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Retail Sales, PPI and Big Banks All Within Reason

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Friday, October 14, 2016

Two economic reads — one addressing the U.S. consumer and the other the U.S. producer — were released before the bell this Friday: September Retail Sales were up 0.6%, and September Producer Price Index (PPI) up 0.3%. Both of these headline numbers are basically in-line, perhaps a tad hotter on the PPI side.

Retail sales were bolstered by monthly strength in auto sales and gas station revenues: autos notched up 1.1%, gas stations up 2.4%. Ex-autos and fuel, the retail sales number for the month is 0.3%. Consumer discretionary provided some pop as well, with Sporting and Hobbies up 1.4% and Restaurants up 0.8%. This directly relates to overall consumer confidence, which has been strong in recent months.

Monthly PPI was a notch higher than the 0.2% expected. The ex-food and energy read was in-line at 0.1%, and the core read was 0.3%. Year over year, PPI ex-food and energy has reached 1.2%, again, a bit hotter than expected. Still nothing indicating runaway inflation, though if we were to see producer pricing continuing to rise over the next few reads, it would begin to tell a different story.

Big Banks Report Q3 Earnings

Three major “too big to fail” banks reported Q3 earnings before the bell today, as well, and all three topped earnings estimates. JPMorgan (JPM - Free Report) saw the biggest positive beat, posting $1.58 per share on $25.51 billion in quarterly revenues. These numbers easily surpassed the $1.40 and $24 billion the Zacks consensus had been expecting, and represent big year-over-year growth on both top and bottom lines. This is the fourth straight quarterly earnings beat for JPMorgan.

Citigroup (C - Free Report) posted $1.24 per share on $17.76 billion in revenues, up strongly from expectations of $1.16 and $17.38 billion, respectively. Fixed income jumped 35% in the quarter, and Citi shares are up 2.2% in the pre-market, erasing the 1.2% loss over the past week and then some.

Finally, beleaguered Wall Street major Wells Fargo (WFC - Free Report) beat the Zacks earnings estimate of $1.02 by a penny on revenues of $22.2 billion, higher than the $22.02 billion expected. Net income was down in the quarter, but brand new CEO Tim Sloan is putting his best face forward. Wells Fargo’s bogus account scandal will not be erased anytime soon, but shares are bidding up nearly 0.9% in early trading.

Mark Vickery
Senior Editor

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