, up 6.2% from a year ago. Companies reporting earnings this week include Bank of America, Netflix, and Microsoft. Furthermore, the Labor Department will announce the latest reading of its import price index this week. Import prices aren’t usually that interesting, but low inflation is getting more scrutiny from the Fed who could be convinced to forgo a third interest rate hike this year if the inadequate price increases continue.
Wall Street Opens Flat
Today U.S. stocks opened flat and held steady at record levels. Analysts estimate Q2 earnings for the S&P 500 companies rose 8.1% from Q2 2016. According to Thomson Reuters data, Q1 earnings posted their best performance since 2011. Earnings will be closely watched to see if high valuations are justified in the face of lukewarm inflation and mixed economic data. “The U.S. market isn't cheap right now,” said Phil Guarco, global investment specialist at J.P. Morgan Private Bank. “Earnings are going to take an important role. We're in a situation where the corporate profits and the profits they are going to deliver in the future will be of keen interest.”