KPIG Radio / The Profit Motive July 14

Stocks struggled early and enter the final hour mixed on disappointing news. Import prices fell a much larger than expected 1.3% in June and recorded their largest monthly drop since December of 2008. A second consecutive decline, prices fell across the board and show mounting deflationary trends.

The MBA Mortgage Activity Index fell 2.9% last week as both purchase and refi activity slipped despite a still record low 4.7% 30-year contract rate. At 161.3 the Purchase Index is at a 13.5-year low and continues to show that without a tax credit interest in real estate purchasing has fallen off a cliff. Something that will start showing up in the existing home sales and price data very soon.

Retail Sales were the big disappointment today as they fell .5% and recorded a second monthly decline that was greater than twice expectations. With the use of credit still declining along with wages and employment, no real surprise there. What remains to be seen relative to consumer spending patterns is how pronounced the paradigm shift in the attitude towards debt is as the credit bust is clearly precipitating change as seen in both the spending and savings data series.

The FOMC Meeting Minutes are out showing the Fed revising GDP and inflation lower and unemployment higher for 2010 and 2011, 2012 was a mixed bag.

Bloomberg released a new survey showing nearly 80% of Americans have doubts about the financial reform bill, 47% think it benefits the finical services industry, just 38% figure they’ll benefit. While 3-1, or 75% think more regulation is needed. This certainly seems to suggest that people are starting to wake up and pay attention. A critical first step in the process of demanding accountability from our Congress Critters who seem bent on pursuing an unsustainable path paved with lobbyist largesse and leading to the destruction of the middle class and ultimately the republic.