Retail Results Just Plain Soft

Productivity numbers were stronger than expected, but initial jobless claims just keep rising, now at 444,000, the highest levels since 2002. The Bank of England left interest rates unchanged at 5 percent, the European Central Bank also left interest rates unchanged at 4.25 percent.

Elsewhere:

1) Yesterday, Kohl's and JC Penney reported August same store sales slightly better than expected. Today Wal-Mart, Target, Gap, American Eagle (reaffirms third quarter guidance), Pacific Sunwear all reported sales above expectations. However, department stores did not fare as well: Saks and Nordstrom were both below expectations, although not dramatically. Mid-priced stores like Dillards, and Bon-Ton Stores were also weaker than expected, as was Abercrombie. TJX was weaker as well, that is surprising--off-price discounters have been doing well.

Bottom line: back out Wal-Mart, results were fairly soft. Expectations were very modest.

2) Hovnanian down 8 percent, reported a loss greater than expected, due largely to higher than expected charges. Units sales were down 38 percent year over year and prices down 12 percent. Cancellation rates remain elevated at 32 percent--this is remaining surprisingly high.

3) Tollreported a loss that was not as great as expected. Traffic and deposits appear to have been stabilizing, "albeit at historic lows." Bob Toll reiterated his belief that "there is pentup demand."

4) Truck manufactuer Navistarup 7 percent pre-open, reported blow-out numbers, largely on improved truck margins.

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