Posts Tagged ‘retail sales’
Here, I present five indicators that point to high risk for key stock indices.
Optimism continues to increase. There’s a general consensus among stock advisors and investors that the key stock indices will continue to go higher. Take the Sentiment Survey by the American Association of Individual Investors, for example. As of November 14, 39.20% of all respondents said they were bullish. In late June, this number stood at 30.28%. Investors who are bearish on key stock indices dropped to 27.47% from 35.17% in June. (Source: American Association of Individual Investors web site, last accessed November 20, 2013.)
History has repeatedly shown us that when the optimism increases and reaches the level of euphoria, key stock indices have turned the opposite way. The examples of this are many.
Corporate earnings are in trouble. Companies are posting lower revenues but reporting higher per-share corporate earnings, beating estimates as they cut costs, reduce their labor forces, and continue on their record stock buyback programs. This “financial maneuvering” cannot go on indefinitely.
And the outlook for corporate earnings continues to deteriorate. Just look at the chart below of estimates of corporate earnings per share of S&P 500 companies in the fourth quarter. You will notice there’s a very clear trend: the estimates continue to decline. Meanwhile, despite corporate earnings estimates falling, the S&P 500 has soared even higher.
Companies are warning about their corporate earnings … Read More
Black Friday is less than two weeks away, and I sense there’s increasing nervousness in the retail sector. For some, this weekend of spending accounts for over 50% of annual sales.
Macy’s, Inc. (NYSE/M) reported a strong fiscal first quarter in which it beat the Thomson Financial earnings-per-share (EPS) consensus estimate by $0.08 per diluted share or 20%. But while Macy’s offers investors some hope, the good news was short-lived, as the stock’s results may have had more to do with the company’s own success than a strong retail sector.
Wal-Mart Stores, Inc. (NYSE/WMT) and Kohls Corporation (NYSE/KSS) followed suit with soft reports that left investors worried about the strength of the holiday shopping season.
In the case of Wal-Mart, the world’s largest retailer reported a 0.1% decline in comparable U.S. store sales (without fuel) for the 13 weeks ended October 25, down from 1.7% growth a year earlier. For the 39 weeks ended October 25, Wal-Mart saw its U.S. sales contract by 0.4%, versus 2.4% growth in the year-earlier period. The result from Wal-Mart raises some red flags for the retail sector as we head into what is the most critical shopping time of the year.
Mike Duke, president and CEO of Wal-Mart, noted in the company’s quarterly report that the retail sector is “competitive.”
Wal-Mart also doesn’t appear to be too optimistic going forward and that makes me nervous, since the company is a good barometer … Read More
The middle class in the U.S. economy is on the verge of collapse. Yes, I said collapse. That social class that once helped the U.S. economy grow and prosper is coming apart. Will the U.S. economy ever be the same without it or is this the new norm?
Here’s why it’s important to you.
The middle class helped the U.S. economy (following World War II and up until the credit crisis of 2008) by buying goods and services they needed or wanted. They bought cars, TV sets, furniture, appliances, clothing, computers, and flashy gadgets. In simple terms: they spent money.
The spending by the middle class resulted in American companies selling more, making more, and hiring more people to meet consumer demand. Businesses then took their profits and invested in new projects and built more factories. This is how cities like Detroit flourished.
But where does the middle class of the U.S. economy stand now?
Signs of trouble for the middle class of the U.S. economy actually started to surface at the start of the new century, but it wasn’t until the financial crisis when the middle class in the U.S. economy really started to deteriorate.
Today, the middle class is not buying or spending like it once did—and this is not by choice.
The collapse of the housing market in the U.S. economy has taken a devastating toll on the middle class in this country.
While the media and politicians keep telling us the housing market has turned the corner and is healthy again, the delinquency rate … Read More
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