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Morning Commentary

Are Consumers Powering Strongest Economy in Years?

By Charles Payne, CEO & Principal Analyst
11/21/2017 9:41 AM
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Heading into the holiday season, all eyes will be on consumers to see if their spending will mirror their enthusiasm expressed in a variety of surveys. The recent macro data from retail sales to income and spending suggests a noticeable uptick in consumer demand.

However, lingering issues, including a slack in wages and high debt levels, have been impediments to increased spending.

The major credit card companies have posted earnings, paced by marked increases in credit card uses. Trepidation remains in the air, reflected in a decline in the likelihood consumers feelings will be rejected when applying for credit over the next 12 months. 

In October 2017, there was a 30.8% likelihood consumers would be rejected (that number is down from 38.2% a year earlier). Only 6.3% of consumers say they will actually apply for credit in the next 12 months, which is down from 7.4% in February 2016.

The question remains: is this trepidation related to delayed increases in wages or a longer lasting impact from the Great Recession?  Perhaps there isn’t as much trepidation as one would expect. The latest wave of brick-and-mortar retailers suggests consumers are back and they are going to the malls.

After the close on Monday, Urban Outfitters (URBN) continued the string of strong financial results from brick-and-mortar retailers. The company beat the Street on revenue, earnings, and comp-store sales and hiked guidance.

 

Earnings Release URBN

Revenues

Earnings

Comp Store

Actual

$893 million

$0.41

+1.0%

Estimate

$861 million

$0.33

-2.3%

 

We get earnings results from a number of brick-and-mortar retailers, including Lowe’s (LOW) and Dollar Tree (DLTR), before the open, along with Burlington (BURL).

Additional earnings results include Palo Alto Networks (PANW), which beat across the board and offered strong upside guidance for the current quarter and the full year.

Earnings Release PANW

Revenues

Earnings

Billings

Actual

$505.5 million

$0.74

$597 million

Estimate

$489.0 million

$0.69

$594 million

Today’s Session

Equity futures are pointing higher despite a spate of earnings that fell short from small brick-and-mortar names and so-so guidance from Lowes.

Getting Hammered on Earnings:

Meanwhile, Dollar Tree is edging higher underscoring the trend of recent strong showings from dollar store discount retail niche. 

Meanwhile, with the avalanche of sexual harassment and assault charges swamping the swamp, there isn’t a lot about tax reform, which is still in a precarious position.  I still think something happens, but potential senate ‘No’s’ are rigidly dug in, and understand the power they wield.


Comments
I know this is not a great deal for the brokers that work for you Charles but, the correction has to happen..

gregg paucek on 11/21/2017 9:58:23 AM
Gregg of course there will be a correct and somewhere done the road a crash but for those that have missed 17,000 Dow points it won't ease the pain. Moreover, we have taken a lot of profits along the way and I think we'll generate many more. The majority of our subscribers are individual investors looking for greater control of their financial futures. I hope just like the crash of 2009 I have them in enough cash to buy stocks "super cheap" for the next rebound. A crash wouldn't be the end but the beginning...but some folks will miss that as they continue to miss current rally. CP

Charles Payne on 11/21/2017 11:05:38 AM
It's a SAD testimonial that Charlie Rose, one of THE most respected television journalists, should fall victim to the same sexual harassment charges that have stricken the likes of Kevin Spacey, Bill O'Reilly, Harvey Weinstein and a growing list of those mainly from the American entertainment industry...lest we forget MULTIPLE accusations against former President Clinton and presidential candidate, NOW president, Donald Trump. Have the morals of these individuals, whose parents hopefully taught them respect and appreciation for the rights of others, sunken to such a deep point that they find themselves out of grace and plummeting from their former positions of earned respect? I once asked myself, "How can I raise my children in a society like this?" and NOW find myself with an even DEEPER query, "How can I expect my GRANDCHILDREN to raise their offspring, given such societal conditions?" And, what LATEST, adulteress discovery will be unveiled about the people we have looked UP to for so long? I can only HOPE that this will somehow blow OVER as quickly as it blew IN and we can all go back to our beliefs in a moral mankind.

James Warlin on 11/21/2017 1:18:53 PM
Dear James teach our children form the Good Book . P.S. NOT (Saul Alinsky.) or ( Marks) nor (ANTIFA)

john on 11/25/2017 5:48:43 PM
 

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