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Economic Data Deluge

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As we say goodbye to another month of Summer 2018, we take in plenty of economic data this week to go with our heaping helping of Q2 earnings results. Among the news we’re tracking today are a number of consumer and employer metrics that chart the behavior of our historically strong economy, tempered by uncertainties regarding the potential of a world-wide trade war.

A key labor force cost monitor is the Employment Cost Index, which for Q2 came in below estimates and the previous read: at +0.6%, this is lower than the 0.7% expected and the 0.8% last time around. This is good in terms of inflationary concerns; higher wage growth is a fast-track to higher economic inflation, and, as we’ve seen in recent employment data — which we’ll see again in tomorrow’s ADP (ADP - Free Report)  private-sector survey and Friday’s government non-farm labor report — wages are not growing at historic levels associated with this tight of a jobs market.

Personal Incomes for June stayed in-line with estimates and the previous month’s read of +0.4% — steady, unimposing and again an inflation dampener. Personal Consumption Expenditures (PCE), a key metric the Fed considers when deciding on interest rate levels, was +0.1% in June, another tepid number, and +1.9% year over year.

Consumer Spending for June, on the other hand, showed confidence that belies stagnant wages: +0.4% is actually a tick below the 0.5% expected, but up month over month. Confidence in consumers’ abilities to buy goods and services is also positive for the economy but must be seen as having a cap as wages refuse to grow substantially higher.

After today’s closing bell, we look forward to fiscal Q3 earnings results from Apple Inc. (AAPL - Free Report) , which is expected to grow earnings roughly 30% year over year to a Zacks consensus estimate of $2.17 per share. Revenues are expected to grow 15% from fiscal Q3 2017 to $52.37 billion. Apple looks to post its ninth consecutive earnings beat for the quarter, and even as FAANG stocks have flopped since Facebook’s (FB - Free Report)  ghastly earnings report a week ago, AAPL shares continue to trade near all-time highs.

Zacks Rank #3 (Hold)-rated pharma giant Pfizer (PFE - Free Report)  reported better-than-expected results on both top and bottom lines this morning, with 81 cents per share topping the 75 cents expected, on revenues of $13.47 billion which outperformed by roughly 1.6%. This marks Pfizer’s 6th straight earnings beat, and although shares are selling off a tad in today’s pre-market, the company remains within range of its 52-week highs. For more on PFE earnings, click here.

Procter & Gamble (PG - Free Report) , a Zacks Rank #4 (Sell)-rated company, posted mixed fiscal Q4 earnings results, beating on the bottom line while missing slightly on the top. Earnings of 94 cents per share outpaced estimates by 4 cents per share, but revenues of $16.50 billion missed the $16.55 billion analysts were looking for. P&G is still digging out of its multi-year trough, but this morning’s results have sent shares trading down another 25 cents ahead of the market open. For more on PG’s earnings, click here.

Ralph Lauren (RL - Free Report) , however, has beaten earnings estimates for the 14th time in a row, bringing in $1.54 per share which easily surpassed the $1.36 consensus. Revenues also topped expectations, to $1.39 billion from the $1.36 billion analysts were looking for. The Zacks Rank #3 company, still off its 2018 highs, has ratcheted up more than 5% in today’s pre-trading thus far.



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