Earnings season is winding down, but a few stragglers in the portfolio are still left to report this week. There are also a few notable macroeconomic reports on the horizon. The common thread between this week's earnings and economic updates is the housing market and the health of the consumer.
1. Housing Market
The most important updates on the housing market will come from the earnings reports and conference call commentary from Home Depot, primary competitor Lowe's, and luxury homebuilder Toll Brothers. But that's not the only data on this important industry on tap this week. On Tuesday morning, we'll get both July housing starts from the Commerce Department and the National Association of Realtors' pending home sales report.
Last month, housing starts increased 19% month over month, led entirely by multifamily units (like apartments), as single-family starts ticked down 0.2% on the month. June pending home sales, meanwhile, declined 5.4% last month, with NAR Chief Economist Lawrence Yun saying in a press release, "The highest mortgage rates in nearly a year and the record-high national median home price together are contributing to a tepid housing market that is especially difficult for first-time homebuyers." While the July releases are notable because housing punches above its weight in terms of economic contribution, we don't expect either to really move the stock market, given the housing industry's sluggishness is well documented at this point.
2. Consumer Health
TJX Companies' earnings release, out Wednesday morning, is what we'll be focused on. That said, we'll also be listening to what the management teams at Walmart and Ross Stores have to say on Thursday. Between these three, we should be able to walk away with a solid understanding of consumer dynamics and, importantly, if the teams are seeing any change in behavior, broadly, and across income cohorts.
For TJX, we're always interested to hear about inventory selection available to the team, as the treasure hunt experience is second only to the team's ability to offer great value. Last time around, the company reported its fifth consecutive quarter of sales beats across all four operating segments, with strong same-store sales growth.
