Morning Business Report: Don't Let Housing Worry You

Visit the front pages of Wall Street Greek and Market Moving News to see our current coverage of economic reports and financial markets.

Today's Housing Starts report might worry you, but don't let it. While we'll offer more color in a later article, we provide enough reasoning here to limit errand morning selling. The day is a light one on the business news front, with a busy Washington session and a few important earnings reports.

Morning Business Report

ICSC Weekly Same-Store Sales Data

Week Ending

Weekly Change

Yearly Change

May 16

-1.2%

-0.3%

May 9

+0.3%

+0.5%

May 2

+0.3%

+0.5%

April 25

-0.7%

-1.7%

April 18

-0.4%

-0.1%

April 11

+0.8%

-0.4%

April 4

+0.6%

-0.3%

Last week, we authored an article implying a bottom in consumption might be developing, and that this would have to be a natural consequence eventually due to the size, growth and demands of our great economy. The ICSC data took a step back this week, but even in so doing, the -0.3% year-over-year decline is not so significant. I'm sticking to my view that there is a critical point where this solid block of shoppers will sink to, and it will sink no further thereafter. I'll go so far as to say we might see a rise in this week's results (posted next Tuesday), especially as things warm up on the east coast.

April Housing Starts

Yesterday's reporting of the Housing Market Index showed homebuilders are a little more prospective than expected, though still severely depressed. The National Association of Home Builders reading of sentiment showed the index moved to 16, versus economists' consensus for 14.

Today, Housing Starts for April came in well short of expectations, but the data is deceiving. I'll save the majority of the gems of my insight on this subject for a later article. Still, I want you to focus on the difference in multi-family starts versus single family home starts, which rose. I believe I understand why the decrease in multi-family, and I'll share those thoughts later today. For now, don't let this data lead you to panic.

The pace of housing starts sank to an annual pace of 458K in April, short of the consensus view for a pace of 540K, as per Bloomberg's survey of economists. March results were revised up to 525K, from 510K initially reported. Building Permits fell to 494K, down from the revised March figure of 511K.

State Street Investor Confidence Index

State Street's (NYSE: STT) Investor Confidence Index is due out at 10:00 a.m. The index measures actual levels of risk in investment portfolios, and is not a survey of investors' sentiment. The last measure in April showed improvement in the Index to 79.6, from 70.0 the month before. The logic behind this is simple, herd mentality. As the market rises, more and more of the herd follows the pack and takes on risk. We've seen two months of brilliant rise through April. This index will not move the market; it's a lagging indicator.

House Financial Services Committee Examines Corruption

The House committee gets busy today, covering corruption in financial institutions in its morning session and the trouble with the rating agencies in the afternoon. Meanwhile, the Senate is expected to vote today on credit-card reform (a.k.a. the Credit-Card Bill of Rights).

Gary Stern Address

Minneapolis Fed President Gary Stern is scheduled to speak at 1:15. Comments from Fed representatives can sometimes offer clear market driving information, and often offer insight into the mind of the collective Fed. What these individual addresses always offer is a look inside the individual speaker's mind.

EPS Report Highlights

Look for earnings news from Home Depot (NYSE: HD), TJX (NYSE: TJX), Medtronic (NYSE: MDT) and Hewlett-Packard (NYSE: HPQ) among many.


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).