RETAIL SALES REBOUND

Stocks opened higher this morning (Dow +100 pts; SPX +.13%). Real estate and utilities are catching a bid after a rough week. Industrials are also in the green after Honeywell’s (HON) earnings report. On the other hand, healthcare stocks continue to slide due to political risk. Popular health insurer UnitedHealth (UNH) is down 27% from its December high. Commodities are mixed; copper continues to climb (+1.4%) but oil and iron ore are flat. WTI crude oil is hovering around $63.60/barrel. Bonds are trading higher today as yields tick lower. The 10-year Treasury yield fell back to 2.56%.

American Express (AXP) reported decent quarterly results even though revenue fell short of Wall Street forecasts. Total revenue rose 7% from year-ago levels and earnings-per-share grew 8%. Management warned that marketing costs will increase to keep a key partner—Delta Airlines—happy, but said strong business momentum can offset those costs. The CEO reiterated previous earnings guidance for the year. He also said “growth was broad based and well-balanced across spend, lend, and fee revenues…” In addition, credit quality remained strong. The stock is up 1.7% this morning.

Honeywell (HON) is up over 3% after reporting first quarter results. This comes despite the fact that revenue fell 15% during the quarter, driven by weakness in aerospace sales. Analysts expected that, however. What they did not expect, was that management raised full-year 2019 guidance for both revenue and earnings. The company’s CEO actually said he is seeing “strength across the globe.” We haven’t heard much optimism regarding global growth lately.

US retail sales finally recovered in March after a rough winter. According to the US Census Bureau, retail sales rose a much better than expected 1.6% from prior month levels. On a year-over-year basis, sales accelerated to 3.6% growth. That’s the middle of the range over the past several years. Bloomberg economists say the return of growth “confirm(s) that the slowdown at the start of the year was temporary, driven by idiosyncratic factors.” This is a big deal as it removes one of the key economic overhangs for investors.


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