Sandwich in the land we are here to settle the score. We begin with a monster day for retail where something happened check out shares of home depot, urban outfitters, kohls, all beating on ets but mixing on revenue. The stocks had a mixed reaction today. Urban outfitters the big after hours mover, so which is telling the story of the health of the american consumer. What do you say . It is a great question. The health of the american consumer, we can debate it the one that tells the story to me is home depot i will tell you if we had a conversation last night and you told me all of the numbers home depot would report and you said, where are the stocks going to go, stocks are down 3 the exact opposite happened. I guess the market is giving home depot a pass once again sales growth wasnt there yet their margins improved. A mixed bag for home depot given their valuation, given the take we saw today, the fact is stock is up today tells me the stock wants to continue going higher typically i would say take profits here i think we have to stay with it given what we saw going into it today. The stock is up 14 , so it is not super soft and here they are with a rally. Right theyre a premiere operator so they should trade at a good multiple they do trade at a really good multiple i agree with guy i was surprised with the strength they pulled out some of the things that caused the weakness, talking about the lumber price and it is not a huge deal for them i think it was expected. They telegraphed that earlier. I was a little i agree with guy. I thought it was going to be down, but then if we look at Something Like kohls, you know, kohls wasnt terrible i was surprised how much it was down it wasnt a disaster at all, and it is really not like kohls was priced to perfection and they had to deliver it wasnt like that at all. Yes, and i think thats a difficult thing about the retail earnings this week, is, you know, where you thought there would be strength lets talk about tj maxx, everybody is talking about how well theyre doing in this environment, retailers are not doing well but they have the deals and everybody will go there yet they didnt do well then the other Companies Come out and where you thought they would do bad, the stocks did fairly well. So i think it is more comment on the confusion thats going on in the market were in this kind of period where we dont have a lot of clarity on a lot of Different Things, and it is just how people are trading it has less to do with what the u. S. Consumer is doing and more to do with how stocks are trading at this point in time. So, i mean, look, the consumer is going to get a tail wind from the Housing Market theyre going to get a benefit from lower Interest Rates, and as far as im concerned first of all in the broader picture Consumer Confidence, if you look at the correlation of Consumer Confidence in the Housing Bureau index, theyre closely aligned until it breaks down, i think the consumers in fine shape when you look at actually the dynamics of lower Interest Rates and what it means for certain parts of the country, not all, that are doing much bet. For home depot, the trends for housing spent i think remain extraordinary. There was one off. Whether it is lumber deflation, whether it is the fact that these guys are actually seeing other price input pressures, they have vendors with the ability to adjust their manufacturing to other places, unlike many other retailers. In terms of competition and in terms of the competitive landscape, right now i like lowes too but theyre so far ahead of lowes and they have no other competition. And then the professional services is a chance where theyre seeing some margin improvement. So the fact that they beat on the eps, some of that was a payroll tax sorry, a tax gain i will talk about payroll tax later, but i do think that these numbers were very good, and home depot is for the long haul. Yes lowes, some would argue it is a turnaround story if they are seeing positive trends at home depot, seeing plus, they have the booster of the new Management Team that has been replaced over the last year or so, then thats why you would be in lowes over home depot. I think so. People want to make the comparison theyre two different. You have been in both. I am a home depot type of guy. I have actually never been in a lowes, only a home depot. No lowes around here. Home depot, you go in there where are you getting your flex seal tape home depot and i might walk out with a drill or hammer just because. You know, i say it in jest but it happens to be true. Quickly back to kohls, i mean karen brings up a great point. It was a disastrous quarter. It was a 75 stock in april, valuation is not ridiculous. I get it they have no earnings growth, but the fact they leaned on this stock today on the back of that on the back of that quarter, you know what it tells me it means the shorts are going to lean into the retailers that just come in okay and the good ones will continue to get a pass thats what you are seeing now so kohls with a 12 Short Interest, you know what . Theyre going to lean in on it again tomorrow. The commentary actually was positive when it came to tariffs. There wasnt much they could pass on to the consumers at this point because they worked it out with their supply chain. Thats positive. But we dont know Going Forward also they plan on doing a big, i think 300 to 400 million buy back there was a lot to not hate for sure and yet people seem to hate it one other thing though, tomorrow we will see lowes will report and target will report we will see how lowes does versus home depot. Remember, lowes had trouble with pricing before the tariff stuff got going, so we will see how they do there. Target, well see. Are they going to be like walmart and continue to really leverage on their Online Business hopefully long, i hope they are. This will be interesting to see. The Department Store thing though, it seems like youre going to be hated no matter what you do this was not a terrible release. Nordstrom, which were expecting later this week. Right. I dont think theres anything we will get out of nordstrom in terms of a change in their business. They will talk about things around the edges where there will be cost savings we occasionally talk about the chance for them to go private but, look, it is hard to understand where theyre supposed to trade right now. I dont think weve found thrige but always, and even with kohls, youren kohls every one of the retailers, especially the big box guys which are not home depot, because home depot is not competing with amazon as far as im concerned for most of the stuff people go to buy. Youre going to return your stuff from amazon to kohls. Right tim mentioned the payroll tax, the possibility of one let a lets get to what could be the pocket of a payroll tax, President Trump talking about it a short time ago eamon javers at the white house with the details confusing out of the white house, eamon. Reporter youre telling me. I dont know where anything stands. Reporter we are following the bouncing ball on this. Yesterday the Washington Post reported they were discussing the idea of a new payroll tax cut at the white house the White House Team put out a statement from a white house official later in the day saying, no, no, no, thats not under discussion at this time. Down playing the story well, the president today clearly decided he wanted to up play the story and talked about it at the oval office. Also talking about the idea of indexing Capital Gains, which is something thats been kicked around for a while, but the president says hes into that idea as well none of this, he says, is because of fear of recession these are just ideas that they think are good ideas and want to move forward on. Here is what the president said today as we follow this story. A lot of people have been talking about indexing for many years, and it is something that i am certainly thinking about. I can say that a majority of the people in the white house at the level that does this kind of thing, they like indexing. So it is something im thinking about. Payroll taxes, ive been thinking about payroll taxes for a long time, whether or not we do it now or not is it is not being done because of recession. So the president saying he is considering payroll tax cut, but maybe not right now. Hes also he likes the idea of indexing as you heard there interestingly, the president also, melissa, said he believes he can do an indexing change unilaterally, that is without congress he said that he believes he can do it on his own, indexing capital gain tax rates to inflation. Thats something that conservative antitax activists have wanted for a long time. Thats a controversial idea. A lot of folks in washington are skeptical you can do it without congress i just got off the phone with Grover Nordquist, the powerful antitax activist here in town he said he believes and he has been evangelizing at the white house that the president can simply order the treasury secretary to tell the irs to change the definition of cost in its regulation, and if they do that they can have this change done overnight. It would be a huge, Sweeping Change to tax law and very controversial on capitol hill im sure. He can do that on his own with president ial powers, but for a payroll tax change it would have to go through congress it is interesting because the president argues theres no recession but a need to do this. The democrats will say the economy is okay, we dont want to do this, even though obama did it a few years ago for a period of two years, lowered the payroll tax to fourplus percent. And president obama did it for a stimulus in a recession. Exactly what are the chances of getting congressional approval zero. Theres no way that the house ways and Means Committee who writes tax law, theyre not going to give the president a big win on anything going into 2020 so i think the chances of that happening are probably zero or south of zero, if you can be south of zero. I think on the other front, this argument that the president can unilaterally change the Capital Gains rate by indexing to inflation, this is an argument that Grover Nordquist has been making publicly and been making inside the white house to a lot he told me he has spoken to everybody at the white house except the president of the United States about this he has gotten a lot of good feedback and he feels like it is something the white house the about to do any day now. Thats going to be controversial. There are people in town who argue thats just not possible under the law. All right eamon, thank you eamon javers covering the white house for us what would be a bigger boost . If you could have either, what would be the bigger boost to the economy in your view clarity, thats what would be the bigger boost. Would you rather have clarity or clarity are we getting a payroll tax, are we indexing Capital Gains, what do i do what is going on my takeaway from this is that the Trump Administration is looking for ways to have the tariff and the trade war go on longer than most people are anticipating as guy has said for over a year now. These are ways to offset it so you dont have a recession going into the election. I think thats the only takeaway other than that, i dont know how you make a decision on this type of chaos. How does it change your current decision not knowing the clarity between a payroll tax reduction and nixing Capital Gains . What if we dont get a payroll Tax Deduction . I understand the point of uncertainty and wanting clarity, but in terms of making investment decisions. It is just posturing. If this is all we have, it is very, very flimsy. It is not going to do anything payroll taxes coming from saved, not spent income as far as im concerned. It is going to drive some kind of spending and it didnt work for obama. The best thing to do is get rid of the tariffs that to me is what we have to do if we dont like huawei and vte, lets go after them. But it is not what this is about. Payroll taxes to me, again, for an administration telling us how strong the economy is over and over again makes zero sense. We are hardly out of the retail woods more big names are reporting results later this week, so what names need to be on your chart Chris Verrone over at the plasma, take it away. When we look at retail here i think we need to remember how bifurcated this group is this is the xrt. I think tactically you are likely washed out enough right near the very big 38 level thats been support over the last couple of years you have some oversold readings on rsi we have seen that in the past. I think it is not unreasonable to think you can get some type of a bounce here, maybe 40, 41 i think we need to remember the trend of this chart, and thed td is still down, 50 is below the 200. 250, both downward sloping when we take a step back and look at the longer term picture here, this is the tenyear xrt chart, we still see one big top formation thats taking shape. So when youre rallying into a top, you still want to be a seller of strength or at least be very, very selective of what you own and what you dont own i will give you one long and one short. On the long side, reports tomorrow, target it is one of the betterlooking names here i mean this is a stock that has largely been basing for the better part of the last four or five years it is pushing right up against that very critical 90 level. I think ultimately it breaks out above that one of the reasons we get there, if you look at target relative to the s p, it is actually quietly starting to outperform here so you are getting paid to wait before this breaks out i think ultimately, higher here is the call then on the short side, foot locker, fl just a definition of a top failed failed lower high broke a couple of weeks ago. Moving average is all downward sloping. I think it is a name that reports friday you can be sure into the number. The takeaway is that it is a very, very Diverse Group we are skeptical enough where you have to be selective of what you own. Target, good foot locker is a short. Come on over, chris john will bring the chair in thank you, john. I love the new music. It is very carol burnettlike. Are there any i know you said you have to be careful what you own, but are there broader trends do, for instance, a lot of the Department Store charts look terrible and the walmart and the targets of the world look better yes, i think what is so striking is how it cuts along two very different lines we know Department Stores are bad, but theyve been bad for years and years and year walmart is emerging strength here target is emerging strength here every name in this group is not a loser. When you look at the xrt, theres such a diversity of stocks in there. There are things like carana it is a great picture. I dont know if you have seen it high Short Interest starting to break out here walmart is starting to outperform amazon as well. When you look for dynamic changes underway, it is happening at the stock level, not the group level. I think it is very important. So im actually long foot locker i know they report on friday i mean to me, i dont look at the charts i look at the fundamental valuation and where it has been, and it has maybe not never but almost never been at a valuation like this. That doesnt matter to you at all, is that right you know, i certainly respect the fundamentals, and this is kind of trying to marry what you see and what i see what troubles me a little bit about the group is when you look at kind of best of breed in the footwear space, nike, that also is starting to deteriorate a little bit you have to kind of wonder if theres a change starting to play out in that group that leaves me at least a little troubled being too long into the foot locker number on friday chris, im glad you brought up nike, because we know what is going on people are going direct to consumer nike is making this big directtoconsumer push. Are there actual Companies Like maybe not nike but other names that you like out there that are directtoconsumer plays so they can be retail but theyre actually selling a product . Carvana is interesting on the car side we dont want to extrapolate too much about the health of the consumer these have been bad charts for a long time. Theres another story here that maybe the consumer is better than people think. Chris, thanks thank you jw nordstrom, i know it is crazy but 27 . Theres a journal article yesterday saying nordstrom has done everything right but the stock has been suffering, now 30 of their sales are ecommerce. If they just Say Something remotely decent you will have a huge Short Covering rally. We have seen it before. Coming up, Toll Brothers reporting. We will tell you what has the stock coming off highs in the after hours session. Plus, we are gearing up for jay powells speech on friday. Live from towns square in new york city, mucmo st ne rhtfter this. 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