A Shift Back To Retail Earnings

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In his Daily Market Notes report to investors, Louis Navellier wrote:

Debt Ceiling Discussions Planned

Lots of Fed-speak, and debt ceiling discussions this morning.

Stocks were higher pre-market on news of further debt ceiling discussions planned. Then interviews with a couple of Fed governors where comments were made about even though inflation trends are encouraging we are far from the 2% target, that another increase may be necessary to keep it going, and cuts this year are very unlikely. Stocks promptly slid into the red.

In the last 30 days, the Dow is down 2.2%, the S&P down 0.8%, the NASDAQ up 1%, the QQQ up 1.8%, and the Russell 2000 down 3%. Interest rates are stable with the 10-year wrapped around 3.5% and the 2-year at 4%.

None of the Fed interviews expressed concerns about the regional banking situation and the KRE is up 2% today. There’s a modest risk-on sentiment bounce today with banks, semiconductors, and metals higher after noticeably trailing recently.

AI Oasis

The oasis of strength is anything AI related, which includes the mega techs, which has acted to drive overall market strength when one considers that roughly half of the S&P names are actually lower YTD.

Telling Retail Earnings

We shift back to retail earnings this week because of their January fiscal years, with Walmart (NYSE:WMT), Target (NYSE:TGT), and Home Depot (NYSE:HD) 1Q23 results and tomorrow we get overall April retail sales data.

This will be telling in both the pricing power the retailers are able to push through and the willingness of consumers to keep dipping into savings and running up their credit cards, albeit the Fed reported today that credit card growth slowed significantly in the first quarter after soaring in 4Q22. Recall that retail sales growth dropped sharply in March to +2.9% from February’s +5.4%.

Consumer-Driven China

With unemployment a remarkably low 3.4%, the consumer remains a source of strength. Concerns are rising on the China reopening rebound as the country shifts from a low labor cost exporter to more of a higher wage internal consumer-driven economy.

The markets look likely to stay broadly in a narrow trading range until the resolution of the debt ceiling becomes clear.

Coffee Beans: Like Mother, Like Daughter

A 50-year-old mother and her 25-year-old daughter graduated together last week with straight A’s from a graduate program at a Texas university — the fifth time they’ve completed college programs together. Source: UPI. See the full story here.