Housing Data Mixed, Deere Misses Q3 Estimates

Friday, August 16, 2019

Ending a volatile week in the markets that will, barring a major reversal in sentiment today, end up a percentage point or two in the negative. That’s still OK overall; what we’d rather not see are more down-legs ahead of next earnings season, which doesn’t even begin to trickle in until mid-September.

July Housing Starts and Building Permits brought us a mixed picture in today’s pre-market: new starts last month dropped to 1.191 million from the downwardly revised 1.241 million in June, and the 1.25 million expected. This is down 4%, whereas expectations had been for -1%, and the lightest read we’ve seen since February. Yet Single Family homes actually rose 1.3% month over month (nearly +2% year over year), which is a nice turnaround from a new housing segment that had been providing negative reads for months.

Building Permits, on the other hand, posted a 7-month high to 1.336 million — well above the upwardly revised 1.232 we saw in June. Permits are, of course, a forward indicator of future housing starts; not every permit will result in a new house or building, but it’s a very good way to gauge appetite in the housing market. So while we saw a 4% drop in new starts, we’re +8% for July in permits, which continues our overall positive narrative. And this from housing, which has been an economic laggard for several quarters.

After the opening bell today, we’ll get new Consumer Sentiment numbers for the month of August. These are expected to remain relatively strong, though the 96.8 expected is down from July’s reported 98.4. That said, if you like economic data, enjoy it while it lasts — next week brings the tumbleweeds in terms of regional and national data.

Deere & Co. (NYSE:DE) missed fiscal Q3 estimates on both top and bottom lines this morning, posting $2.71 per share which missed the Zacks consensus of $2.80, though up from $2.59 reported in the year-ago quarter. Revenues of $8.97 billion in the quarter fell 3.59% from expectations. The stock, which had been down 3.7% year to date, is down another 1% at this hour in the pre-market. For more on DE’s earnings results, click here.

Mark Vickery
Senior Editor

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