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Afternoon Note

Bottom Fishing

By Charles Payne, CEO & Principal Analyst
8/21/2024 1:04 PM

Today, retailers dominate the top ten advancers list after Target (TGT) and TJ Maxx (TJX) posted better-than-expected results.

There is also bottom fishing with Lululemon Athletica (LULU) and Ulta Beauty (ULTA), which saw Warren Buffett recently taking a stake.

A closer look at the Target’s (TGT) numbers show that the average transaction amount is down more than a year ago. The upside guidance saw the upper end of the range increase by ten cents for the full-year and four cents for the current quarter.

This statement from Brian Cornell sets the overall tone for retailers today.

“Consumers have shown remarkable resilience in the face of multiple challenges over the last several years, and that they remain resilient today. While consumers have been more discerning with their shopping and traded down in many categories, transaction growth has been solid enough to ward off some of the recession fears in the sector.                                                                 

-Brian Cornell, CEO

It’s one thing for Wall Street to cheer news that could have been worse in their minds and assumptions, but for me the signs still seem ominous overall for consumers.

The stock market is not an exact scorecard of the economy – this is the latest example of this rule, and you should always remember.

More broadly, there is a defensive tone to this market.

The decline in Financials (XLF) stands out, after a major firm downgraded American Express (AXP) this morning because it is sensitive to credit-related issues from consumers.


 

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