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US economic data, Ben Bernanke to speak

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US economic data, Ben Bernanke to speak

This week is jam packed with important economic data out of the United States including the most recent retail sales, housing, and inflation data. During the second half of the week Federal Reserve Chairman Ben Bernanke will give his semiannual testimony if front of congress. While Wall Street’s analysts have speculated on what the Chairman may say, it remains almost certain the conference will provide the markets needed guidance when it comes to his quantitative easing strategy. Much of the turbulence over the last few weeks has been largely a result of speculation surrounding his future actions. Will he or will he not pull the plug on his historically loose monetary policy? That is the question everyone will be trying to answer this Wednesday and Thursday.

On Monday the Commerce Department released the June retail sales data. The report stated sales rose 0.4% in June from May, this increase comes after a slightly stronger 0.5% increase during the previous month. Within the report, both auto and furniture sales performed exceptionally better than the rest of the core categories. Auto sales rose 1.8% as a result of improving credit quality and demand seen for trucks in particular. I feel the strength seen within the pickup truck category is a bullish sign for the housing recovery in general as construction and industrial companies realize they must refresh their current portfolio of vehicles to keep up with the recovery. Moreover, furniture sales rose an astounding 2.4% as new homeowners and homebuyers now need to furnish their newly purchased properties.

On Tuesday morning, National Association of Home Builders reported the highest level of homebuilder confidence since the housing highs seen all the way back in 2006. One economist from the association stated “Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten”. Rising demand coupled with tightening supply is priming the U.S. housing market for a shortage in the following months. I would expect to see those companies with exposure to these sectors including Ford, General Motors, Lowe’s, and Home Depot perform better than the broader markets over the following few days.

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