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Consumer Spending Increased in March

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·3 min read
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We close both the month of April and the trading week on a downward trajectory, despite often excellent Q1 earnings reports from some of the biggest companies on Wall Street, and economic metrics enhancing expectations — indeed, realizations — of a Great Reopening. Yet investors are starting to feel the thinner air up near all-time highs, and appear cautious to be bidding up much further from current valuations.

The economic reports continue this morning, as well: Personal Income for March stretched to a new record high on government stimulus checks: 21.1%, from a slightly upwardly revised -7.0% for February. These figures reach all the way back to 1959, and only twice before has this monthly read ever gotten above 10% — both within the past year. Consumer Spending, however, also for March, was +4.3% — still higher than expected, but far from the income heights.

Part of this spending performance has to do with the still-shuttered parts of the retail economy. But those days are vanishing before our eyes. Last month, Goods gained a solid +8% but Services was only +1.7%; we expect this to even out in the coming months.

Meanwhile, Core Inflation for March reached +0.4%, beating expectations of +0.3% and notably higher than +0.1% posted a month ago. This is another sign that we are entering a new economic era at last; for more than a year, the Fed has basically dared inflation to make an appearance in the U.S. economy. Should we see 30-basis-point gains every month, we’ll be back to discussing higher interest rates before we know it.

The Employment Cost Index for Q1 also came in higher than expected: +0.9% versus +0.7% estimated and reported in Q4 2020. This would indicate hiring back employees into the workforce is beyond the low-hanging (low wage) fruit, and/or that paying employees more may be the way forward for companies ensuring their workforce is of acceptable quality.

Not to be forgotten — and rather quickly — let’s run through a few key calendar Q1 earnings reports posted here at the end of the week:

Zacks Rank #1 (Strong Buy)-rated ExxonMobil (XOM) beat expectations on both top and bottom lines: 65 cents per share topped the Zacks consensus by 6 cents on $59.15 billion in revenues, which outperformed estimates by 7.24%. Shares are trading down a bit in the pre-market, but are +43% year to date.

Exxon rival Chevron (CVX) in the integrated oil super-major category, missed the Zacks consensus by 2 cents to 90 cents per share. Revenues of $32.03 billion, on the other hand, topped expectations by 3.66%. Weakness in volume affected by the winter storm in Texas was the main headwind in the quarter.

Phillips 66 (PSX) narrowed its bottom line loss per share to -$1.16 from the -$1.41 per share expected, on $21.93 billion in revenues which outperformed estimates by nearly 30%. Shares are trading down in a weak pre-market, but had been +16% year to date.

Fiscal Q3 numbers for Clorox (CLX) also surpassed expectations on its bottom line: $1.62 per share versus $1.47 (also down from the $1.89 per share reported in the year-ago quarter), though revenues of $1.78 billion missed the Zacks consensus by 4.7%. The Oakland, CA-based cleaning products giant are trading down, now more than -11% year to date.

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