Dollars and Sense: Janet Yellen speaks, and the markets yawn

Bull unbound. The markets just keep rising. A couple of weeks ago we were lamenting July, when losses pretty much erased the year-to-date gains. But since the first of August, the Dow has risen about 800 points, or 5 percent, solidly back in positive territory for the year. Last week, I said the markets were looking for normalcy: No news was good news. That’s still the case. Plenty of world problems remain, but last Sunday, for example, there appeared to be progress in talks between Ukraine and Russia. On Monday the Dow rose more than 150 points and the NASDAQ hit a 14-year-high.

Retail strong. We’re mopping up earnings season with retail reports, and they are generally pretty strong. One of the few major reports of the day came from home improvement retailer Lowe’s, which reported a rise in second-quarter profit and beat Wall Street estimates.

Economic reports. Consumer prices rose just 0.1 percent in July. That was good news for those worried about inflation. The number of Americans filing for first-time jobless claims fell by 14,000 last week to 298,000, better than expected. The National Association of Home Builders/Wells Fargo builder sentiment index rose to its highest level since January. Housing starts surged 15.7 percent in July. On Wednesday, after these reports released, housing-related stocks all jumped, including homebuilders KB Home (up 2.9 percent), DR Horton (also up 2.9 percent) and Pulte Group (up 1.8 percent).

Eyes on Wyoming. A lot of this good news—especially in the housing sector—is tied to lower interest rates. Interest rate concerns prompted everyone in the financial world to keep an eye on Jackson Hole, Wyo., this weekend. Traders and analysts wanted to hear what Fed Chair Janet Yellen had to say at the financial summit there. Conventional wisdom says interest rates should stay where they are until the middle of next year. Yellen’s speech on Friday gave no one reason to doubt that strategy. She presented a lot of “on the one hand/on the other hand” scenarios, but when she was said and done, so to speak, most traders thought she gave no reasons to doubt the conventional wisdom expectations. And the markets barely moved.

The week ahead. It’s actually a pretty big week for economic reports. Durable goods and housing starts come out today. The Conference Board’s Consumer Confidence report comes out tomorrow, and we’ll get a key estimate of second quarter gross domestic product on Thursday. On a scale of 1 to 10, with 10 being the greatest impact on the markets, I would say none of these reports are a 10. But they are all a 7 or 8, and if they point in the same direction, they will likely move the markets in that direction, whether that be positive or negative.