Several Retailers Due to Report Earnings Today; April Retail Sales Numbers to Offer First Look at 2Q Consumer
DAVID HAFFENREFFER, CNN ANCHOR: Several retailers are due to report earnings today, including The Gap, Kmart and Nordstrom. We'll also get our first look at the mood of the U.S. consumer last month with the release of the April retail sales report.</s>DEBORAH MARCHINI, CNN ANCHOR: Reports due an hour before the opening bell. Christine Romans is here to give us a little preview, Christine, of what people are buying from what retailers and what it might mean for their stocks.</s>CHRISTINE ROMANS, CNN CORRESPONDENT: Exactly. Well, it looks like discount retailers over and over, retail analysts have been telling us, they seem to be doing well, they seem to be positioned pretty well. We'll watch to see those earnings come in today. Gap and Kmart people we'll particularly be looking at because there have been some more pessimistic expectations on the Street about their earnings for both of those companies. So they've pulled down their estimates a little bit, some analysts have, we'll see if those companies can meet or beat the expectations or Wall Street. They have been pulled back just a little bit. And we get this government report on retail sales. Now this is the first look at the consumer -- really, the first big look at the consumer for April, thus the first big look at the consumer for the second-quarter. What -- they're looking for overall is up 0.4 percent. This will be the 20th month or so of expansion, so the consumer continue to chug along, moving over to the register and buying up products, excluding the auto sector, up 0.3 percent. Now, the analysts are telling me that consumers still believe that this is a good jobs market. Remember, we had that jobs report last week that showed 3.9 percent unemployment, something like a 30- year low. And they're also still believing in the economy. You have not seen consumer confidence dented too much by the increases in interest rates and the volatility in the stock market, although they're still watching that in terms of volatility in the stock market. Watch those retail stocks today, see how the earnings play out in that group. Watch to see the first hour -- we have an hour before the markets open, the stock markets open, to see any kind of reaction for retail sales. But remember, the bond market will be open, so it might be that the stock market takes its cue from the bonds today, if there is a big reaction there. So judging from yesterday's stock market action, I have to say that one great comment I got yesterday from Mark Cashen (ph) was -- we were talking about a light volume in the market and if you could sort of, you know, underplay what was happening in terms of the direction of the market. And he said: Christine, ships can sink even in a quiet sea. So we did have a pickup in volume yesterday. People are starting to say, be careful, you know, the market still goes down, even if it's on lighter than expected -- or a lighter than normal volume. It's still going down. I mean, your portfolio is still depreciating, so that can incite a little bit of concern.</s>MARCHINI: One of the things that's managed to stay up, even in the calm sea, where other ships were sinking, has been food stocks. What's the prognosis there?</s>ROMANS: You know, they are a defensive play, they are seen as a defensive play here. They've been underwater for some time. It was just a couple of months ago, I was talking to the Sara Lee chairman, who was say that, you know, he thought that there was this tech- frenzy, people were really interested in tech stocks, and the big companies that had real products, that are usually seen as constant, defensive-type plays were being ignored. And he said that they would come back, and they are. So he was right. But he considers also going on there and talk about speculation about the merger environment. We know that Bestfoods got an offer last week from Unilever and has rejected it. There's talk now that may be BFO could attract a higher bid than the Unilever bid that is all the table. Also, the bidding deadline for NGH, that's Nabisco Group Holdings, is Monday. So we're getting close to seeing some sort of resolution, or at least know what kind of options are on the table, for Nabisco. Obviously, as you know, Nabisco shopping around its food unit there. So there looks like there could be some consolidation on the horizon here for this company, or this industry. We've been talking about it for some time. Analysts in this sector say, it's, you know, benefiting on two fronts. The S&P; food index yesterday closed up 1.49 percent, when the Dow was down 1.6 percent.</s>MARCHINI: I didn't know there was an S&P; food index.</s>ROMANS: Yes.</s>MARCHINI: OK, thanks, Christine.