Durable goods orders fell 1.7% in July, well below the -0.5% expected by the market and the 0.7% (revised down from 0.8%) registered last June. The main cause of this decline is due to the drop in demand (extremely volatile) for civil aircraft. In a year-on-year rate, durable goods orders increased 9.2% compared to 2.9% in June. Excluding the transport sector, durable goods orders increased 0.2% compared to 0.1% in June. In interannual rate, these orders grew 80,% (8.7% in June). However, the most outstanding thing can be found in capital goods orders, excluding defense and transport (an excellent indicator of business spending plans), which increased more than expected in July, growing by 1.4% from 0, 6% (revised down from 0.9%) in June. In a year-on-year rate, capital orders without defense and transportation increased 8.5% from 8.2% in June.
Saturday ended, with some ingredients for controversy, the Jackson Hole symposium. From the outset, the meeting took place in the midst of the controversy between Trump and Powell over the monetary policy of the Federal Reserve and against the backdrop of the trade war between China and the United States. The debut of the new president of the FED (appointed directly by Trump) has provided a defense of the gradual rise in interest rates and monetary normalization. The Federal Reserve, barring a setback, will continue to raise rates (in October and December). Powell himself has already suggested this, to avoid overheating the economy.
However, markets are speculating on the possible influence of President Trump, who is not at all “enthusiastic” about this policy because of the effect it may have on growth. At heart Powell has defended the same in Jackson Hole because he does not see “a high risk of overheating” of the American economy. He has argued in his speech that US inflation recently rose to around 2%, but there are no “clear signs of acceleration” above that level. Although the September rate hike is “assured,” the fourth hike scheduled for this year, the one expected for the December FOMC meeting, is currently the subject of controversy.
The trade agreement with Mexico and this “good news” from Jackson Hole, pushed the markets up yesterday. Both the S&P 500 index and the NASDAQ technology closed yesterday at record highs, while the Dow Jones recovered 26,000 points almost seven months after leaving them. At the close of the session yesterday, the Dow Jones closed at 26,049.64 points (+ 1.0%), while the S&P 500 stayed at the border of 2,900, specifically at 2,896.7, (+0, 77%) and the NASDAQ exceeded 8,000 points for the first time in its history, specifically at 8,017.9 (+ 0.91%).
In the same appointment in Jackson Hole, the intervention of the president of the Bundesbank, Jens Weidmann, who has openly disagreed with Draghi and has once again asked the ECB to put an end to its “exceptionally expansive” monetary policy due to the secondary effects on the economy. However, Weidmann’s “star” is fading as his chances of succeeding Draghi are reduced as Merkel focuses on the goal of putting a German in the post of President of the European Commission.
Business confidence in Germany, as measured by the IFO index, rose in August for the first time (if we discount the extremely slight rise of 0.1 points in May) this year and also did so strongly and exceeding market expectations. The business climate index increased to 103.8 points in August, from 101.7 in July. And well above the expectations that economists managed (101.9 points). There is even the circumstance, which has not happened since last November, that the two sub-indices that make up the indicator rise together. The “current situation” 1.1 points to 106.4 and the “business expectations” which does so by a robust 3.0 points to 101.2 points, the highest level since January of this year. The fear of the trade war with the US seems to have been left behind. At least, for the moment, so the main German businessmen believe according to the indicator of business confidence sentiment of the IFO Institute. The businessmen consider that the threats of the Donald Trump government about the increase in tariffs on European vehicle exports will remain at that, threats. While “… companies may be putting off some investments amid still high uncertainty, this month’s survey points to strong domestic activity,” added Clemens Fuest, president of IFO, a grassroots economic institute in Frankfurt, yesterday. builds the index.
On the other hand, the Chicago Fed National Activity Index (CFNAI) decreased to +0.13 in July (which was expected) from +0.48 in June. The quarterly moving average of the index (CFNAI-MA3) fell to +0.05 in July from +0.20 in June