For you Zab
Eric deGroot- Insights
Sunday, February 17, 2013
Forget Internal Memos - Wal Mart Sales Have Been A Disaster Since 2002
While an internal memo expressing concern about recent sales trends at Wal-Mart generates headline clicks, it's NOT (big emphasis here) saying anything new about the long-term trends. Wal-Mart's stock 'adjusted' performance, the only internal memo that matters to investors, has been a complete disaster since 2002 (chart). Since this reality could easily encourage the public to spending less and saving more, a serious no-no Western economic growth, its not widely-published.
As long as private consumption (consumer spending) drives Western economic growth, retail stocks will be leadership sector. As already discussed on Insights, this sector is beginning to show early signs of deterioration amid the growing weight of the global debt crisis.(Market Says Risk-On But Cracks Are Showing).
Many have come to believe that the United States, as the cleanest economic shirt in the world's dirty laundry hamper, can bear the economic weight of the growing global debt crisis. The recent under performance of retail stocks; therefore, suggests a growing vulnerability of the US as the world's sole heavy lifter If the cracks in the facade of the US recovery grow more visible (the negative divergences expand and extend), who's left to do the heavy lifting? This is why 2015-2016 will likely be an important transition period.
AI
