KEY DATA: Sales: +0.6%; Excluding Vehicles and Gasoline: +0.5%/ CPI: +0.2%; Excluding Food and Energy: +0.2%/ Real Hourly Earnings: -0.2%

IN A NUTSHELL: “The slow and steady rise in inflation continues and with consumers spending, firms should be able to sustain those price increases.”

WHAT IT MEANS: Another day, another indication that consumers are back out shopping ‘ill they’re tired and inflation is steadily accelerating. Retail sales rose strongly in June and it wasn’t simply because gasoline prices were up. The increases were spread across a variety of categories. The nice weather got people out fixing up their homes, visiting malls, replacing old furniture and playing sports. When they got tired, they shopped online and hit the supermarkets so they could barbecue. Clothing store sales fell, but prices were down. The only weak segment was restaurants, which appear to have hit a major slow spot after years of solid increases. Core retail sales, which exclude the more volatile vehicle and gasoline purchases, rose strongly, pointing to a very solid second quarter consumption number.

On the inflation front, prices continue to rise in a steady manner.   Energy costs were up but electricity prices fell, likely reflecting the lag in cost declines and price reductions. The strong vehicle sales took their toll on used car prices as a flood of trade-ins showed up at dealerships. Food prices fell in the supermarkets but rose at restaurants. Services costs were up sharply, led by medical expenses. Excluding food and energy, consumer prices were up 2.3%, the eighth consecutive month this measure has been above the Fed’s 2% target. The overall index, though, continues to show no signs are acceleration and remains in the 1% range.

Real hourly earnings fell in June, a real disappointment for workers. Wages were flat and with prices rising moderately, worker income purchasing power.

MARKETS AND FED POLICY IMPLICATIONS: A rebounding consumer and rising inflation should provide the Fed with some reason to discuss the possibility that maybe the members might consider a rate hike sometime in the future. Since this Fed sees only evil and when good shows up, it’s viewed as transitory and is dismissed, don’t expect a sudden rush of members saying that the fears expressed at the June FOMC meeting may have been overblown. The members are more concerned that there are other surprises out there that they don’t know about (which is why they are surprises) and so they have to keep their guard up.

Fed Policy Commentary: I am concerned about the Fed’s current approach and here is why. There are two major risks the Fed faces if it sticks with its no/slow rate hike policy. The first is the traditional one, that inflation accelerates past its target. I suspect most Fed members could live with inflation above 2% for an extended period. They can always raise rates quickly and don’t forget, there is no upper bound to interest rates – think Paul Volcker. The doves continue to discuss inflation and its low level.

But there is a second risk: The expansion entered its eighth year and is getting old. Brexit is a prime example of things that can go wrong. The Fed members used Brexit as an excuse to stand pat. But that is not the right way to look at it. If Brexit causes the EU to split apart, which I don’t think will happen, it could send Europe into recession and that could lead to a U.S. recession. What tools would the Fed have to fight that recession? Not the interest rate tool. Instead, we could be back into a world of quantitative easing. Will we need QE4,5,6,7,8,9 or whatever? Will QE work the next time around? This is the risk that the Fed is discounting and the reason I am so outspoken about the need to raise rates every chance possible, not just when the time is perfectly right.

KEY DATA: PPI: +0.5%; Excluding Food and Energy: +0.3%; Energy: +4.1%; Goods: +0.8%; Services: +0.4%/ Claims: flat

IN A NUTSHELL: “The days of falling prices are pretty much over and the labor market is strengthening, which raises the question, is anyone at the Fed paying attention?”

WHAT IT MEANS: A lack of inflation and a softening of job gains worried the Fed at its June meeting. Well, as usual and not surprisingly, conditions have changed. Wholesale prices jumped in June as energy costs surged. But it wasn’t just oil as the increases were spread across just about every category of goods and services. You have to look hard to find any grouping that posted a decline in costs. That contrasts with just a few months ago when the opposite was true. Looking down the road, the inflation pipeline is beginning to fill as unfinished goods costs jumped as well. While the pathway from producer costs to consumer prices is hardly direct, rising wholesale prices are clear signs that the disinflationary pressures created by falling energy prices and the rising dollar have dissipated sharply.

On the labor market front, the June surge in job growth may be no aberration. Jobless claims remained at record lows, when adjusted for the size of the labor force. Firms are not cutting their workforces and that bodes well for the July employment report.

MARKETS AND FED POLICY IMPLICATIONS: Come out, come out wherever you are! That was the phrase used by kids who played “hide and seek”. (Do kids play that anymore?) The members of the Fed, who fear anything that is not normal and hide from it, may want to peak out from under their rocks. Conditions are changing and two of the Fed’s terror’s, a lack of inflation and a soft labor market, are turning around. The labor market seems to be picking up steam and while inflation is not likely to surge, a steady upward drift in the rate should be sustained. And if oil can get to $50/barrel, we are likely to see the top line inflation number reach the Fed’s 2% target. That could happen in the fall. In addition, the path to Brexit looks like it could be long and tortuous as new British prime minister Theresa May indicating she will not trigger Article 50 to leave the EU until the end of the year. That may be wishful thinking, but it points out that the process could be drawn out. If it is, the uncertainty will be extended but there will be more time to address the issues. Is the Fed really going to wait for months while this issue runs its course? If not, then the Fed should start focusing once again on the domestic economy. The FOMC members may not know second quarter growth at the July 26, 27 meeting, but no matter how solid it turns out to be, one quarter of growth would not be enough to force a rate hike. But signs that the economy is rebounding would matter if job growth is sustained in July and August and inflation continues to trend upward. That could put the September meeting in play, though I am not banking on that. As for the markets, with indications the economy is in good shape, we should see equity investors smiling and bond buyers fading. Then again, the political conventions are coming, reminding us that the economy and the markets still have to contend with the political uncertainty.

KEY DATA: ADP Jobs: 172,000; Small: 95,000; Small: 25,000/ Layoffs: 38,536/ Claims: Down 16,000

IN A NUTSHELL: “The only thing that seems to be holding back the labor market is skittishness on the part of large corporate CEOs.”

WHAT IT MEANS: Tomorrow is the “all-important” employment report and after the May debacle, we could really use a good one. That could happen, as the recent labor market data have been quite good. Earlier this week, the Institute for Supply Management reported that nonmanufacturing companies increased their hiring, which echoed their manufacturing report. Also, the Paychex/IHS small business index jumped in June. Today, we got three reports that all pointed to stronger job growth.

The ADP private sector job number came in above expectations. Small and medium sized businesses added workers solidly. The only laggard was the large corporate sector, especially firms that employ 1000 workers or more. Big company CEOs have been the least optimistic for much of this recovery and their failure to actively hire, which stands in stark contrast to small business employers, is what is restraining the economy.

Challenger, Gray and Christmas reported that layoffs in June were down almost 15% from June 2015. The number of job cuts slowed in the past two months as the energy sector stabilized. Remember, the payroll change is the difference between job losses and gains, so the smaller the number of layoffs, the larger the gain. Of course, these are just announcements and there is a lag between notices and actual reductions, if those reductions actually occur.

Finally, unemployment claims plummeted and we are back at record low levels when you adjust for the size of the labor force. That reinforces the view that firms are holding on to their workers tightly.

MARKETS AND FED POLICY IMPLICATIONS: Despite two consecutive modest job growth numbers, the labor market does not seem to be faltering. The apparent willingness of small business owners to bring on new workers is a clear sign that the economy is moving forward solidly. Indeed, second quarter GDP should be pretty good, showing that at least the domestic U.S. economy is in good shape. But will a strong job number and solid GDP growth matter to the Fed? Probably not. The members are like pinballs, bouncing from one temporary crisis to the next. Whether it was China, or the equity markets, or emerging markets, or a GDP or job slowdown or now Brexit, none of which changed the course of anything, the Fed told us that it would act cautiously. With the Brexit issue needing time to run its course, and the Fed indicating in the minutes of its June meeting that it wanted to know more about the potential impacts of Brexit, the likelihood of a Fed move anytime soon has disappeared. Really, if in order to raise rates again, the Fed members need a perfect world of solid U.S. job and economic growth, above-target inflation and no problems anywhere around the world, why don’t they just come out and admit they have no desire to raise rates. The chances of all those things occurring at once are slim. But, Chair Yellen and her merry band of skittish monetary authorities will continue the fiction that every meeting is “a live one”. Please, get your act together and just come out and say that the Fed would rather risk having few bullets when the next downturn occurs than raising rates and risking that the economy falters. That is the choice the members are facing and they routinely vote to keep the chamber empty.

KEY DATA: Payrolls: +38,000; Revisions: -59,000; Private Sector: 25,000; Unemployment Rate: 4.7% (down from 5%); Wages: +0.2%/ ISM (Non-Man.): -2.8 points/ Deficit: +$1.9 billion

IN A NUTSHELL: “Take a deep breath, breathe slowly and don’t panic – yet.”

WHAT IT MEANS: Huh? Has the economy really stopped creating jobs? Looking at the headline employment number, you get the impression that hiring came to a screeching halt in May. The increase was the smallest in 5½ years. The Verizon strike reduced the gain, but even adding those workers back, the number was still disappointing. Worse, the March and April increases were revised downward, which usually is a sign of slowing employment gains. The details weren’t much better. Only health care and government added lots of new workers. Manufacturing shed employees like crazy and the energy-sector continues to crater. There was also a sharp reduction in temp workers. Firms may be looking for permanent employees because of shortages, but normally, the need for temps rises in a strong labor market.

On the unemployment front, the rate fell significantly, to the lowest level since November 2007. However, the labor force also contracted sharply and the participation rate declined. Thus, it is likely the rate might tick up in June. Also, wage gains remained decent, which provides some belief that the labor market is tighter than the jobs number would imply.

Supporting the view that the economy may be slowing, especially job creation, was the Institute for Supply Management’s May Non-Manufacturing survey. Growth in the service sector slowed in May. New orders, including both imports and exports, moderated, activity eased back and backlogs stopped growing. That led to a contraction in employment gains, which is precisely what we saw in the jobs report.

What is likely to be today’s tree falling in the forest report was the release of the April trade numbers. The trade deficit widened, but by less than expected. The April deficit is well below the average for the first quarter and that could mean trade might surprisingly add to rather than subtract from growth this quarter. It was nice to see that both imports and exports were up.

MARKETS AND FED POLICY IMPLICATIONS: Yesterday I mentioned that the May jobs report could surprise either on the upside or the downside, but I didn’t expect this big a surprise. But the data in both the unemployment and payroll portion of the report were so outsized that you have to simply step back and ask: What is going on here? Is this an aberration or a signal that the economy is slowing? The surveys on job gains, except for ADPs, have not pointed to a strong job market. However, I am leaning toward it being an aberration since consumers are still buying homes, motor vehicles and just about everything else. If consumption expands by my expected 3% and trade actually adds to growth, we could wind up with a 2^nd quarter GDP number near 3%. That would argue the May jobs numbers do not represent the true state of the economy. Of course, it would also imply a sharp rise in productivity, which would be very hard to explain. Regardless, a Fed rate hike on June 15^th looks to be off the table. That doesn’t mean a July move is also history. We do get the June payroll numbers before then and while the second quarter GDP number will not come out until after the July 26-27 meeting ends, the FOMC should have a good idea what it will look like. A rebound in employment gains and a solid GDP number would support the Fed to nudging rates up again. But the Fed claims to be data driven, so we need to see those numbers first. As for the markets, while investors may not want the Fed to tighten, they also don’t want to see the economy tank. So this report shouldn’t bring smiles to anyone’s face, as it only adds to the confusion about when the next rate hike will occur and the strength of the economy.

KEY DATA: Orders: +3.4%; Excluding Aircraft: +0.6%; Capital Spending: -0.8%/ Pending Sales: +5.1%/ Claims: -10,000

IN A NUTSHELL: “Another day of data, another day of pretty solid data.”

WHAT IT MEANS: The next Fed meeting is in a little less than three weeks and the economic releases will be even more closely scrutinized the closer we get. Today’s reports generally paint a picture of accelerating growth. Durable goods orders surged in April, as demand for civilian aircraft picked up sharply. Military orders eased back after skyrocketing in March. Even excluding aircraft, demand for big-ticket items was solid, with every sector other than machinery posting gains. That said, businesses remain quite cautious on the investment front. Orders for nondefense, non-aircraft capital goods fell for the third consecutive month and fifth time in six months. Consumer may be spending and their confidence rising, but CEOs are down in the dumps – or they would just rather buy back their stock than investment for the long-term. Whatever. Backlogs continue to build, so we should see an increase in production soon.

As for the housing market, The National Association of Realtors reported that pending home sales were up sharply in April to the highest level in a decade. This is a forward-looking index that is pointing to better home sales in the next few months. Strong increases were posted in the West and South, a more modest rise in the Northeast and a modest drop in Midwest.

After having spiked a few weeks ago, unemployment claims have moved back down to more normal, that is low, levels. Any question that the labor market was softening should be put to bed, at least until June 3^rd, when the May jobs report is released.

MARKETS AND FED POLICY IMPLICATIONS: To hike or not to hike, that is the question the FOMC members face. If they are really data driven, the data don’t demand they make a move in June, at least not yet. The numbers are coming in solidly and the Atlanta Fed’s GDP Now forecast is pushing 3%. So for now, it is fair to say that the data support a hike. But the labor market is key and until we get the May employment gains, unemployment rate and wage increases, “support” is the best we can say. The wild card is the May retail sales report, which is released the morning of the first day of the meeting, June 14. It was up big-time in April and any rise would be considered good. A decent one would point to a consumer who is back spending heartily. For now, let’s just assume the Fed could move in June but July may be a better bet, but only by a little. I suspect this uncertainty will temper the actions of investors for the next couple of weeks, especially since none of the economists I know have a good feel for the May jobs report.

KEY DATA: ISM (Manufacturing): -1 point; Orders: -2.5 points; Hiring: +1.1 points/ Construction: +0.3%; Private: +1.1%

IN A NUTSHELL: “The manufacturing sector is expanding, but just barely.”

WHAT IT MEANS: If you were hoping for a rebound in the manufacturing sector, well don’t hold your breath. While it looks like the sector is still expanding, it is not doing so at a rapid pace. The Institute for Supply Management reported that activity slowed a touch in April as order growth decelerated. It should be noted that demand remains quite solid. It’s just that the pace of gain was just not as rapid last month. There was a pick up in export orders, a possible indication that the problems in the rest of the world are easing. Or, it may be due to the declining dollar. Regardless, it was nice to see that export demand was accelerating. Production grew slower and order books expanded at a modest pace. In other words, the sector is moving forward but we have the tortoise, not the hare in this race. One sign that Friday’s employment report may be okay was the rise in the employment index. While it didn’t show that payrolls were increasing, it did hint that the large decline in manufacturing employment posted in March may not be repeated in the April data. Also, inventories shrank for the tenth consecutive month. It is not clear if the inventory rationalization process we have been seeing is over, but that is a fairly long time for inventories to contract. I suspect we are nearing the end of that process, which would help with second quarter growth.

Construction activity was up in March led by a solid rise in private sector residential and nonresidential building. On the other hand, the government did its best to slow the economy down as construction spending was off sharply during the month.

MARKETS AND FED POLICY IMPLICATIONS: March was not a great month for the economy and April didn’t start off that well either. Still, this week we get a number of key labor market numbers. The biggie, of course, is Friday’s employment report.  But I am very interested in Wednesday’s productivity and labor costs numbers, which could show that worker expenses accelerated sharply in the first quarter. Chair Yellen is a big believer in labor costs as an indicator of future inflation, so watch these data closely. If we see rising labor costs in the Friday’s hourly earnings numbers as well, that could be a warning to the Fed Chair that the slack in the labor market that she has talked about may be disappearing. Tomorrow’s vehicle sales numbers should tell us if the March decline was just an aberration or a sign of soft times ahead. I expect a sharp rebound in vehicle purchases and that could set us up for a very good second quarter consumption number. So today’s manufacturing report, though not a good one, shouldn’t worry the markets a whole lot.

KEY DATA: GDP: +0.5%; Consumption: +1.9%; Income: +2.9%; Core Consumer Inflation: +2.1%/ Claims: +9,000

IN A NUTSHELL: “The economy eked out a gain in the first quarter but with incomes rising solidly, we should see better growth in the quarters to come.”

WHAT IT MEANS: Phew! We dodged the negative bullet. Whoopee! Okay, a growth rate of less than one percent is not something to be happy about and no one is. But let’s discuss the details first to determine if this is a turning point that leads to better growth or a report that warns a recession is coming. Consider consumer spending, which was okay, at best. The big problem was durable goods, which was basically flat. A “weaker” than normal March vehicle sales number was the reason. On the other hand, services demand, which I see as a true indicator of consumer attitudes, remains strong. Looking forward, incomes, especially wages and salaries, are growing at a pace that should fund solid, if not strong consumption. That could happen even if the savings rate continues to filter upward. On the investment side, it was largely the energy complex cutbacks that kept investment down. Residential construction was a major positive for the economy, though that may add less going forward. One other factor points to a better growth rate ahead: The inventory adjustment process, which has restrained growth for the three quarters, looks to be largely over. The inventory build was more “normal”, even if it did subtract one-third percentage point from growth. The trade deficit widened, not surprisingly, as the world economic problems and the strong dollar led to a decline in exports. Imports were largely flat. Finally, sequestration is doing its job and federal spending for defense items was down. Looking at inflation, the top line consumer inflation rate rose minimally. Excluding food and energy, it increased at a 2.1% pace in the first quarter, just above the Fed’s target, and by 1.7% over the year. If oil remains in the $45 per barrel range, the huge year-over-year declines we have seen in energy costs will disappear by fall. That would move the top line number close to the Fed’s target as well.

Jobless claims rose last week. Since the previous week’s level was the lowest on record, when adjusted for the labor force, that was hardly an issue. The labor market is tightening further and that bodes well for income growth, which we saw in the first quarter was already strong.  

 MARKETS AND FED POLICY IMPLICATIONS: The economy essentially stalled in the first quarter, but that doesn’t mean it is faltering. If oil prices stabilize near where they are currently, or even rise modestly, the massive cutbacks in the energy sector would dissipate. Households have the income to spend and they are likely to do that. With the dollar retracing some its rise, the negative effects on exports should ease as well. For all these reasons, growth is likely to accelerate going forward. Of course, Janet Yellen wants to see it before she will believe it, and yesterday’s FOMC statement made it clear that weak growth is a major factor in the Fed’s thinking. But for me, the issue is inflation. Right now, it is so low, at least on the headline number that the Fed has all the freedom it needs to keep rates at current levels. But wage gains are accelerating and with productivity gains largely nonexistent (and probably negative in the first quarter), businesses may need to recoup their rising labor costs by raising prices. It would not take much for the inflation rate to go above the Fed’s target of 2% if the energy price restraint disappears and business increase prices even modestly faster than they have. This report is why the Fed signaled a June rate hike is likely off the table. But it also contains enough information to suggest that a rate hike this summer remains a possibility.

KEY DATA: Starts: -8.8%; 1-Family: -9.2%; Permits: -7.7%; 1-Family: -1.2%

IN A NUTSHELL: “Home construction always bounces around like crazy, so with February being up, it was not a huge (and I mean HUGE) surprise that March was down.”

WHAT IT MEANS: The housing market has been one of the more positive parts of the economy and we have needed it to be solid. Could that strength be disappearing? I am not so sure. Housing starts fell sharply in March with both single-family and multi-family activity faltering. The weakness was almost universal as declines in both segments of the market were posted in the South, Midwest and West. In the Northeast, single-family construction also faltered, but there was a ridiculous 300% increase in multi-family starts. That rise came after an equally absurd 79% drop in February. I think you now understand why I pull my hair out when I see people using one month’s housing start numbers to come to any conclusion about the state of the industry. Looking forward, permit requests also fell. That is somewhat more worrisome as the permit demand has lagged starts for the last two months. That could signal continued softness in the market, especially since housing completions and the number of home under construction are still rising. Yesterday, the National Association of Home Builders housing market index was released and it was flat in April, another sign that the housing market is sluggish.  

 MARKETS AND FED POLICY IMPLICATIONS: The economy didn’t do particularly well in March as many indicators were weak. So, the decline in housing starts in March is being taken as an indication, possibly incorrectly, that the economy softened further. During the first quarter of this year, housing starts ran at about the same pace as they did in the fourth quarter of 2015. If there was any softening, it was insignificant. Starts during the first three months of this year were up by 14.5% over the same period in 2015, led by a 22% rise in single-family construction. Still, the sector does not seem to be poised to lead the way going forward, given the softening in permit demand. My view is that housing will likely continue to expand, but more slowly than it did during the 2012-2015 period, when it averaged double-digit increases. What does that mean for the Fed and investors. Without a robust housing market, Fed rate hike agnostics will be able to continue saying that nothing needs to be done. Meanwhile, investors will likely read the headline number and conclude that housing and the economy are in the dumps and smile. Remember, when it comes to the equity markets and the economy, it is not about the economy, it is about Fed rate hikes and the weaker the economy, the lower the probability that the FOMC will do very much this year.

KEY DATA: Payrolls: +215,000; Private: +195,000; Unemployment Rate: 5% (up from 4.9%); wages: +0.3%/ ISM Manufacturing Index: +2.3 points; Orders: +6.8 points/ U. Michigan Sentiment: -0.7 point

IN A NUTSHELL: “Economy to presidential candidates: It’s not about jobs, it’s about wages.”

WHAT IT MEANS: All the presidential candidates want to create more jobs. Well, this economy is already doing a good job of that. The economy added a lot of new positions in March and that happened despite continued weakness in energy-related sectors and manufacturing. Together those areas reduced payrolls by over 40,000 positions and that doesn’t count the jobs lost in transportation due to reduced shipments. Outside those areas, though, the gains were really good and maybe most importantly, were spread across all pay levels. Construction, health care, retail, wholesale, finance, professional services and leisure and hospitality all hired like crazy.

While the unemployment rate ticked up, that too was actually a positive sign because we are seeing a return of the discouraged worker. The labor force participation rate has slowly increased and the labor force is surging. People are much more confident they can get a job in this economy. While firms paid up a little more in March, wage gains are just not accelerating rapidly.

The Institute for Supply Management’s Manufacturing Index jumped in March led by a sharp rise in new orders. Production was up and order books filled once again. Nevertheless, hiring did drop, though if demand remains strong, that may not be sustained.

The University of Michigan’s Consumer Sentiment Index edged down in March as a late month improvement couldn’t overcome an early month decline. But it was nice that the trend is back up and that holds out hope that confidence will rise in April.

 MARKETS AND FED POLICY IMPLICATIONS: This report shows we have a pretty good economy, if you believe that firms only hire when conditions warrant it. The job gains may not be as strong as they were for much of last year, but that is due to sectoral, not general economic weakness. And if we believe that the manufacturing sector has stabilized, the huge 29,000 March drop in industrial jobs will likely disappear in the April report. The real issue, though, is lagging wages. That remains the missing link that Chair Yellen needs to see before she goes all-in on raising rates. It would be nice if we could create new positions so fast that firms had no choice but to increase wages sharply in order to attract workers. But in this global economy, we are doing as well as possible and probably a little better. So the question for our presidential candidates, if they ever decide to act presidential, is not how do you create more jobs, but how do you get wages to rise faster? It would be nice if they presented ideas to accomplish that, but I am not sure if some of them have any. That’s because either the labor market forces businesses to do it on their own or the government intervenes in the market. There are proposals to raise the minimum wage, but there are few ideas about how to get businesses to act.

KEY DATA: Sales: +2.0%; Prices (Year-over-Year): +2.6%

IN A NUTSHELL: “The housing market is improving, though in fits and starts and not uniformly across the nation.”

WHAT IT MEANS: New home sales rose in February but the details of the data, once again, were as strange as they come. The entire increase came from a nearly 40% rise in demand in the West. Meanwhile all the other three regions posted declines. Looking at each area, the one pattern is that the numbers are bouncing around like crazy. While one might conclude from the huge rise in sales in the West that the housing market is on fire in that part of the country, that would be totally wrong. The increase came after a one-third drop in January. The February sales pace, while solid, was still below the December rate. Meanwhile, the nearly 24% drop in the Northeast came after a nearly 20% decline in January. Sales have been up and down, sometimes wildly in the South and Midwest as well, so let’s not jump to any conclusions from a single month’s number. Prices are rising, but modestly. The increases have tailed off as supply has improved. That stands in contrast to the lack of inventory in the existing home market.

MARKETS AND FED POLICY IMPLICATIONS: Existing home sales were off in February, but at a level that was not that bad. Meanwhile, new home sales rose, though the level is well below what anyone thinks is decent, let alone strong. Part of the problem facing the housing market is the demographic shift. Boomers are looking to shed their McMansions but Millenials are tending toward renting. Also, households are just starting to build enough equity to actually sell their homes and many homeowners have refinanced into low rate mortgages that has made it financially manageable to own their current homes. Consequently, the prospects for a surge in home sales are not very bright. That doesn’t mean sales will not rise. With mortgage rates low and household finances getting better, it is expected that home sales will rise solidly this year. It is just that we shouldn’t expect any major boom, except in scattered markets. Investors would most likely not have reacted very much to this report, but with the terror attack in Brussels and the ebbs and flows in oil, who knows what will drive the markets in the short term? As for the Fed, four regional bank presidents have voiced their opinion that rates should be going up and their comments contrast with the largely dovish FOMC statement issued last week. There is a lot of smoke coming out of the Fed and that makes one wonder about the extent of the fire.