![\"Retail](\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/05\/Picture1-22.png\")
<\/figure>\n\n\n\nInvestors are also anxiously waiting for a resolution in the debt ceiling debate with Republicans pushing for spending reductions and Democrats maintaining that such cuts would have dire economic consequences. Later today, Democratic President Joe Biden and top congressional Republican Kevin McCarthy will attempt to strike a deal to raise the U.S. government’s $31.4 trillion debt ceiling and avert an economically catastrophic default of U.S. debt payments. Time is tight for the two leaders with the U.S. Treasury Department warning that it could run short of money to pay all its bills as soon as June 1, a problem that could not only trigger a default but also spark a recession.<\/p>\n\n\n\n
Markets Digest Consumer Spending Data and Debt Ceiling Fears<\/strong><\/h2>\n\n\n\nMarkets are reacting cautiously to the confluence of information this morning with all major U.S. stock indexes down. However, the Nasdaq Composite Index, which has led the market year-to-date, is barely down this morning as investors view tech stocks as being less vulnerable to recessions or higher interest rate environments. Cyclical sectors are weighing down the S&P 500 Index, which is down 0.3% while the Russel 2000 and Dow Jones Industrials Average are down 1.3% and 0.6%, respectively. The strength in retail sales excluding gasoline and autos alongside fiscal issues are weighing on bond prices, with yields higher across the curve driven by the shorter-end. The 2-year and 10-year yields are up 12 and 6 basis points (bps), each to 4.11% and 3.57%. Higher yields are pushing up the dollar as well, with the Dollar Index up 24 bps to 102.67. Yesterday\u2019s news of the U.S. Department of Energy\u2019s purchase of 3 million barrels of crude oil for the U.S.\u2019s Strategic Petroleum Reserve (SPR) alongside this morning\u2019s news of the International Energy Agency (IEA) raising its forecast for global oil demand by 200,00 barrels per day (bpd) to an all-time high of 102 million bpd are failing to underpin energy prices, with WTI crude oil down 0.4% to $71.33 per barrel. <\/p>\n\n\n\n
Homeowners Cut back on Spending but Secular Growth Continues<\/strong><\/h2>\n\n\n\nConsumer spending is facing a mix of headwinds. Many consumers are tapped out on purchasing goods as partially reflected in this morning\u2019s report, after splurging on home renovations, furnishings and technology during the depths of the pandemic. They have since switched their spending focus to services. At the same time, consumers are struggling with higher costs of living as inflation has spread across the economy. New homeowners, furthermore, are struggling with higher mortgage rates which has weighed significantly on construction activity. Many of those factors contributed to Home Depot lowering its guidance for 2023. Conversely, the secular trend of growing e-commerce and digital payments has allowed Paysafe to maintain its guidance.<\/p>\n\n\n\n
Home Depot reported $3.82 earnings per share (EPS) for the first quarter, down from $4.09 a share in the year-ago quarter but above the analyst consensus expectation of $3.80. Its revenues of $37.26 billion, however, missed the consensus expectation of $38.28 billion and declined 4.2% from $38.9 billion in the first quarter of 2022. The company\u2019s same store sales in the U.S. declined 4.6% year-over-year (y\/y), with half of the decline attributable to lower lumber prices. Cold weather in the West also hurt sales. Homeowners have also shifted from large projects to smaller projects. Home Depot Chief Financial Officer Richard McPhail had previously cautioned that sales this year would be relatively flat y\/y because homeowners had splurged on projects during Covid-19 and consumers have shifted their spending to entertainment and other services. The company now expects overall sales and same store sales to decline as much as 5%, largely due to higher mortgage rates.<\/p>\n\n\n\n
Paysafe, which provides a digital payment platform for merchants and consumers, reported adjusted EPS of $0.54, beating the consensus expectation of a $0.01 loss per share but down from $0.62 in the first quarter of last year. Its net income declined 11% largely due to higher interest expenses. After accounting for interest and other expenses as expressed by earnings before interest, taxes, depreciation and amortization (EBITDA), its earnings increased y\/y from $74.5 million to $83.5 million. Additionally, the company\u2019s revenues increased 5% y\/y from $367.7 million to $395.2 million due to strong performance with its digital wallet and e-commerce services. On a constant currency basis, revenues climbed 7%. The company maintained its guidance for its 2023 revenues to increase 5% to 7% y\/y.<\/p>\n\n\n\n
A High Stakes Meeting for Investors and the Economy<\/strong><\/h2>\n\n\n\n\n
Consumer spending is facing a mix of headwinds. Many consumers are tapped out on purchasing goods as partially reflected in this morning\u2019s report, after splurging on home renovations, furnishings and technology during the depths of the pandemic. They have since switched their spending focus to services. At the same time, consumers are struggling with higher costs of living as inflation has spread across the economy. New homeowners, furthermore, are struggling with higher mortgage rates which has weighed significantly on construction activity. Many of those factors contributed to Home Depot lowering its guidance for 2023. Conversely, the secular trend of growing e-commerce and digital payments has allowed Paysafe to maintain its guidance.<\/p>\n\n\n\n
Home Depot reported $3.82 earnings per share (EPS) for the first quarter, down from $4.09 a share in the year-ago quarter but above the analyst consensus expectation of $3.80. Its revenues of $37.26 billion, however, missed the consensus expectation of $38.28 billion and declined 4.2% from $38.9 billion in the first quarter of 2022. The company\u2019s same store sales in the U.S. declined 4.6% year-over-year (y\/y), with half of the decline attributable to lower lumber prices. Cold weather in the West also hurt sales. Homeowners have also shifted from large projects to smaller projects. Home Depot Chief Financial Officer Richard McPhail had previously cautioned that sales this year would be relatively flat y\/y because homeowners had splurged on projects during Covid-19 and consumers have shifted their spending to entertainment and other services. The company now expects overall sales and same store sales to decline as much as 5%, largely due to higher mortgage rates.<\/p>\n\n\n\n
Paysafe, which provides a digital payment platform for merchants and consumers, reported adjusted EPS of $0.54, beating the consensus expectation of a $0.01 loss per share but down from $0.62 in the first quarter of last year. Its net income declined 11% largely due to higher interest expenses. After accounting for interest and other expenses as expressed by earnings before interest, taxes, depreciation and amortization (EBITDA), its earnings increased y\/y from $74.5 million to $83.5 million. Additionally, the company\u2019s revenues increased 5% y\/y from $367.7 million to $395.2 million due to strong performance with its digital wallet and e-commerce services. On a constant currency basis, revenues climbed 7%. The company maintained its guidance for its 2023 revenues to increase 5% to 7% y\/y.<\/p>\n\n\n\n