Tuesday, June 27th, 2023

Considering we’re in a rather sleepy period of stock market activity, this morning we see a few distinct events of possible consequence. These include a print on goods-producing inflation, a clear account of the domestic housing market and quarterly earnings from a company that’s also a household name. Market are looking to stem the slide from June 15th highs, which mark the highest levels on the indices so far this year.

Preliminary Durable Goods Orders for May came in much higher than expected: +1.7% versus -0.9% expected, with the previous month upwardly revised threefold to +3.3% from +1.1% originally posted. Stripping out volatile Transportation costs, this figure jumps to the highest we’ve seen on this metric in a full year. The May headline is the second-highest of 2023 so far, but because these are preliminary reads, they too are subject to future revisions.

Cap orders, non-defense, ex-aircraft — a proxy for “normal” business spending — reached +0.7%, a very solid number. However, April’s revision had gone from the highest print since 2021 at +1.3% to a far lower -0.6% on the revision. So we do see quite a bit of shift in these numbers as they are recalculated from initial prints. That said, even with a wider grey area than many economic reports, it would be hard to project anything but a reasonably strong economy at this stage.

The Case-Shiller Home Price Index came out this morning, posting its second-straight negative number, -1.7% following an unrevised -1.1% the previous month. In the past 12-month cycle, these numbers have really ramped down — from +20.5% in May of 2022. The 20-city survey reached +0.9% for April, with only the Southeast posting overall gains — the West, Midwest and Northeast all came in lower.

However, we do see something of a sea-change in top growing home price cities, with Chicago coming in at #2, sandwiched between Tampa and Atlanta, both of which have registered among strongest home-price growth in the past few months. In fact, not long ago we were seeing all top-3 in the state of Florida; before that, West-coast destinations like San Diego and Seattle were among the highest. Chicago makes the top of this list for the first time in many years.

After the market open today, New Home Sales for May are expected to tick down to 675K from 683K reported the previous month. We’ll also get a glimpse of June Consumer Confidence, which is expected to increase slightly to 104 from the 102.3 posted a month ago. Small dribs and drabs of economic metrics — at least compared to the Personal Consumption Expenditures (PCE) report due out at the end of this week.

Walgreens Boots Alliance (WBA Quick QuoteWBA - Free Report) posted its first earnings miss this morning when it reported fiscal Q3 numbers ahead of the opening bell. Actually, this is the first miss for the company since the Alliance, back in July 2020. Earnings of $1.00 per share missed the Zacks consensus by 7 cents, while revenues in the quarter outpaced expectations: $35.42 billion versus $33.88 billion estimated, and +8.6% year over year.

The company notes a budget-conscious consumer providing a headwind for the drugstore retailer, and as a result is expanding its cost-cutting program (layoffs, etc.) from $3 billion initially presented to $4.1 billion today. Also, full-year earnings guidance has been brought down notably, to a range of $4.00-4.05 per share. Zacks consensus had been for $4.43 per share. As a result, shares are now trading down -8% in today’s pre-market. For more on WBA’s earnings, click here.

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