The market is going to open slightly lower as there is anxiety of the tenure of trade talks, but the real anxiety must be the clock at this point.   Something must be done before December 15^th and with the underlying fundamental of our economy much stronger than any experts predicted (glad I’m not an expert) Wall Street whiners might dump some shares.

It would be a chance for us to buy a dip.

Yesterday I said the hits to Home Depot (HD) and Kohl’s (KSS) were company – specific and this morning we have evidence the US consumer is indeed strong, robust and spending money.  This morning Target (TGT) and Lowes (LOW) posted numbers and offered guidance that underscores the might of the American consumer.

Target (TGT)

Is simply crushing it, beating the street on all key metrics.

• Revenue $18.67 billion consensus $18.49 billion
• Earnings $1.36 consensus $1.19
• Comp store growth +4.5% consensus +3.6%

Digital climbed 31% driven by same day business.  Management is lowering cost by delivering from stores rather than warehouses and has experienced little cost upticks from curb side pickups. 

Traffic has been remarkable for Target and should continue as they expand toy offerings into Christmas.  I’ll be there for sure.

Management upped guidance to $6.45 from prior guidance of $6.20 against consensus of $6.18.

Lowes (LOW)

Missed on revenue but earnings of $1.41 beat consensus of $1.35, climbing 35% from a year ago.  Comp sales were lower than expected, but it underscores weakness in Canada where management closed a lot of underperforming stores.  In the United States comp stores grew 3.0%.

Operating margins expanded and management hiked its full year guidance.

My main concern is the fracking miracle, which I will go into greater detail later.

Portfolio Approach