GO
Loading...

Draghi Talks Down Stimulus; Retail Sales Disappoint, but...

Thursday, 3 May 2012 | 9:24 AM ET
Mario Draghi
Getty Images
Mario Draghi

European stocks dropped, the euro rose as European Central Bank chief Mario Draghi spoke. Draghi said that the latest spate of weak economic data highlighted the "prevailing uncertainty."

Mr. Draghi wants to give himself flexibility, so he said the government bond buying program is "still there." But he dampened expectations of any immediate stimulus or Long-term refinancing operation program by saying that the perception that there is no near-term stimulus coming was "correct."

By taking easing off the table, the euro rose.

Elsewhere:

April retail sales were slower than expected, but guidance was good. Retail sales were up 0.8 percent in the month, according to RetailMetrics, less than the 1.5 percent increase expected. It's the first miss since November 2011.

What happened? Retailers are facing the most difficult year-over-year comparisons to date: April 2011 saw an increase of 8.7 percent, because Easter was at the end of April (this year Easter was early in April).

Another factor (ready for this?): Colder weather at the end of April.

Below expectations: Target, The Gap, Macy's, Costco Wholesale, Walgreen, and The Buckle.

Costco had incredibly difficult comps: up 12 percent in April last year, and they still managed to eke out a 4 percent gain, just a tad below the 5.3 percent increase expected.

First quarter earnings guidance mostly up. Many companies guided higher: The Gap, Limited Brands, Aeropostale, Hott Topic, American Eagle Outfitters, TJX Cos., and Ross Stores.

The main trend continues: Off-price retailer (TJX and Ross Stores) continue to gain market share from the Kohl's and J.C. Penneys of the world.

No earnings update from Saks, Nordstrom, or Macy's.

  Price   Change %Change
WEMMX
---
LEEU
---
COST
---
GPS
---
HOTT
---
JCP
---
JWN
---
KSS
---
LB
---
M
---
ROST
---
SKS
---
TGT
---
TJX
---
WAG
---

The big issue is this: The Retail Index is at a record, where else can it go? The bulls argue that retailers have a lot of profitability coming in the back half of the year ... there appears to be a little more credit available to consumers. Cotton prices are lower than last year, so input costs will be lower and will help margins in the second half of the year. Balance sheets are strong and retailers are buying back stock.

_____________________________
Bookmark CNBC Data Pages:

_____________________________

Want updates whenever a Trader Talk blog is filed? Follow me on Twitter @BobPisani

Questions? Comments? Write to me at tradertalk@cnbc.com

  Price   Change %Change
AEO
---
ARO
---
BKE
---
COST
---
GPS
---
HT3
---
JCP
---
JWN
---
KSS
---
LB
---
M
---
ROST
---
SKS
---
TGT
---
TJX
---
WAG
---

Featured

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

Wall Street