US retail sales in June

According to data provided by the US Census Bureau, US retail (XRT) sales fell 0.2% in June 2017, which was below the market’s expectations of a 0.1% rise. Retail sales fell 0.3% in May 2017. In the past three months, retail sales haven’t met market expectations.

Falling US Retail Sales Could Be a Major Headwind for 2Q17 GDP

Components of retail sales

Weaker retail sales in June were mainly due to lower sales in the home appliance, miscellaneous store, and gasoline station categories. Core retail sales, which most closely reflect the performance of the GDP’s consumer spending segment, also fell nearly 0.2% in June 2017.

Weak retail sales are a major headwind for US economic growth (QQQ) (SPY). The falling retail sales in the last two months could hamper economic growth in 2Q17. Improving retail sales indicate that consumer activity is improving and suggest increased revenue growth for businesses (IWM) (SPXL).

According to Mike Wilson, chief equity strategist at Morgan Stanley, retail sales are a major driver for the S&P 500 Index. He believes retail sales could post strong gains in the next six to seven quarters. He thinks that stronger growth in retail sales and earnings growth could drive the S&P 500 Index to 2,700 in the next 12 months.

In the next part of this series, we’ll analyze the Eurozone Sentix Investor Confidence Index in July 2017.

Latest articles

On June 25, AbbVie (ABBV) announced that it plans to buy Allergan (AGN) for ~$63 billion. At 10:20 AM ET, Allergan stock rose 27%, while AbbVie stock fell 15%.

On June 25, Credit Suisse initiated its coverage on Shake Shack with an “outperform” rating and a target price of $77—an upside potential of 15.4% from its closing price of $66.72 on June 24.

On June 25, the soft economic data isn't an isolated case. We have been getting a flurry of dismal data points. The US economy added only 75,000 non-farm jobs in May.

French retail giant Carrefour has agreed to sell an 80% stake in its China operations for ~$705 million to Suning.com, an Alibaba (BABA) backed company. While China represents a massive opportunity with its almost 1.4 billion population, it has not been an easy market for foreign companies, at least when it comes to retail and e-commerce.

On June 25, US Secretary of Agriculture Sonny Perdue told CNN in an interview that the US-China trade war has impacted US farmers. He said that farmers “are one of the casualties” of the trade war.

25 Jun

Hang Seng and Nikkei 225 Lose amid Trade Worries

WRITTEN BY Mayur Sontakke, CFA, FRM

After rising marginally yesterday, Hong Kong’s Hang Seng Index fell today. The index lost 1.15% to end at 28,185.98. Only seven stocks in the index rose, while 39 declined. Four remained unchanged. Tencent Holdings (TCEHY) was one of the worst performers with a 1.8% fall.

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