Single-family home starts up, Fed minutes released and Target (TGT) surprises beats expectations

Markets were heading lower on Wednesday after a report showed that single-family housing starts were on the rise last month. The Commerce Department announced that building permits on single-family homes were up 4.2% to a seasonally adjusted 696,000 unit pace. When combined with the data for both single and multi-family housing, the total was up 4.8% to 1.08 million units. This marks the highest information on record for the index since 2008. Richard Moody, a senior economist at Regions Financial, said, “The October report on new residential construction does not change our view of the underlying trends in the housing market – robust activity in the multi-family segment of the market with single family activity continuing to underperform expectations.”

The Federal Reserves minutes were released from their October meeting on Wednesday. There was a heavy debate amongst policymakers over how much importance to place on signs that inflation expectations were slipping. Placing too much effort on those signs would counteract their goals to bring price increases up to their goals. The minutes said, “Many participants observed that the committee should remain attentive to evidence of a possible down shift in longer-term inflation expectations. Some of them noted that if such an outcome occurred, it would be even more worrisome if growth faltered.”

Shares of Target Corp. (TGT) were on the rise over 6% after the company posted results that beat expectations. The company noted that they hit their first increase in same-store sales in four straight quarters. Same-store sales were up 1.2%, which was more than double what economists were projecting. The company also reported full-year earnings expectations of $3.15 to $3.25. This is narrowed from their previous projections of $3.10 to $3.30. Target also said that they have had success in sales at their Canada stores. Sales gained 44% during the third-quarter to $479 million. Brian Cornell, Target’s chief executive and chairman, said, “We’re pleased with our third-quarter financial results, which were driven by better-than-expected performance in our U.S. segment.”

That’s all for today,

Warren Gates, Normandy Research

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