Why Walmart's online push will be a money machine for investors
MARKETWATCH 7:27 AM ET 3/7/2019
Critical information for the U.S. trading day
The mood is grumpy out there.
Much of the dour mood for global equities seems to be stemming from those moth-eaten global growth worries and a touch of anxiety as a bull-market anniversary (one of them) approaches.
The gloom won't have been helped by disappointing U.S. trade data and an utterly cheerless OECD report on Wednesday.
The good news? For a few hours on Thursday, U.S. investors get to focus on an economy that's probably in more trouble than American's might be. An ECB meeting is fast approaching, with "whatever-it-takes" ECB President Mario Draghi expected to cut growth forecasts in a bid to justify lending more money to troubled banks.
Back to that bull-market birthday (or fake as some would call it (http://www.marketwatch.com/story/contrarian- investor-steven-jon-kaplan-says-the-sp-is-in-a-bear-market-and-the-dollar-will-prove-it-2019-03-06)). It has produced some runaway hits for investors, such as those who bough into Netflix and its 6,000%-plus gain, but la less -lucrative bet for owners of Walmart (WMT), up a mere 106%.
But don't even think about walking away from Walmart, says our call of the day from Robert Ross, senior analyst at Mauldin Economics. He says the retailer is in prime position to lead a hundred-billion-dollar online grocery industry and deliver "massive profits" for investors who get in early enough.
Rival Amazon (AMZN) doesn't stand a chance against it, claims Ross, in a blog post (https://mauldineconomics.com/the- weekly-profit/walmart-will-crush-amazon#). "I have no doubt Walmart will be the biggest winner in this market. It all comes down to Walmart's physical footprint," he says, highlighting Amazon's 479 Whole Foods locations, versus 4,200 for the retailer some love to hate.
While Walmart was late to the party when it came to selling other goods online, it was an early mover as an e-commerce grocer with in-store pickup. By the end of this year, Walmart expects to offer delivery via 800 stories, blanketing 40% of the U.S., says Ross.
"Unless Amazon buys another giant bricks-and-mortar retailer, it will never be able to match Walmart's store footprint," he says, offering up this chart showing just how much Americans have grown to love filling their fridge without leaving the house.
Walmart is the world's third-biggest e-retailer, overtaking Apple (http://www.marketwatch.com/story/walmart-to- overtake-apple-on-list-of-biggest-e-commerce-retailers-2018-11-15), and helped by its strategy of buying solid players in the field, such as Jet.com, which helped boost e-commerce sales from $13.5 billion to $23.8 billion.
One potential wrinkle in this bullish play is how tough it has proven in some places to make the delivery of perishable goods pay off. The U.K. is a prime example of that, as grocer/retailers Wm Morrison (MRW.LN) and Marks & Spencer (MKS.LN) have moved slowly into home deliveries via online supermarket Ocado (http://www.marketwatch.com/story/ marks-spencer-ocado-form-new-joint-venture-2019-02-27)(OCDO.LN).
"It is truly one of the worst business models in existence," because retailers just can't seem to make it profitable for them, Brittain Ladd, a food retail consultant based in the U.S., told the FT (https://www.ft.com/content/8aa756ac- 3c35-11e9-b72b-2c7f526ca5d0) earlier this month. Another analyst noted it costs roughly 10 pounds ($13) to pick up those orders and get them to their destination, while customers pay around half of those delivery charges.
And Amazon, which prides itself on free shipping for Prime members, is looking for ways to cut its own delivery costs after paying $21.7 billion in 2017 (http://www.marketwatch.com/story/with-free-shipping-perk-amazons-2018-shipping- burden-on-track-to-top-the-217-billion-spent-in-2017-2018-11-05) to keep its customers happy.
Gold is lower, crude is higher, while the dollar is steady. The euro will be in the spotlight, with that ECB meeting on deck and expectations rising that the central bank will push a rate hike further out (). The presser with ECB President Draghi will be the big deal to watch.
Opinion:ECB has a plan for markets and is looking for reasons to act (http://www.marketwatch.com/story/opinion-ecb- has-a-plan-for-markets-and-is-looking-for-reasons-to-act-2019-03-05)
Europe stocks are largely down across the board (http://www.marketwatch.com/story/europes-markets-down-as-investor- fears-for-slowing-growth-spill-over-2019-03-07), while it was a mixed day for stocks in Asia (http:// www.marketwatch.com/story/asian-markets-retreat-as-uncertainty-over-us-china-trade-deal-grows-2019-03-06), with more pressure on the Nikkei .
The chart
Small-cap stocks may be a focus for Thursday's trading, on the heels of a day that saw the biggest drop for the Russell 2000 index since Jan. 22, and its fourth down day in six. The index is up nearly 14% year-to-date, leading the crop of U.S. major indexes.
Some view the Russell as a canary in the coal mine for large-cap equity direction, as it tends to lead the broader market up and down.
Our chart of the day comes from Mott Capital Management's (https://mottcapitalmanagement.com/stocks-fall-again-and- the-russell-may-be-signalling-a-bearish-sign/?utm_source=mailpoet&utm_medium=email&utm_campaign=MP) Michael Kramer, who is also watching the small-cap index closely. "We really need to see the Russell stabilize here. I would get more nervous over the short-term should the Russell crack below 1,530. It would likely signal a steeper pullback for the S&P 500 too," he said.
Opinion:Zuckerberg's privacy pledge presents a big dilemma for Facebook (http://www.marketwatch.com/story/zuckerbergs- privacy-pledge-presents-a-big-conundrum-for-facebook-2019-03-06)
Burlington Stores (BURL), Kroger (KR), H&R Block (HRB) and Barnes & Noble (BKS) are reporting early, followed by L Brands (LB) American Outdoor and Costco (COST).
Tesla (TSLA) has released details (http://www.marketwatch.com/story/tesla-says-new-v3-supercharger-stations-will- reduce-recharging-times-by-50-2019-03-06) on its updated Supercharger network, saying it will cut driver charging time by 50% and those charging stations will start rolling out across the country soon.
Opinion: These 15 stocks will allow investors to tap into strong growth for cloud computing (http:// www.marketwatch.com/story/15-stocks-for-investors-who-want-to-profit-from-strong-growth-in-cloud-computing-2019-03-06)
Tim Apple. Close, but no cigar Mr. President. Social media is having lots of fun after he flubbed the name (http:// www.marketwatch.com/story/tim-apple-trump-botches-apple-ceos-name-2019-03-06) of the CEO of one of the world's most valuable companies (AAPL).
One day until big jobs data (see preview (http://www.marketwatch.com/story/all-the-bad-news-on-the-economy-cant- overshadow-where-the-real-strength-lies-2019-03-02)). For Thursday, we'll get weekly jobless claims, fourth-quarter productivity and unit labor costs, the January trade balance on the heels of a soaring December deficit (http:// www.marketwatch.com/story/trade-deficit-soars-to-10-year-high-in-2018-foiling-trump-white-house-effort-to-rein-it-in- 2019-03-06) and consumer credit.
The stat
5%--That's how many women held Fortune 500 CEO (https://www.catalyst.org/research/women-ceos-of-the-sp-500/) seats in 2018, which is down from a record 6% in 2017, according to a new research report from J.P. Morgan. The data comes a day ahead of International Women's Day, and the bank also reported that women only hold 10% of top management position in S&P 1500 companies.
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