Four big pieces of economic data were released this morning, all showing a strengthening U.S. picture. The Consumer Price Index (CPI), the most widely followed measure of inflation, came in flat month over month (MoM); the Estimize consensus was looking for a slight decrease of -0.07%. Core CPI, excluding certain items like energy and food products that can experience volatile price movements, increased 0.2% MoM, showing that higher food costs were more or less offset by lower energy prices. Existing Home Sales showed a more positive reading than Housing Starts yesterday, up 1.54% MoM to 5.260M, welcomed news as existing homes account a much larger share of the housing market than new homes. Jobless claims of 291,000 were higher than our estimate for 279,615, but still fell 0.68% MoM; this is the 10th consecutive month that initial claims have been below the 300k mark. Perhaps the best news this morning came from the Philly Fed Manufacturing Activity Index, growing to 40.8 for November, a 97% increase over October and the highest reading since December 1993. The Estimize consensus called for a reading half that size at 20.5. The much better-than-expected number had many Economists quickly calling its validity into question, suggesting it may be an anomaly unlikely to hold up.
On the earnings front, Dollar Tree and Best Buy reported this morning. Dollar Tree’s earnings per share (EPS) came in at $0.69, $0.04 higher than the Wall Street and Estimize consensus, an increase of 19% YoY. Revenues of of $2.1B also beat expectations of $2.06B from Estimize and the Street, growing 11% from the year-ago period. The Q3 same store sales growth of 5.9% was the strongest comp for the company since 2011. This quarter included $14.3M in acquisition-related costs as the discount retailer pushes forward with its $8.5 billion deal to buy Family Dollar Stores Inc. Great results encouraged the company to increase their outlook for the year, now expecting EPS in a range of $2.97 – $3.04 from previous guidance of $2.94 – $3.06. Revenues are forecast in a range of $8.52B – $8.58B versus previous guidance of $8.44B – $8.55B.
