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Daily Market Update – May 13, 2015 (Close)
Yesterday was no where near as bad of a day as it could have been. For some reason the bond market turned around after an early surge in interest rates continued from the previous days and the stock market followed that lead, as it turned around another triple digit loss. Escaping the day with only about a 40 point loss was a gift, coming off Monday’s nearly triple point decline. This morning began a flow of retail earnings reports that could have either added fuel to the bond market’s belief that higher interest rates are right around the corner or throw water on it. The retailers, especially well regarded CEO of Macys, Terry Lundgren, were among the first to tell the world that falling energy prices would be good for their retail fortunes. This morning Macys got the ball rolling about an hour before the official government Retail Sales Report is released. About 6 months after all of the optimistic forecasts regarding GDP, which is said to be approximately 70% comprised of consumer spending activity, none of the gains have been realized. This morning Macys didn’t have any good news to share, although it did as many have recently done and it increased its dividend. That seems to be a fairly common action that is taken even in the face of falling revenues and falling profits that makes you wonder about sustainability and disappointment down the road. This morning, however, prior to the release of that official government report, markets were nicely higher and poised to offset yesterday’s small loss. Instead, though, when it was all done and throughout the day, the market was just ambivalent and traded within a fairly narrow range. The next few days, however, will have lots of those retail sales reports coming along and it may be a question of threading the needle to get those numbers just right. Just right would mean not offering such bad earnings news so as to scare stock markets, but also not offering such good news so as to create fears of rising rates. Ultimately, a loss in top line revenue, like the kind Macys reported today, may be just the thing to keep markets at current levels or even going higher. That doesn’t make too much sense, but at the moment the data and the emotions that it can create may be at a precarious balance. This morning my hope was that the market would look positively on the weakness that may be reflected by retail sales and push shares higher, so that there’s a better chance of getting some assignments this week or at least some rollovers, as the monthly cycle comes to its end. The first two days of this week weren’t very helpful in that regard, but there’s still plenty of time to set things right. Macys’ retail weakness did give the bond market a reason to reverse course and for that period of time the stock market was respectable, but later on the bond market regained some footing and the stock markets faltered. With more retail earnings coming out this afternoon and tomorrow we should all be in store for more of the same during the last 2 days of this week and monthly option cycle. |
