Market Likes Bessent, But Macy’s Is Nothing to Cheer About
Here's the signal that keeping us cautious this week.
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Stocks are moving higher this morning as the market welcomes President-elect Trump’s nomination of Scott Bessent, Key Square hedge fund founder, to be his Treasury Secretary. Given Bessent’s background as a macro investor and comments about layered tariffs, the thinking is he can help Trump deliver more market-friendly policies.
While we enjoy this, we recognize the Citibank Panic/Euphoria model is deep into Euphoria. That's a signal to us to remain cautious ahead of this week’s retail earnings, October PCE Price index data, and the receipt of the most recent Fed meeting minutes. It also means we’ll want to keep a close eye on the market’s relative strength index (RSI) levels should its melt-up continue.
More Retail Earnings on Deck, but Not From Macy’s
Ahead of Wednesday’s October PCE price index data, the Bessent news is driving Treasury yields lower as we begin a shortened trading week, and folks prepare for the Thanksgiving holiday and Black Friday-Cyber Monday shopping event. We’re already seeing early Black Friday deals as retailers look to get an early jump and contend with a shorter-than-usual post-Thanksgiving holiday shopping season.
We’ll look to fine-tune our holiday shopping expectations as we consume this week’s retail earnings, including those from Best Buy BBY, Abercrombie & Fitch ANF, Dick’s Sporting Goods DKS, Kohl’s KSS, and Nordstrom JWN.
One retailer we expected to hear from but won’t is Macy’s M, which said it will delay its quarterly results due to an accounting issue. As part of that news, the company also reported its Q3 net sales decreased 2.4% to $4.74 billion, below consensus expectations of $4.75 billion, and included comp sales that fell 2.4% on an owned basis and were down 1.3% on an owned-plus-licensed-plus-marketplace basis.
We haven't been fans of the department store stocks, and Macy's figures aren’t doing much to change our minds. Macy’s comp sales figures are a tad worse than the year-over-year decline of 1.1% found for the August-October 2024 period in the October Retail Sales report.
We see this as another reminder the holiday shopping season will be an uneven playing field for retailers this year, and we continue to favor our positions in Costco COST and Amazon AMZN.
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At the time of publcation, TheStreet Pro Portfolio was long COST and AMZN.
