Retail sales data has been streaming in last night and this morning. The overwhelming trend has been lower sales. Wal-Mart (WMT) reported higher same store sales vs. expectations. But it is important to remember that the expectations were already substantially reduced so when viewed as a trend the sales have significantly dropped year over year. The bright spot on Wal-Mart is that their traffic was higher and in our view this means more people are needing to shop at lower prices as inflation costs continue to impact the consumer.
Khols (KSS) was significantly lower from an already lowered expectations. Target (TGT) also was down vs. the already lowered expectations. CEO says that the 4th quarter (holiday shopping season) EPS will not meet last years performance and maintains their lowered earnings guidance. The majority of retailers that have reported so far have been negative. Some bright spots in the mix but the trend is what we look at and that trend has taken a down ward turn. Even some of the stores reporting better than expected are based on previously reduced expectations, but the actual numbers are generally lower year over year.
Capital One Financial (COF) issued warnings about losses and lowering guidance. Says they are seeing higher write offs in the credit card and auto loan sectors.
Bank of England and European Central Bank have left their interest rates unchanged. Says inflation is major factor for not cutting rates in spite of a slowing economy in Europe. This announcement has taken some air out of our market on expectations that Ben Bernanke will be cutting rates substantially as our inflation is also running high.
Futures are down significantly in pre market.. we will have to see how this plays out. Remember that Ben Bernanke will be speaking at 1pm EST and everyone will probably analyze his every word for clues on what they will do at the end of the month.
Seeing many stocks trading trading lower in pre market.
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