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Infighting Within The Eurozone

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In his podcast addressing the markets today, Louis Navellier offered the following commentary.

Durable Durables

Durable goods have risen for three consecutive months and are indicative of improving business confidence and a resurging manufacturing sector. The Commerce Department on Tuesday announced that durable goods orders surged 1.7% in May to $288.2 billion. 

This surge follows a 1.2% increase in durable goods orders in April.  The strength in May durable goods was a big surprise since economists were expecting a decline of -0.9%.

The details of the May durable goods report were very encouraging.  Specifically, excluding transportation, new orders increased 0.6% and excluding defense, new order rose an impressive 3%.  Automotive orders surged 2.2% in May. 

Interestingly, defense orders plunged 35% in May, but a 33% surge in passenger planes offset the big drop in defense orders.  Core business orders rose 0.7% in May and have now risen 2% in the past 12 months.

The Conference Board on Tuesday announced that its Consumer Confidence Index for June surged to 109.7, up from 102.5 in May.  The present situation component rose to 155.3 in June, up from 148.9 in May, while the expectations component rose to 79.3 in June, up from 71.5 in May. 

This consumer confidence report is simply stunning and indicative that a robust consumer recovery is underway.  In the wake of both surging durable goods orders and consumer confidence, I am now expecting a very healthy June retail sales report.

Housing Recovery

The Commerce Department on Tuesday also reported that new home sales in May surged 12.2% to an annual pace of 763,000.  Even more impressive is that new home sales are now 20% higher than a year ago.  Economists were expecting that new home sales would rise only 0.5%, so this was a massive surprise. 

Median home prices in May were 416,300, down 7.6% from $450,700 in May 2022.  So between lower home prices and consumers getting used to current mortgage rates, the housing market appears to be in the midst of a robust recovery.

Eurozone Infighting

The infighting within the eurozone is increasingly focused on the European Central Bank (ECB).  Specifically, two Italian deputy prime ministers, Matteo Salvini and Antonio Tajani, both criticized ECB President Christine Lagarde after she signaled another key interest rates hike at its upcoming meeting in July. 

Specifically, Salvini and Tajani called ECB policy “nonsense and dangerous.”  Tajani added that “with rates that are too high, you risk a recession.”  Under Italian Prime Minister, Giorgia Meloni, Italy has been very vocal against French President Macron and now appears to be launching a full frontal assault on the ECB.

Wagner Group Rebelion

Vladimir Putin in a televised Kremlin ceremony on Tuesday told the 2,500 troops assemble that “You in fact prevented a civil war” and added, “In a difficult situation you acted clearly and coherently.” 

The Russian Ministry of Defense on Tuesday said that the Wagner Group was preparing to hand over its heavy weapons, which is the first step that the Ministry of Defense is planning to assimilate the Wagner Group. 

Vladimir Putin has said that Wagner Group members were welcome to sign a contract with the Russian military, go home or follow the Wagner Group’s leader, Yevgeny Prigozhin, to exile in Belarus.  The Russian Federal Security Service said that it closed its criminal case against the Wagner Group’s mutineers.

Ukraine is viewed as a winner near-term due to the internal chaos in Russia.  However, NATO allies are not seeking a peace deal and instead are seeking to help shore up Ukraine’s defense, since their offensive was met with heavy Russian resistance.  Like all wars, both sides are losing, so how both Russian and Ukraine regroup in the upcoming months will be interesting.

Coffee Beans: Dollywood

More than 1,100 people donned Dolly Parton costumes in an Irish town to attempt a world record and raise money for Kerry Hospice and Comfort for Chemo Kerry. Eugene Naughton, who has served as Dolly Parton’s president of Dollywood since 2019, was among those in attendance. Source: UPI. See the full story here.

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Louis Navellier
Editor
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