Trade, Tariffs and Retail

This week’s economic calendar does not gather much in the way of momentum until Wednesday, with the possible exception of Tuesday’s release of Import and Export Prices. Import and Export Prices for July will be looked at as a soft proxy for both inflation and trade as US/China tariffs begin to take shape. Econoday consensus is calling for a 0.0% M/M change for import prices and a modest 0.2% uptick in export prices – due in large part to rising petroleum prices and their impact on energy exports.

On Wednesday, the calendar will provide investors with a great deal of potentially impactful data. Retail Sales for July, on a M/M basis, are due out at 8:30 am. They are expected to drop to 0.1% from June’s torrid 0.5% pace. However, less autos, that M/M figure is expected to register a solid M/M gain of 0.4%. That spread is due in large part to the calendar as it relates to historically based auto sales. Less Autos and Gas, the M/M change is expected to also expand by 0.4%.

Also on Wednesday, Industrial Production for July is scheduled for release by the Federal Reserve. Econoday consensus is calling for a monthly gain of 0.3% – down from June’s 0.6%. Manufacturing is expected to expand by 0.3% – down from June’s 0.8%, and the Capacity Utilization Rate is expected to move marginally higher to 78.2% from June’s 78%. We also receive the EIA Petroleum Status Report on Wednesday. Last week’s release provided a mixed but in-channel report. Crude inventories drew down by 1.4M barrels while both gasoline (+2.9M bbl.) and distillates (+1.2M bbl.) saw a build.

Housing Starts for July, Weekly Jobless Claims, and the Philadelphia Fed Business Outlook Survey are due out Thursday – all three have market-moving potential. Econoday consensus is calling for Starts – Level – SAAR for July to tick up to 1.271M from June’s 1.173M. Permits are also expected to tick higher from June’s 1.273M to 1.303M. Last week’s Jobless Claims for the previous week saw a drop of 6K claims to 213K. The current 4-week moving average – Level is a very tight 214.25K. Finally, the Philadelphia Fed Business Outlook Survey is released at 8:30 am.

Last week’s EIA Petroleum Status Report reflected a total North American rig count of 1266 of which the US had 1057 while the Gulf of Mexico had 18 and Canada had 209. As we covered last week, WTI crude prices have reset lower over the previous four weeks. As a result, I do not expect to see much, if any, movement here.

Q2 earnings season continues at a torrid pace this week. Sysco (SYY) reports on Monday. The street consensus for SYY is $0.94/share. Advance Auto Parts (AAP) quarterly results are due out Tuesday. The street is calling for $1.84/share. Also on Tuesday, Agilent (A) reports. The street is calling for $0.63/share. Other names to keep an eye on this week include Tapestry (TPR), Cisco (CSCO), Macy’s (M), NetApp (NTAP), Applied Materials (AMAT), (JD), Nordstrom (JWN), NVIDIA (NVDA) and Walmart (WMT).

Flickr photo: Saucy Salad
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