Great news coming out of Target, Saks and Home Depot this morning as all three released solid earnings reports, providing further evidence that the recovery is taking shape. There was tepid interest in the morning's PPI print, and a little talk from the Housing Starts data, but all conversations are including the surprise retail figures.
Interestingly, well-regarded analyst Dana Telsey did note the strong operating margins for these retail shops, and she did add that we haven't seen the flood of shoppers you would expect from this type of earnings report. And, she may very well be correct, but I do believe it depends on the geography noted. For example, in South Texas, the shops are packed--literally. I was at one of the more recognized shopping malls this past weekend in San Antonio--The Shops at La Cantera--and what you notice isn't necessarily the volume of shoppers, but the amount of shoppers carrying shopping bags. And--the tax-free weekend is this weekend!
As my friend, Rich Yamarone (Chief Economist for Argus Research out of NYC) has told me before: people are shopping, and buying, and that is in no way a sign that we're heading for the Great Depression.
Indeed, he's right!
Look for more positive signs for the U.S. economy in the months to come.
Todd M. Schoenberger, Managing Director
LandColt Trading, Inc.