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Economic and Earnings Data Deluge

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New economic data has come out ahead of Friday’s open on major trading indexes, and some mopping up from previous delayed reads accompany these results. Personal Income for December (because the 5-week government shutdown had kept these numbers from being formulated until now) rose a solid 1.0%, much higher than the 0.4% expected and the 0.2% reported in November.

However, this same metric for the month of January, also reported this morning, went to -0.1%, much lower than the previous read and the +0.3% analysts had anticipated. Consumer Spending in December fell 0.5%, 10 basis points lower than expectations.

These December results were already brought to the surface with yesterday’s Q4 GDP report, but today’s release allows for a closer look at these metrics. And while the knee-jerk reaction may be to sell this January news on lower growth, one should consider seasonality when looking at Q1 economic reads in any year.

For instance, 2018 — which may be the first to finish above 3% growth in more than a decade — still brought a Q1 read of 2.2%, the lowest quarter of the year. Winter months cause some dormancy in most markets, especially following holiday shopping season in Q4.

January’s Consumer Spending is still delayed this morning. But the December read does not immediately generate much optimism for the following month. Of course, all of these figures for January feed into Q1 GDP for 2019, which will not only be lower than Q4 but quite likely below the 2.2% reported a year ago. In fact, many analysts do not expect 2019 GDP overall to be anywhere near as high as the year just finished.

Q4 Earnings Roundup

Shares of The Gap (GPS - Free Report) are surging ahead of the bell, up more than 20% on a mixed Q4 report but an intriguing prospect: the spinning off of its Old Navy brand to its own publicly traded company. The core group — consisting of Gap, Banana Republic, Athleta and other brands (and currently referred to as “NewCo,” indicating the Gap name may be ending — would control roughly $9 billion in assets, while Old Navy would be worth $8 billion.

And Foot Locker (FL - Free Report) shares are up 13% ahead of regular-day trading on its Q4 results that came in better than expected. Earnings of $1.56 per share easily surpassed the $1.37 expected, while revenues grew 2.8% year over year to $2.272 billion. Year over year comps grew an impressive 9.7%, which more than doubled expectations.




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