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Macy's (M) Crushes Q3 Estimates; Claims, Philly Strong

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Thursday, November 18, 2021

Pre-market futures are waking up early today, looking to turn around a lackluster mid-week of trading. We’ve got a couple big pieces of economic data to help color in the picture, as long as new earnings results from two global retail majors, Macy’s M and Alibaba BABA. The Dow is +34 points at this hour, the S&P 500 is +11 and the Nasdaq is looking best of all, +95 points.

Weekly Initial Jobless Claims were higher than expectations, but still lower week-over-week. This means we’re at a new post-pandemic low on new weekly claims: 268K, down 1000 from the upwardly revised 269K the previous week. At this time last week, the headline was 267K, and this morning’s pre-release estimate was 260K. Still, as long as we’re continually hitting post-Covid lows, we’ll take it.

Continuing Claims had hit a snag a couple weeks back (this metric reports a week in arrears from Initial Claims) and notched up a bit in the week-ago report, but this morning sets a satisfying post-Covid low of its own: 2.08 million, from an upwardly revised 2.21 million the previous week. Each step these longer-term claims take toward sub-2 million, the closer we will be to the robust labor market we enjoyed in the months leading up to the pandemic fallout.

Also, a new Philly Fed report for November shot way past expectations to post a 39.0 headline — a mile away from the 23.0 expected and the unrevised 23.8 from October. This is the strongest monthly read since April’s 50.2, which happened to reach a 48-year high. This is another piece of evidence the economy is rebounding from the post-Delta variant morass in late Q3, and strengthening half-way through an historically robust Q4.

Zacks Rank #2 (Buy)-rated Macy’s M more than tripled expectations on its fiscal Q3 bottom line, reporting $1.23 per share versus the Zacks consensus 35 cents (to say nothing of the Covid-hampered year-ago quarter’s -19 cents per share). Revenues in the quarter of $5.44 billion topped estimates by +2.13%, nicely above the $3.99 billion a year ago. This marks the big-box retailer’s ninth straight earnings beat, with a trailing four-quarter average beat of +270%.

Shares of Macy’s are up close to +14% on this morning’s news, following a simply incredible rise in stock value: +174% year to date. These types of performances are usually reserved for high-tech innovators like nVIDIA NVDA, not department stores. For more on M’s earnings, click here.

Alibaba BABA is down -8% in today’s pre-market on a disappointing report for its fiscal Q2. Revenues in the quarter came in at the equivalent of $31.4 billion, beneath the $31.92 billion in the Zacks consensus. Alibaba is something like the poster child for Chinese government regulatory crackdowns on domestic tech and global retail companies. Two years ago, Alibaba CEO Jack Ma took China’s government to task for its initiatives; he’s been little seen or heard from since.

Today we look toward the White House to see if a changing of the guard at the Federal Reserve is in order. Fed Chair Jay Powell is up for renewal, after first being installed by President Trump. And Powell has been good for the stock market overall, as well as for looking after the lower tier of the labor force getting back to work post-pandemic at something resembling a living wage.

But momentum has been gaining for Biden to promote Lael Brainard to the post, instead. Brainard is largely considered on the same dovish side of Fed policy Powell has been.

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