Business News Review 09-14-10

Morning Greek
Greek Factor: 0

Tuesday's business news review offers data on retail sales, same-store sales, business trade, small business confidence, international economies, and important corporate EPS reports and events. Positive data out of retail sales offered a modest boost to the premarket, but questionable data otherwise, has the market trading cautiously since. The "Greek Factor" ranges from +3 to -3, and is a subjective measure of The Greek's view of the market impact of individual and aggregate news and the day's scheduled events.

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Business News Review

Retail sales data was reported better than expected in the premarket, but the business news was not without noise. Auto sales slipped, and food and beverage sales boosted the gain along with gasoline stations. Meanwhile, businesses reported faster growth in inventories than sales, which leads one to wonder if purchasing managers have not missed inflection point once again. Enjoy your business news review below.

Retail Sales
Greek Factor: +1

Retail Sales headline Tuesday's wire, with the data for August reported at 8:30 AM ET. Economists were looking for a very modest increase of just 0.3%, as compared to the revised 0.3% for July and 0.3% in June. However, Retail Sales moved a better 0.4% higher in August, benefiting largely from strong gasoline station and food store sales, which is likely a factor of price change. Market gurus are also attributing some of the gain to state sponsored incentive programs pushing tax-free sales. Excluding automobile sales, revenue increased a better 0.6%, against economists' views for growth of 0.4%, and against a 0.2% increase in July. Once again in August, retail sales were padded by price change in gasoline, and this time it looks to us like food as well, so investors are digesting the data with caution. Motor vehicle and parts dealers sales fell 0.7%, and that's not good news. We'll try to give you more detailed coverage of this data point later today.

ICSC Sales
Greek Factor: +1

Of course, the International Council of Shopping Centers (ICSC) produces its regular weekly reading of same-store sales Tuesday morning. Last week's data covering the period ended September 4 was horrible, showing a week-over-week decline of 0.4%. The start of school, Labor Day and the religious holidays for Jews and Muslims play a role in skewing data here. Back-to-school shopping, for one, hits crescendo just ahead of the start of school. Therefore, this week's report stood to show a surprising increase, and we would be better served comparing in the coming weeks, versus now. Indeed, sales jumped 0.8% for the period ending on 9/11, and the year-to-year increase measured 2.6%. Redbook's data last week, covering the period ended September 4, showed sales growth of 3% year-to-year. This week's report showed a gain of 2.9%.

Business Trade Report
Greek Factor: -1

Business Inventories data for the month of July came due at 10:00 AM ET. Similarly to June's Wholesale Trade data, June's Business level inventory built (+0.3%), and compared against a sales decline (-0.6%) in June. Last week's report on July Wholesale Trade was troubling, but at least sales rose in July (just at half the pace of inventory build). Thus, it was going to be interesting to see what happened at the business level. My feeling is that America's purchasing managers may have again missed the inflection point, and ordered on a situation that did not persist. I expect inventories will have been over-built, and retailers will need to discount as a result.

July's data showed inventory built 1.0%, against expectations for a 0.6% increase. Like in the Wholesale data, Business level sales rose at a lesser rate of 0.7%. Still, the difference is not too troubling as yet, and the inventory-to-sales ratio only moved up to 1.26, which is relatively low historically speaking.

Small Business Confidence
Greek Factor: 0

The NFIB Small Business Optimism Index gained ever so slightly in August. The 0.7 point gain, to a mark of 88.8, is certainly less than enthusiasm inspiring. Little change in the mood of small businessmen is of signficant concern to market followers, as small businesses employ a great portion of the nation and are a key driver of the economy. The only positive is perhaps the fact that things did not get worse. We will likely cover this data point in a follow up article.

International Drivers
Greek Factor: -1

Some important data is emanating from overseas today. Industrial production data was due out of Japan, and the United Kingdom released its Consumer Price Index. The NIKKEI 225 fell fractionally, as Japan revised its July production rate down to a decline of 0.2%, from an initially reported increase of 0.3%. Capacity Utilization also dropped 0.3 of a percentage point. The UK's CPI increased 0.5%, against expectations for an increase of 0.3%. Core prices stayed high, and higher food prices and clothing and air fare weighed on the month's data. The FTSE is also down fractionally this AM. The international news is definitely a weight against trade this morning.

DC Drivers

The US SEC and Commodity Futures Trading Commission are holding a roundtable on swaps, given new regulatory reforms.

Corporate News Drivers

The corporate news drivers Tuesday key on Cisco's (Nasdaq: CSCO) meeting with analysts. The market is always tuned in to any speech given by Cisco CEO John Chambers. The Morgan Stanley (NYSE: MS) Global Healthcare Conference highlights presentations by Baxter International (NYSE: BAX) and Express Scripts (Nasdaq: ESRX). Look for Bank of America (NYSE: BAC) to present at the Barclay’s (NYSE: BCS) Capital Financial Services Conference. Cardinal Health (NYSE: CAH) is due to present at the Robert W. Baird Healthcare Conference. NVIDIA (Nasdaq: NVDA) will present at the Deutsche Bank (NYSE: DB) Securities Technology Conference.

The EPS schedule highlights news from Kroger (NYSE: KR), Best Buy (NYSE: BBY), Pall (NYSE: PLL), MDS (NYSE: MDZ), Bakers Footwear (Nasdaq: BKRS), Cracker Barrel (Nasdaq: CBRL), Lakeland Industries (Nasdaq: LAKE), Majesco Entertainment (Nasdaq: COOL), Nevada Gold & Casinos (AMEX: UWN), Pansoft (Nasdaq: PSOF), Schiff Nutrition (NYSE: WNI), ThermoGenesis (Nasdaq: KOOLD) and WPCS International (Nasdaq: WPCS). Monday's reports included news from Aerosonic (AMEX: AIM), Contango Oil Gas (AMEX: MCF), Evolution Petroleum (AMEX: EPM), Frequency Electronics (Nasdaq: FEIM), Globecomm Systems (Nasdaq: GCOM), H.B. Fuller (NYSE: FUL), K12 (NYSE: LRN), Lannett (AMEX: LCI), National Technical (Nasdaq: NTSC), Optical Cable (Nasdaq: OCCF), Peerless Manufacturing (Nasdaq: PMFG), Pharmacyclics (Nasdaq: PCYC), RF Industries (Nasdaq: RFIL), Sasol (NYSE: SSL), Sigmatron (Nasdaq: SGMA), Superclick (Nasdaq: SPCK), TRC Cos. (NYSE: TRR) and Workstream (Nasdaq: WSTM).



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