November 25, 2016

Stocks opened higher in a truncated Black Friday session. The Dow and SPX are currently up 53 pts & .24%, respectively. Yes, the Trump rally continues, but its character is very different today. Utilities are up over 1.5% whereas energy and financials are lower. In fact, across the board defensive and interest rate-sensitive stocks are outperforming the cyclicals today. Telecoms are up about .8%. The dollar is weaker and yet WTI crude oil is down 2.8% to $46.60/barrel. Gold is rebounding a bit from its 4-month low. Interest rates are lower on the day. The 5-year Treasury yield is up to 1.85% and the 10-year is trading at 2.36%. And with the 10-year up 100 basis points since the Brexit bottom, traders are beginning to wonder if it has gone too far, too fast. In other words, we could see rates pull back a bit and consolidate. Alternatively, we see resistance at about 2.46% so perhaps that will serve as a stop for surging rates. 

SW Retail Advisors says this holiday shopping season is all about online sales. The dollar volume of online transactions is expected to grow double digits. The retail environment remains promotional though. Retailers are fighting a price war. Wal-Mart and Target average prices are down single digits this year. And in-store traffic will likely fall mid-single digits this year.  

The Nat’l Retail Federation says consumers are able and willing to spend and surveys indicate this could be a record-breaking Black Friday weekend. The trade organization expects 137 million Americans to shop over the course of this weekend, with about 70% showing up somewhere on Black Friday. 

The Target CEO was interviewed on CNBC today. He said Black Friday went well, especially regarding consumer electronics. He singled out gaming systems, TVs and Apple products as top sellers.  Black Friday revenue and store traffic were up nicely compared with last year. He also said the US consumer is in good shape and spending could be bolstered by the policy agenda the Trump Administration. Separately, Macy’s CEO says Black Friday crowds are steady and apparel demand is picking up. 

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