Last Friday, the latest consumer credit results for December were released showing an overall increase of $14.7 billion against the consensus estimate of $15 billion. While non-revolving credit, which consist mostly of student and auto loan debt, came in at $8.98 billion, the pace of growth slowed considerably. Overall, the fourth quarter 5.4% increase was the slowest pace since Q4-2013.

It’s backwards looking, but points to sentiment shifts for this year. The $5.8 billion increases in credit card debt were the largest since April, underscoring what we heard from credit card companies. The idea that consumers are spending again is critical for 2015 as its clear corporations will be more focused on share price and avoiding the long arm of President Obama.

It doesn’t say gangbuster spending is ahead, but we could see consumers move up the food chain.

Despite recent upgrades, Conn’s as well as Rent-A-Center have seen their shares under huge pressure, and while deep-discount dollar stores are holding up, its clear the consumer has moved to the next rung of discount reflected in impressive results from Target, Kohl’s and Costco.

Strong Dollar...Too Strong?

President Obama’s pledge to double American exports by the end of 2015 is going to come up short despite surges in oil and autos.

Obama's 100% Pledge
Export	2014 Billion USD	ChangeSince 2009
Fossil Fuels	$123.6	+211%
Automobiles	$46.2	+145%
Civilian Planes and Parts	$82.3	+50%
Computer Chips	$25.8	+19%
Scrap Iron & Steel	$4.7	-12%
Toilet Paper	$1.1	-29%
All Products	$762.1	+59%

Some are blaming the strong dollar which was lower a few years ago, but losing the race to the bottom in part to a more resolved US economy, but also because of our historic economic reputation.

Now that the dollar is even stronger, our trade balance is even more out of whack. In December, our trade deficit surged to $46.6 billion, and for 2014, ended at $524 billion, up $76.8 billion or +17% year-to-year.

The dollar has been mentioned by virtually all companies reporting this earnings season and for good reason as four industries get more sales outside of America than domestically, and four other industries are at 30% or more.

 

I'm a fan of a strong dollar, but also, wish we had policies that would mitigate harm for multinational companies, like making it easier to bring money and factories back home.

Today’s Session

Mixed news this morning, but mostly good to hopefully good. The hopeful part comes from Greece where it feels like the saber rattling will subside and a deal will be struck.

The 10-year yield is back to 2.0%, which I think is important for a variety of reasons.

Earnings are pretty good with Starwood Hotels & Resorts leading the way with a bottom line beat and business spinoff. Wyndham Worldwide beat on the bottom line and increased its dividend to $0.42 per share from $0.35 per share.

Coke (KO) is also leading the charge as it actually beat consensus on the top and bottom lines on better-than-expected case volume and released positive comments on the 2015 "turnaround."

CVS earnings were hurt by a lack of cigarettes, slower traffic, and a smaller basket size.

Below are some of the major companies that reported yesterday afternoon and this morning.

Date	Company	EPS	Cons.	Revenue ($M)	EPS Guidance	EPS Consensus
10-Feb	KO	0.44	0.42	$10,872	-	FY15 2.01
10-Feb	CVS	1.21	1.21	$37,055	FY15 5.05-5.19	FY15 5.15
10-Feb	GWR	1.12	1.18	$416	-	FY15 4.81
10-Feb	TAP	0.55	0.69	$974	-	FY15 4.19
10-Feb	MWW	0.07	0.06	$186	Q1 0.05-0.09	Q1 0.07
10-Feb	SAVE	0.80	0.78	$475	-	FY15 5.01
10-Feb	HOT	0.97	0.76	$1,493	-	FY15 3.13
10-Feb	WYN	0.90	0.84	$1,231	FY15 4.75-4.90	FY15 4.87

I like the action in pre-market. The market is ranged-bound and will not stay this way much longer. There will be a breakout or a big pullback...either will be a buy signal, but let’s keep watching.

Comments

"CVS earnings were hurt by a lack of cigarettes, slower traffic, and a smaller basket size." - Gee, what a shocker.... I HATE that CVS stopped selling cigs... yes, i smoke, know its bad, but now i just go to cvs for scripts and run around to different stores for cigs.... so much for my $75+ weekly spending at cvs on stuff i really didn't need, now i save a little more and spend the rest at whatever store i'm in.... dianne on 2/10/2015 10:07:09 AM

So very interesting cigarettes are bad marijuana is good maybe CVS can add a new product. I don't smoke at all never have but the choice is part of our freedom. I am totally at a loss to explain the direction society is taking. Charlene Voss on 2/10/2015 12:29:12 PM

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