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Retail Sales, Empire State Look Healthy; Plus Home Depot Q1


Tuesday, May 15, 2018

Futures are trading down ahead of the opening bell this morning, both prior to and immediately following both April Retail Sales numbers and the May Empire State report, both of which came in better than anticipated. Actually, Retail Sales on the headline was in-line with estimates at +0.3%, but revisions to March were ratcheted up from 0.6% to 0.8%. Empire State reached 20.1, higher than the 15 estimated and the 15.8 last month.

As it turns out, 3s were wild for today’s Retail Sales: headline was 0.3%, but so was ex-autos, as well as ex-autos & gas. It’s these kind of numbers, should they prove consistent over time, that will help overall GDP reach that (psychologically) coveted 3% rate in Q2; right now, early indications are that Q2 GDP will be at least 3% — up 0.7% or more from the seasonally slow Q1.

Even better, the Control read was at 0.4%, and the last take was moved up from 0.4% to 0.5%. Non-store retail (internet sales) grew notably at 0.6% last month. These are indeed the sorts of numbers those interested in seeing domestic growth evidence can be proud of. They are also continuing to allow that the Fed will crank up interest rates another quarter-point, to 1.75-2.00% — the first time we will have seen 2% rates since well before the Great Recession a decade ago.

We’re getting more earnings reports, mostly from the retailers these days, but results are relatively sporadic compared the the deluge we’d been experiencing over the past few weeks. Tomorrow morning we will hear from Macy’s M, but for today we’ve got Home Depot HD results to parse through.

Home Depot, ahead of its report, is a Zacks Rank #4 (Sell) with a Style Score (Value – Momentum – Growth) of A. The company posted a mixed Q1 picture, beating estimates on the bottom line while missing on the top. Earnings of $2.08 per share surpassed the $2.06 expected, and up 24.6% year over year. Revenues of $24.95 billion slipped beneath the $25.20 billion analysts had been looking for, on overall comps up 4%.

The company expects business to pick up modestly for the the rest of the year, and guidance is up from Q1 results accordingly — in-line with what analysts had already been expecting. However, shares are trading down in today’s pre-market on the mixed headline results. For more on HD’s earnings, click here.

Mark Vickery
Senior Editor

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