Economy

Economic & Earnings Data Deluge

Torrential downpours in the middle of the U.S. are responsible for difficulties in the transportation of domestic crude oil from crucial locales like the Cushing hub in Oklahoma. This has sent oil prices down on both West Texas Intermediate (WTI) and Brent crude indexes, which had already seen sunken front-month contracts from a week ago: -6.8% and -5%, respectively.

This is despite the global oil market firming on tensions in the Middle East, where U.S. National Security Advisor John Bolton brings more inflammatory rhetoric toward the nation of Iran. Early this morning, Bolton accused Iran of attacking oil tankers in the United Arab Emirates (UAE), though specifics about the claim have immediately been questioned. Bolton is also somewhat at odds with President Trump regarding policy with Iran, though they both agreed tearing up the non-nuclear proliferation deal the U.S. had reached with Iran during the Obama administration was a good idea.

Mortgage Applications fell 3.3% in a report this morning, from the Mortgage Bankers Association. New purchase applications and refinance activity were both down, -1% from a week earlier but +7% year over year. The average 30-year fixed mortgage is currently at an historically low 4.33%. Analysts had been expecting slightly stronger numbers on mortgage business based on such low rates, but they have yet to show up in the data.

Abercrombie & Fitch ANF shares are down 17% ahead of today’s opening bell, even as the apparel retailer posted a better-than-expected loss on its quarterly bottom line this morning: -29 cents per share versus -43 cents expected, and compared to the year-ago quarter’s -56 cents. Revenues were also marginally improved on expectations to $734 million in the quarter. But lower comps, flat guidance and higher inventories, with a poor showing from A&F brand Hollister, accounted for investor disappointment. For more on ANF’s earnings, click here.

Canada Goose GOOS is also down 17% in today’s pre-market, although the company outperformed on the bottom line impressively — 7 cents per share versus 2 cents expected — while missing slightly on the top line. The company looks to expand with two new stores in China; aside from economic woes currently hitting that country, along with seasonality waning for Canada Goose goods, have helped account for the big early-trading loss.

All in all, while the U.S. economy remains in good shape, there are whiffs of worry entering into the marketplace. And they didn’t just start today, even though the Dow is expected to open down triple-digits again this morning: the month of May looks headed into the red. Treasury yields are down, with the 10-year falling to its lowest level in more than a year and a half. Even Morgan Stanley MS has said it is on a “recession watch.”

More better-than-expected economic data would help turn this sentiment around. So would good news on the ongoing U.S.-China trade war.


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