1) Some strange retail earnings numbers this morning: Lowe's was a surprising miss on the bottom line. Revenue of $13.1 billion not only missed consensus, but were 0.5 percent below the same period last year. Huh? What happened to the housing/home improvement recovery? Exterior products (gardening, paint, etc.) apparently suffered because of the cold weather.
But wait a minute: Comp-store sales were down 0.7 percent, well below expectations. At Home Depot, comp-store sales were up 4.8 percent. True, Lowe's is more dependent on the garden business than Home Depot. Lowe's reiterated its full-year guidance, as April and May appear to be better, but that gap in sales has raised eyebrows, especially since the company has said it can do 3.5 percent comp-store growth this year.
On the conference call, the company confirmed that outdoor was the weak spot: Indoor comps were up 3 percent, but outdoor was down 7 percent.
Same with Target, where same-store sales were down 0.6 percent.
2) Traders talking about a Goldman Sachs report that the typical hedge fund is continuing to underperform, generating a year-to-date return of 5 percent through May 10, compared with 15 percent gains for the S&P 500.
3) We were reminded this morning that autos (along with home building and aerospace) are one of the true bright spots of the American economy.
Detroit auto factories are forgoing their traditional two-week summer break ... because demand for vehicles is so high.
Ford Motor will only shut for one week. Chrysler will have a two-week break at just four of its 10 North American plants. General Motors won't shut at all.
4) Japanese stocks at another 5-year high. The Bank of Japan kept policy steady as widely expected, saying the economy "has started picking up."
Is it really? I was impressed by news that Carlyle Group was planning to raise 200 billion yen ($2 billion) for a third Japan fund. Its second fund is seven years old.
What's the cost of a weakening yen policy? It shows up in trade data: Japanese exports rose 3.8 percent in April year over year ... that's partly because a 20 percent decline in the yen has helped exports. But imports rose 9.4 percent because costs for oil and other commodities have risen.
5) Merck has entered into an agreement with Goldman Sachs to buy back 99.5 million shares (about 3.3 percent of outstanding shares) based on current market prices.