The anxiety in the air continues to weigh on the market, but the fundamental underpinnings for the rally remain intact beginning with consumer confidence.

The third best read since 2000, consumer confidence also had its eighth best beat versus consensus since 1999.  Interesting, according to Bespoke Research, those other sessions saw stronger underlying reaction in the market. 

This points to anxiety over the Federal Reserve and trade talks, although investors are clear on what may happen with both this week.

Consumer Confidence Conference Board	July	June
Headline	135.7	124.3
Present Condition	170.9	164.3
Expectations	112.2	97.6
Jobs Plentiful	46.2	44.0
Jobs Hard to Find	12.8	15.8

Value Investors Find Opportunities

Proctor & Gamble (PG) is the stock of the day after posting net sales increase of 4%, but factoring out the strong dollar, results would have been much higher.

Volume	Price	Mix	Foreign Exchange	Total net sales
3%	3%	2%	-4%	4%

 

The company’s organic growth was awesome.

2Q19 Organic Growth	Volume	Sales
Beauty	1%	8%
Grooming	-1%	4%
Health Care	3%	10%
Fabric	5%	10%
Baby	1%	5%

The move in PG shares is leading Consumer Staples higher and giving value hunters a sigh of relief.

Home Sweet Home

Lots of stocks have reversed from the initial reaction to earnings, including DR Horton (DHI), which reported fewer unit sales during the quarter sending shares down.

It may be counterintuitive, but lower prices might be the reason the stock is higher bringing the rest of housing along for the ride.

Sales

• Units 15,588 +6.4% (estimate 15,663)
• Value $4.7 billion
• Operating Margin 12 from 14

Orders Closed

• Units 15,971 +13.2%
• Value $4.7 billion
• Average price $296,450 from $302,217

We have DHI in the model portfolio, but we have seen too many false signals, so we aren’t breaking out the pom-poms.  Lower mortgages and higher wages should matter.  

Pending Home Sales

The news from DR Horton dovetails with Pending Home Sales, which climbed 2.8% against the estimate of 0.5%.  This reverses a 17-month trends of year over year declines.

• South (1.4 percent)
• Midwest (1.7 percent)
• West (2.5 percent)
• Northeast (0.9 percent

 

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