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Registered Investment Adviser Caleb Lawrence 

More North Korea saber rattling spooked the major averages overnight sending them into the final hour with small losses despite generally positive data.

Preliminary 2nd quarter productivity advanced .9% while unit labor costs gained .6%, beating expectations. That said the figures remain weak as the year ago productivity gain is just 1.2%, while unit labor costs fell .2% continuing the now long-term trend of wages failing to keep up with productivity. Real, or inflation adjusted hourly compensation for nonfarm businesses rose 1.9% annualized. Manufacturing gained 2.5% on the same basis. Once again okay, but not great wage gains despite a supposedly tight labor market.

Wholesale trade advanced .7% in June to mark a second significant gain. Sales increased .7% led by non-durable goods. The inventory to sales ratio was unchanged at 1.29 months. Given the excessive motor vehicle inventory situation and it’s doubtful inventories will continue to build going forward unless sales pick up materially.

Mortgage activity advanced 3% last week as per the Mortgage Bankers Association led by a 5.3% jump in refi activity, sales apps increased .8%. The 30-year contract rate for a jumbo loan slipped fractionally to 4.07%.

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