U.S. economy slowed to 1.5% growth rate in Q2; June core inflation at 3.3%

[00:00:00] Speaker 1: Rick Santelli is standing by. Rick, take it away. Yes, let's check out what's going on with regard to jobless claims. 197,000, that's once again under 200,000, which was expected. And last month's 187 becomes 188 as we continue to hover in numbers that really were the late 60s. 197, though, of course, does comp. We've had some numbers in that area. 197 would take us to the last week in April when it was 190. These are unbelievably contained numbers. And once again, I'm not sure how much info it gives us. Probably a lot of fraud taken out of these programs over the last year. Continuing claims under 1.8 million, 1,782,000. Once again, these numbers continue to be well behaved. We've been now below 1.8 million since the middle of June. Let's go to personal income and spending for June. Up two-tenths on income, a little light. We're expecting up three-tenths. Up two-tenths is actually the lightest. Well, not long. It was unchanged in April. And remember, we're coming off up seven-tenths on income. And even if you consider, you know, the wage issues and inflation, up seven-tenths was the strongest going back five years. July of 21, spending up three-tenths, one-tenth lighter than expected. Up three-tenths also equates to up four-tenths, which was April, to give you a parameter. Last month gets upgraded to up nine-tenths, which makes it the strongest number still since January of 23. Real spending accounting for inflation comes in spot-on, up four-tenths. Last month becomes four-tenths from three-tenths. Month-over-month, PCE, down a tenth, as expected. Last month moved up to half a percent. So, six-tenths difference to the downside. Minus one-tenth would be the lightest level going back to basically COVID era, April of 2020, when it was minus four-tenths. If we look at year-over-year PCE, that is coming in at 3.7, largely as expected. That would be the lightest level since March of this year. Now, let's get into what I consider the most important numbers. Core PCE, month-over-month, up one-tenth. We're expecting up two-tenths. That would be the lightest level going back. It would equal March of 25 to find a smaller number. You're in May of 24, so basically over two years. And the most important number, the one I look at anyway, Core PCE, year-over-year, coming in exactly as expected at 3.3. Don't see a revision to last month's 3.4. 3.3 would basically equal April to find a lighter number. You're in March at 3.25. Now, there is an asterisk here, and everybody's going to be bringing it up. You know, June, numbers are already considered old. What's going on with the Mideast? The MOU, of course, being violated around July 7. Just to put a face on that, crude oil reached its lowest level before the MOU was violated, and that was, what, about $68, $68.50 in September future. So we're about $15 higher, which is no small amount, but it certainly isn't over $100. And if we look at what's going on with regard to the first look at GDP for the second quarter, this is always important. We're looking for a number around 2% comes in light. 1.5%, that would be the lightest quarter since the last quarter of 25. We're up half 1%. On the consumption side, 2.3 expected. Hold on to your hats. 3.2, that is a big consumption number. 3.2, that would be the best since the third quarter of 25. On the pricing index, this is a big one, 6.2%. 6.2%. We're expecting a number around 4%. I have to go way back to find a number bigger. We're going back to the second quarter of 2022 when it was 9.3, of course, and that is not adjusted. When you look at the core pricing index, and this is a quarter over quarter number, it comes in at 3.4, a little bit light, 3.5 expected, and the rear view mirror, 4.4. So 3.4 would be the lightest going back to the last quarter of 25 when it was 2.7. So if I had to summarize these numbers, that price index at 6.2 sticks out a bit. Jobless claims well behaved. How did the market synthesize all that? We were right around 4.66, down two basis points in a 10-year. It's now at 4.67, a key technical pivot. It was the high yield close for the cycle on May 19th. It took us a while last week to get above that, and here we hover. Curve steepening, that was the big, big, big deal yesterday. We've gone from 24 basis points to 42 basis points on the Tuesdays in one month. So many could say, 30-year bond, we're all looking at it. How many people talk about the 20-year bond? They're oddities. It's the 10-year to look at, and it is relatively self-contained. The short end moving lower says, worse made the right call. Back to you.