Fifteen years of hard work, countless hours of practice, parents shuffling their young stars from field to field, from city to city, sisters complaining that they are bored, summers full of sweat, dirt, sunflower seeds, and Gatorade all coming to an end in the next week. Believe it or not, it’s that time of year already. Eight teams made the trek from their college campus to Omaha, Nebraska last Saturday for the College World Series. Only one will leave a champion. For many of the young men competing, it will mark the end of their baseball days. These young men will be turning their attention to their chosen profession, softball, beer, and wings. For the lucky ones, baseball will be their profession as they go on to star in the Big Leagues. The rest of us are treated to two weeks of some of the most exciting baseball being played this summer.
Not even Omaha could escape the rain this year. Even though this week marked the first day of summer, the soggy weather continued. Many people across the country are worried about their homes and being caught up in the devastating flooding that has plagued many parts of the U.S..
While many are worried about the roof over their head, Congress and the President continue their fight over the debt ceiling. If an agreement is not reached by August 2nd, the government may not meet their obligations to holders of U.S. Treasury debt. The Republicans, led by House Majority Leader John Boehner, insist that deep spending cuts be made. The President and leading Democrats are asking for tax hikes in addition to the spending cuts. Boehner maintains that tax hikes are unacceptable. Apparently, Boehner and the President didn't come to an agreement while on the links the previous week-end.
While the debt ceiling has received a lot of attention this week, there was a lot of news coming from the markets as well. Home sales were released on Tuesday. Sales of existing homes and condos fell 3.8%. Despite slumping prices and low mortgage rates, buyers are still sidelined by tight credit conditions. In addition, inventory keeps increasing as foreclosures remain at historically high levels.
On Wednesday, the Fed kept its key interest rate at a range of 0% - 0.25%. The FOMC said the moderate pace of growth & the labor market was unexpected. Fed Chairmen, Ben Bernanke, said that they didn't have a 'precise read' on why the U.S. economy is slowing down. But don't you worry -- he feels that by 2013, things should get better. I'm sure anyone that is unemployed was happy to hear that. The Fed revised its growth forecast. They now forecast the GDP down to 2.8% from 3.2%. They see unemployment between 8.6% - 8.9%. Currently, unemployment was 9.1% in May. They feel that higher gas prices and food prices as well as disruption in the manufacturing sector from the earthquake in Japan earlier this year have led to the slow-down.
In addition to keeping the Prime Rate at a near-zero rate, the Federal Reserve Bank of New York bought $4.58 billion in Treasury debt on Monday. As a result, the yields on 10-year notes rose 1 basis point to 2.96%.
The Fed's monetary policy seemed right on target as Jobless Claims rose unexpectedly to 429,000 last week. Many expected the number to come in around 415,000.
About the only good news on the home front was that Durable Goods orders rose 1.9% in May. Fueling the increase were stronger orders for airplanes. Durable Goods orders are up 9.7% for the year. Without the increase in transportation, orders were up 0.6% in May. Orders for non-defense capital equipment goods excluding aircraft were up 1.6% in May. This is considered the best gauge of capital spending by businesses. Shipments of core capital goods rose 1% in May.
The markets were focused heavily on the situation in Greece. The Prime Minister, George Papandreou won a key no-confidence vote on Tuesday. Greece will have more austerity measures in order to receive another round of European aid.
In equities this week, analysts for Citibank cut the earning estimates for Goldman Sachs and Morgan Stanley. They feel that the nation's largest investment banks will be hit hard by weaker commodity prices and slower equity trading. Citibank didn't stop there; they also cut the estimates for J.P. Morgan Chase & Co. and Bank of America Corp. However, both companies are likely to meet or beat expectations largely due to credit results.
Also in the news, PNC purchased all of Royal Bank of Canada's U.S. retail Operations. PNC investors did not see this as a good thing, as their stock price dropped 2% after the news. Caterpillar and Boeing both announced an increase in sales.
Looking ahead to next week we have the following reports:
· Monday - Personal Incomes, Consumer Spending, and Core PCE Price Index
· Tuesday - Case-Shiller Home Prices and Consumer Confidence
· Wednesday - Pending Home Sales
· Thursday - Jobless Claims and Chicago PMI
· Friday - Consumer Sentiment, Construction Spending, and Motor Vehicle Sales
Remember to watch Florida and South Carolina in the finals of the NCAA College Baseball World Series. Games will be Monday, Tuesday, and Wednesday (if a third game is necessary.)