Retail is Rockin

Retail was strong out of the gate this morning on the back of earnings from Macy’s (M), which beat on the top and bottom line and raised it guidance.  Nike (NKE) is getting a boost as well after Macy’s cited strength in active wear (Macy’s is a vendor of Nike’s).  NKE is breaking out to new high territory, up 2.56% (we are long NKE on our Hotline Service. If you are not a subscriber, contact your account representative or email info@wstreet.com to get started today) today.  Other retail apparel standouts are: Urban Outfitters (URBN) +3.65%, Under Armour (UA) +5.90%, American Eagle Outfitters (AEO) +3.60% and Abercrombie & Fitch (ANF) +4.64%. 

Energy

The latest weekly report from the Energy Information Administration (EIA) for the week ended May 11, showed U.S. crude oil production climbed 10.72 million barrels per day, 20,000 above the prior week and another record high.  However, crude oil inventories decreased 1.4 million barrels from the previous week and gasoline inventories had the greatest decline, down 3.8 million barrels.     

Crude oil imports averaged 7.6 million barrels per day.  The four-week average for crude oil imports is 8.0 million barrels per day, 4.3% below the same time frame a year ago, as the U.S. production increases and we become less reliant on OPEC and other oil producing countries.

In its monthly oil market report the International Energy Agency (IEA) warned that it expects higher oil prices to weigh on demand. Global crude inventories are below average for the first time since 2014.  The "recent jump in oil prices will take its toll" on growth. The agency lowered its outlook for global demand growth to 1.4 million barrels per day (bpd) this year vs. a prior estimate for growth of 1.5 million bpd.

With Memorial Day fast approaching consumers will be keeping an eye on prices at the pump.  Lower prices will give consumers extra money to spend during the holiday weekend, while rising prices will have the opposite effect.  The national average price for regular gas as of yesterday was $2.87/gallon compared to a year ago price of $2.34/gallon.

WTI is flat today at $70.00.

Housing

Mortgage loan application volume decreased 2.7% from the prior week.  The Refinance Index declined 4%, the lowest level since August 2008. The refinance share of mortgage activity decreased to 35.9 percent of total applications, its lowest level since August 2008, from 36.3 percent the previous week. The Purchase Index dropped 2%.
 

.Housing starts dropped 3.7% month-over-month in April to a seasonally adjusted annual rate of 1.287 million versus an estimate 1.325 million.  Permits also fell 1.8% to a seasonally adjusted annual rate of 1.352 million vs estimate of 1.350 million.  April weather attributed to overall activity.

• Single-family starts increased just 0.1
• Permits for single-family homes rose 0.9
• Multi-family starts dropped 11.3%
• Multi-family permits declined 6.3%

Overall, supply remains constrained. Lack of land, labor, rising input cost and inventory are adding to higher prices.  Affordability will become more of an issue as interest rates continue to creep up, especially for first time home buyers.

The major indices are in the green.  Advancers outpaced declines 1914/929 on the NYSE and 1985/812 on the Nasdaq.