Consumer Confidence

Consumer confidence continues to climb higher.  The Conference Boards’ Consumer Confidence Index for August reached its highest level, 133.4, since October 2000 (135.8).  The reading was higher than consensus of 126.5, and July’s upwardly revised 127.9 (from 127.4).

• Expectations increased to 107.6 from 102.4
• The Present Situations Index rose to 172.2 from 166.1. 

On the wage front, those expecting their short-term income prospects to improve rose to 25.5% from 20.4%, while those expecting a decrease declined to 7.0% from 9.4%.  The strong numbers point to an extremely confident consumer who is willing to spend money if the price is right.

International Trade

The international trade deficit for July was $72.2 billion, up $4.3 billion (6.3%) from June.  Exports were $140 billion ($2.5 billion less than June), while imports were $212.2 billion ($1.8 billion more than June).  

Wholesale inventories increased 0.7% to $637.0 billion in July from June.  Year over year inventories rose by 5.2%.  Retail inventories rose 0.4% in July from June to $637.7 billion and were up 2.3% year over year.  Rising inventories mean the manufactures are confident they will be able to sell the goods they produce. 

S&P Case-Shiller Home Price Index

Home prices are still rising, but at a slower pace.  In June, prices rose 6.2% year-over-year, down from 6.4% in May.  Elevated input prices, such as lumber, land and labor are squeezing builders of entry-level homes.  Affordability is important for entry level buyers as they will be priced out of the market if prices get to high.  Potential sellers are holding back as they are concerned they might not be able to find an affordable home to move into.  For now, we seem to be at a stalemate.  Wage growth at the lower end of the labor force would be a welcome occurrence, as would an easing of input costs.     

DSW

DSW Designer Shoe Warehouse (DSW) is being innovative in attracting consumers into their shoe store.  The company had blowout earnings and followed up with strong revenue guidance.  DSW has been working on presenting its customers with engaging experiences.   Their strategy is working as U.S. retail comparable store sales rose by 9.6% for the three months ended August 4, compared to 0.6% for the same period a year ago.  DSW is trading up 20%. 

According to CEO, Roger Rawlins, “DSW has been transforming itself by creating engaging experiences that stir emotion and inspiration.” The company recently opened a DSW store on the Las Vegas Strip.  The store is ½ the size of a typical store and features a video tunnel, an arcade game that offers an opportunity to win a pair of sneakers and a “Shoevator”.  The company’s “Shoevator” is a display of shoes that has three elevators and operates like a vending machine.  Customers order shoes from the wall via a tablet or DSW app and the shoes are sent to the customer via the “Shoevator”.   The company’s “video tunnel” is designed to make people feel like they are flying over a city, walking in a desert or swimming under water, while in fact they are riding on an escalator. 

Equity indices are all hovering the flat line as the market digests yesterday’s gains. Decliners outpace advancers 1728/1181 on the NYSE and 1535/1306 on the