Market CommentariesThe Beige Book Does Not Disappoint July 16, 2014The Federal Reserve's Beige Book was released within the past hour, and there were few surprises, and hence, no disappointments of note. Essentially, this summary of business conditions across the country observed that labor market conditions were improving, while only two of the 12 Federal Reserve Districts, Boston and Richmond, reported any slowing in overall economic growth since the last such report was prepared in May.

Essentially, the Fed-prepared report noted that economic activity had continued to expand since the previous release in May. In all, the pace of growth was characterized as moderate in  New York, Chicago, Minneapolis, Dallas, and San Francisco. The remaining Districts acknowledged modest expansion.

Moreover, most Districts expressed optimism about the road ahead. It is little wonder, then, that Federal Reserve Chair Janet Yellen, yesterday, speculated that the central bank might yet raise interest rates before many expect. At present, the consensus is that the Fed will hold off until well into 2015.       

Importantly, consumer spending gained in every District. That is key, as such outlays typically drive about two-thirds of aggregate economic output, or GDP. The increases, meantime, were characterized as modest in most of the dozen Districts.

Also, activity in non-financial services continued to grow in all Districts, with the gains here ranging from modest to moderate, as well. However, reports on real estate varied across the Districts, with many reporting low inventories and increasing home prices, while demand was mixed. Still, Boston, New York, and St. Louis reported that home sales trailed year-earlier levels.

Taken together, this report suggested that the business expansion was on very firm footing domestically, and that thus far we have been immune to the many storms raging across the globe. This comparative sea of calm is yet one more reason the stock market is continuing to perform well, notwithstanding the frothy valuations now in place.