Navigating Retail Earnings: Insights from the Trading Floor

Let's get to the big story breakdown.

It is a big week for retail earnings with all eyes on how the American consumer spending.

Now monetary policy is top of mind for Wall Street and for Main Street.

The annual Federal Reserve symposium is taking place in Wyoming at the end of the week.

Now this afternoon, Fed minutes from the July meeting are set for release.

Joining me as we kick off the session is Matts, equity trader at Virtue Financial.

Matt, good morning.

Thank you so much for joining me.

Ray, how are you?

Well, it is looking fairly gloomy outside here in New York City, but when we look at the markets, we did see that big tech pullback yesterday.

But here we are digesting the latest retail earnings.

What did you make of some of those results?

Well, it's a good segue.

Is this the eye of the storm?

You know, we're talking about some of the biggest hurricane in the Northeast starting the season a little bit earlier, and I think we're starting to see that selloff happen a little bit earlier than we may anticipated, but that's way these markets are going.

So as things operate, people get on one side of the boat, and certainly in this case you know we saw selling in you know one of the biggest gaining sectors, you know, the mag 7, they were up sharply all summer and we see a little bit of a sell off and now people are calling for panic.

So I'm not sure we're there just yet.

We saw a little change in momentum.

We saw some retail names start to gain some interest this week as they should.

Uh, because they are the focus, and we're going to get FedSpeak at the end of the week.

So you know there's enough to keep your eye on in these slow summer days, so maybe it's just a little bit of a move in money to some sectors that you may see some more volatility like you know the retail sector where we're seeing 10% moves both up and down.

Yeah, and speaking of 10% moves, Target shares pre-market are down about 10%, and this does come on the heels of its latest earnings report.

And when we're looking at pre-market price action for that name, that's the steepest plunge since the April Liberation Day sell-off that we saw, but in Bigger picture here since you mentioned the Fed at the end of this week.

What do you expect for the central bank?

Well, I would expect the central bank probably to cut.

They're probably boxed into a bit of a corner here.

There is some political influence, and we can talk about that until we're blue in the face, but it does happen, you know, we're starting to look at like almost I think 85% to 87%.

You know, the respondents think that we're going to get a 0.5 point cut, so that's probably baked in.

We've got some inflation news that's been kind of mixed, you know, but I think the Fed is probably going to get on board.

We'll get a taste of that today at 2.

When they released some of the minutes, we did have two dissenters in the last voting, which has not happened in a long time.

So I think there's some expectations that we will get a September rate cut and then they have to be data dependent again.

They've told us all along and hopefully that will continue going forward.

Yeah, and despite the slight pullback we saw yesterday, we have to keep in mind that the Dow, Nasdaq S&P 500 hit record highs, closing as well as intraday highs.

So perspective, I think, is key here, and I like your analogy with what we're seeing in terms of weather as well.

So bigger picture here.

What does this all mean not just for Wall Street but also Americans out there on Main Street?

I think we've seen some of the retail names today have reaffirmed full year guidance, which is a good thing.

So I think we're starting to see companies shaking off this tariff talk, right?

You can use it as an excuse for maybe one quarter.

But I think you know going forward you've got to really manage your inventory a little bit better and how you operate, and I think companies see that and now they're knowing that and you know and the investors rewarding the company that is able to reaffirm full year guidance and maybe shake off this particular quarter.

But you know Target may be a case where you know you're changing your CEO, there's changing a lot of, there will be a lot of changes within Target itself, you know, it's also maybe a good time to keep an eye on that one.

As it may overextend to the downside based on some news that we should have expecteded already, and it's good to get some guidance whether it's lower than expected versus not getting any guidance or outlook at all.

So you're on the trading floor every day here at the New York Stock Exchange, Matt.

So when it comes to sectors as well as factors here, we keep on reading some of the sensationalist headlines, but what are you seeing and what are the key takeaway?

Well, you know, we've talked about this for probably about a year now that these moves are highly exaggerated.

They really are, you know, we're starting to see 10% move based on a one quarter release, and that's phenomenal for me as a trader down on the floor.

These are things that we never saw before and the way it happens is that it moves down 10% and stops.

Why is 10% the threshold?

So as a trader, then you're looking for maybe a point of rebound.

But it doesn't happen overnight generally.

It happens, it takes a little while, and the company has to shake off some of those headlines and those drastic moves.

So from a trading point down here you've got to be very nimble.

You have to be more nimble than ever because you know 4 or 5% moves, that's not even outsized anymore.

So the 10% move and more is what you're looking for from the trading aspect.

When do you start committing even more capital to, you know, hopefully capitalize on. rebound type move.

And Matt, last but not least, before I let you go, I want to ask you about bonds in particular, what we're seeing in yields, because last year when we think about the rate cuts that started in September and continued until the end of the year, we're paying close attention to what is referred to as bond vigilantes out there.

So what is the bond market telling you right now?

Well, from my standpoint as an equity trader, you know, I'll be honest.

We have so much to focus on from the stock standpoint, so the bond market, you know, we hear just about how it affects housing and how that sector is going to relate to some of these bond bond moves and the Fed's, you know, rate cuts and things like that.

So if that market shapes up, then you know there may be some more money out there that's going to be investable into the market side.

So that's not something I'm really particularly watching because you know our moves are so outsized now we've got to be paying attention to that.

Yeah, well, we are starting to be normalized when it comes to some of these massive new moves, but that is not something that we want to become the norm.

So Matt, appreciate your time.

Thank you so much for joining me today.