Much is being made about last week’s earnings releases in the retail sector with the general narrative of mixed results.  Extrapolating this consensus assessment, folks are coming up with the idea that it means we have a mixed economy.  The thing is that retail earnings have largely come in better-than-expected and in many cases, they have blown away the Street.

What does this mean for the market and what does this say about the economy?

Yesterday, I wrote about the assumption being made by the Federal Reserve and several businesses, and that Philadelphia area manufacturers were banking on a big spike in the second half of economic activity.  So, let’s look at additional proxies.

The Wal-Mart Proxy

The world’s largest retailer is often considered the best proxy for the state of the U.S. economy. For the most part, it does give a pretty good glimpse of the economy.  The company reported results yesterday   for the last three months; U.S. sales climbed $2.3 billion, or 3.1%, up $76 billion.  The good news is that traffic increased for the seventh consecutive month, and same-stores-sales improved for eight straight months. Wal-Mart (WMT) even had a small amount of pricing power.

Additional Retail

After the close on Wednesday, Ross Stores (ROST) crushed it while Gap Stores (GPS) eked out a beat.  I am looking for more gyrations, but I think a base is being put into place for a move higher.

Then there’s gold, which is a hedge against a faulty economy. It’s on the rise as well.  Maybe it’s just a hedge, or maybe, it’s smart money bracing for something. 

The Oil Proxy

Crude oil continues what has been a stealth rally that now has West Texas Intermediate (WTI) in the shadow of $50.00 a barrel. A number if sustainable would lend credence of better demand, reflecting a stronger economy.  Right now, it looks as though we could see that big upside test early next week.

Once again, I am not sure how justified a 3.6% Gross Domestic Product (GDP) current Atlanta Fed model would be in the current quarter. However, I think it will be the best quarter in a couple years, aided by a bump in governmental spending and even growing anticipation over the general election. (Wall Street thinks that it could fare better under Trump or Hillary than Obama despite the leftwing promises from the Democrat nominee.)

Today’s session

All of the major indices are pointing to a lower open.