Overall retail sales data was better than expected…
But it wasn’t enough to pull the markets out of the doldrums.
Investors paid more attention to the disappointing showing by Target (TGT). Its profit fell by half in the last quarter, it cut expectations for the holiday season, and it is the latest company looking to control expenses.
We can’t just say that’s a one-off.
Between the various tech companies that are laying people off or imposing a hiring freeze, Disney’s (DIS) cost-cutting efforts, and now Target (TGT), we have to conclude that key companies throughout the economy are facing hard times.
Yet we can’t give in to doomerism. After all, retail sales were better than expected. All that will provide ammunition for those within the Federal Reserve who suggest that a pause or a cut in interest rates is warranted.
Christopher Waller, one of the Fed’s toughest inflation hawks, now says he is “more comfortable” with smaller rate increases in the future.
He explicitly said that he is considering “stepping down to a 50-basis point hike.”
That said, he and other Fed Governors have not made up their mind.
Let’s remember that he responded skeptically earlier this month to data which reportedly showed that inflation was slowing. “I don’t know how sustained this deceleration in consumer prices will be,” he said.
He’s previously said the Fed has “a ways to go” before the work of containing inflation is done.
Yet a slowdown in rate hikes will undoubtedly serve as a bullish sign for investors.
It doesn’t even need to be a pause.
With this much uncertainty, it’s important to have a protective strategy.
Don’t miss Chris Hood on the moves you need to make with your portfolio right now.
WORD ON THE STREET
TGT Down Big, Retail Booms, BBWI Surges In After-Hours Trading
- Expect More, Get Less – After Walmart and Home Depot smashed expectations, Target (TGT) investors could be forgiven for expecting more of the same. It was not to be. The stock was down more than 13% after the company reduced its outlook for the year. It is especially concerned about “organized retail crime,” which it estimates will reduce its gross margin by $600 million this year.
Meme Stock Comeback – Bath & Body Works Inc (BBWI) was up about 20% in after-hours trading. It posted third-quarter results that beat expectations, but investors were most enthusiastic about the chain hiking its full-year profit outlook.
Musk: I Don’t Want To Be CEO – Of anything. During a trial over the amount of money he is paid by Tesla (TSLA), Elon Musk said that he “frankly” doesn’t want to be CEO of any company. He argued that when it comes to Tesla and SpaceX, his role is “much more that of an engineer developing technology and making sure that we develop breakthrough technologies and that we have a team of incredible engineers who can achieve those goals.”
Retail Sales Data Better Than Expected – American retailers made $694.5 billion in sales last month. That’s a 1.3% increase from September, slightly better than the 1% increase that experts were projecting. “The strong month, which followed a flat month in September, suggested that, at least for now, a recession was not at hand,” said Tuan Nguyen of RSM.
HOT SPOTS: What’s Going on in Geopolitics
- Chairman Of The Joint Chiefs Urges Negotiations – General Mark Milley said that the “probability of Russia achieving its strategic objectives of conquering Ukraine” is “close to zero.” However, he also said Ukraine’s chances of a total military victory, which would include kicking Russia out of Crimea, are not high, militarily. General Milley urged negotiations last week, but neither Moscow nor Kyiv feels it is in a place where it can back down.
Inflation Hits New High In The UK – The struggling economy in the United Kingdom is now suffering from a 41-year high of inflation at 11.1%. Inflation in October outpaced the 10.7% that experts projected. The Office of National Statistics said that the main price increases came from electricity, gas, and other basic fuel costs.
Jinping Scolds Trudeau Over Leaked Conversation – Chinese president Xi Jinping seemed to express his unhappiness with Canadian Prime Minister Justin Trudeau’s eagerness to speak to the media. “Everything we discussed has been leaked to the paper,” Jinping complained, “that’s not appropriate.” Trudeau shot back that in Canada, “we believe in free and open and frank dialogue and that is what we will continue to have.”
CUTTING EDGE: What‘s Happening In Tech
- Election Is Over, Weapons Flow Resumes – There’s always enough money for weapons – at least once the election is over. President Joe Biden asked Congress to provide $37 billon in emergency aid to Ukraine. Despite the GOP takeover of the House, the president is likely to have the votes. Though presumptive Speaker Kevin McCarthy has warned that the GOP won’t support a “blank check” for Ukraine, Republicans are leery of being called soft on Russia.
Low Tech Drought Could Threaten High Tech Data – Companies including Meta Platforms, Microsoft, and others consume vast amounts of water in order to cool their data centers. However, more than half the country is now at risk of a drought. Companies are making reforms to become “water positive,” but remain at risk for higher than expected expenses in the short-term.
Nvidia Down On Earnings – A mixed bag for Nvidia (NVDA). It beat expectations on revenue but failed to meet expectations when it came to earnings per share. Adjusted earnings per share were about $0.12 short of expectations.
FOR YOUR CONSIDERATION
“During bear market uncertainty, you must shift your focus from winning to preventing losses. A risk-management mindset will make you win more by losing less.”
You can’t win them all. But you can keep from losing them. At a time of high-volatility, consider switching up your strategy towards risk avoidance. Chris Hood lays out the exact steps you need to take right away.
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