Trader Talk

Retail Numbers: Too Good For Rate Cut?


Looks like Costco's disappointing August store sales was an anomaly. The good news is that retailers beat expectations, almost across the board. A number of retailers noted that some school districts in Texas and Florida went back to school a week later, which gave a boost in August. Bears, however, are noting that estimates were very conservative to begin with; they're calling it a non-event and advising to sell the strength in retail.

Wal-Mart, JC Penney, Nordstrom, Ann Taylor all handily beat expectations.Saks was a big surprise, notably better, up 18% for August, twice the estimate. Teen retailers like American Eagle also beat and reiterated Q3 earnings.

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The commentary was pretty positive as well. JC Penney said, "August sales results reflected good response to both regular priced and clearance merchandise." Aeropostale said they saw " overall improvement in our business in August from July."

On the downside, these comparatively positive trend muddies the water for those arguing for a Fed rate cut. We keep getting numbers that refute the notion of imminent weakness; bears argue that it is still early in the game.

Questions?  Comments?