Consumer Spending Getting Lowe-r

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• 🕺Markets slide down

• 🐻 Consumer weakness is all the bears can think about

• 💰 Earnings are out for LOW, AZO and DKS

📈 Market levels – The US equity futures are experiencing a mixed bag of results, with the Dow slipping 67 points/20bp, S&P down 3.5 points/8bp, and Nasdaq barely hanging on with a 4.7 points/3bp gain. Meanwhile, the major Eurozone indices are sliding 30-50bp, with luxury stocks taking a hit. It's interesting to note that the weakness in luxury is signaling caution for mega-cap tech stocks in the US, which have become overcrowded with reluctant investors. On the other hand, financials, real estate, telecoms, and utilities are outperforming in Europe, showcasing a rotation from loved to hated sectors. In Asia, stocks ended mostly lower, although there were a few pockets of green. 🌍

🗞️ Morning Snapshot – The stock market is witnessing a selling spree as the world awaits clarity on the debt ceiling issue from Washington. While the Biden-McCarthy meeting showed promise, a formal deal has yet to materialize, and time is running out. Economic data outside of Washington paints a mixed picture, with a concerning Eurozone flash manufacturing PMI but improved flash PMIs in Japan. As regional bank concerns ease and domestic sentiment stabilizes, yields are climbing, and Fed expectations are shifting in a hawkish direction. Investors are pricing in a higher year-end Funds Rate of 4.74%, indicating growing confidence in the economy. Earnings reports, US flash PMIs, and presentations at the JPMorgan TMT conference will be the highlights for Tuesday. 📉💼

🔍 Macro Tracker – Biden and McCarthy had a "productive" meeting, but the debt ceiling deal is still hanging in the balance. It's like waiting for the clock to strike midnight at a dance party. 🕺 The June 1st deadline is looming, and Yellen insists it's not a dance move, but a real X-date. Meanwhile, European PMIs are doing a mixed dance routine, with manufacturing taking a tumble while services try to keep the beat. 💃🕺 In Taiwan, industrial production sank like a deflated balloon, while shipping container production slumped due to people cutting back on impulse buys. Watch out, crude speculators! Saudi Arabia's oil minister is giving them a warning before the OPEC+ meeting. Stay tuned as the Fed's rate hikes are making some investors do a double-take and flocking back to fixed income like a homing pigeon. 🕊️💰 Oh, and Washington has no plans to let China's Defense Minister off the hook. Sanctions stay put like a stubborn stain.

🛠️ LOW (Lowe's) 🏠, the home improvement retail giant, reported an EPS beat of $3.67 (vs. the Street's $3.43), but their comps fell short with a 4.3% decline. It seems like folks might be putting down their tools and stepping away from DIY projects. Maybe the allure of home improvement isn't as strong right now, or perhaps people are just taking a break from fixing things. Either way, it's clear that Lowe's, known for providing a wide range of home improvement products, might need to find ways to rekindle that do-it-yourself spirit among customers. 🔨

🚗 AZO (AutoZone) 🛠️, the leading retailer of automotive parts and accessories, had a bit of a fender bender when it comes to comps, only growing by 1.9% (half of what the Street expected). It seems like people hit the brakes on their automotive repairs and upgrades, especially during March, which turned out to be a tough month for AutoZone. On the bright side, their gross margins revved up to 52.5%, surpassing expectations. So while the road might have been a bit bumpy for comps, AutoZone is still cruising along with healthy margins. 🚙

🛒 BJ (BJ's Wholesale) 🏪, the membership-based warehouse club, didn't hit a home run when it comes to EPS and comps, but they didn't strike out either. Their earnings per share came in at 85 cents (just a penny shy of expectations), and their comps grew by a respectable 5.7% (not far off from the Street's estimate). The real victory lies in their merchandise gross margins, which expanded by 100 basis points. It looks like BJ's Wholesale, known for offering a variety of products at discounted prices, was able to navigate supply chain challenges and keep those margins in check. With a higher tax rate as a minor hurdle, BJ's Wholesale seems to be keeping their game strong in the retail arena. 💰

👗 CTRN (Citi Trends) 👟, the fashion retailer specializing in urban clothing and accessories, stumbled on their earnings, missing EPS expectations at a loss of 66 cents (vs. the Street's 42 cents). The culprit? Gross margins took a bit of a tumble, landing at 37% (around 100 basis points lower than planned). It seems like Citi Trends encountered some headwinds in the form of margin pressures. While their revenues were in line with expectations, their downward revision of the full-year guidance indicates they'll need to put on their thinking caps to navigate these challenges and turn the tide in their favor. 👕

⚽ DKS (Dick's Sporting Goods) 🏀, the popular sporting goods retailer, may have missed the bullseye on comps with a +3.4% growth (slightly below the expected +3.6%), but their EPS came through with a slam dunk at $3.40 (beating the Street's $3.13 estimate). While some might see it as a slight fumble, it's important to remember that Dick's Sporting Goods still hit the mark in terms of profitability. Their solid transaction growth and double-digit EBT margin indicate that they're still playing the game well, even in the face of macroeconomic uncertainties. It seems like sports enthusiasts are still turning to Dick's for their athletic needs. ⚾

🌯 Wrap for earnings. Have a fantastic day! 🌯

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