Showing posts with label black friday sales. Show all posts
Showing posts with label black friday sales. Show all posts

Stocks Suffer Despite Consumer Income Rise

black friday salesIt is the week of all weeks for retailers. In fact, I find it comical to browse around online retailers to see that the norm has now become "Black Friday Week." Retailers are riding the black friday train as long as they can. Some, like Amazon, keep the party going a whole week after. For many, 40-50% of their profits will be earned in the next two months. That can be a big gamble if consumers are tightening spending a bit, which recent data is showing.


First, lets discuss the drops in stocks. This was initiated by the failure of Congress to pass a bill to cut into the Federal Deficit, which has caused for a lot of concern on Wall Street with some speculating another future downgrade in US debt. The one received earlier caused quite the shake in markets.

Coupled with politics, is the recent spending data which was released this week that showed despite consumer earning more income this past month, their spending rate decreased. Sure, October can be an exhaust month in anticipation of the holidays, but many see it as consumers being concerned about economic uncertainty.

In addition, jobless claims ticked up by 2,000 this week, which didn't help.

A lot of eyes will be on Black Friday spending to see how consumer sentiment is going into the holidays. Don't be fooled by coupons being sent in the mail. Many retailers are cutting back on holiday savings, due to recent declines in sales despite large discounts on items (big ticket items especially).

As for now, I have a straddled position in the market, hedging many of my longs with shorts. To offset the rest, I am bullish on commodities and gold as I continue to believe uncertainty amongst investors will push up those markets. Happy Trading.

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Black Friday - More, But Less

black friday salesWe have seen the finish of yet another wild "Black Friday" weekend. Retailers were hoping for a sign of light at the end of the tunnel with the weekend sales performance. Thus far, results were not as good as many were hoping for. Sales slightly increased as a whole, but the estimated spending per person was lower than last year. Also, when breaking down the numbers, most of the sales were found in the big ticket "door buster" items, and much less in the standard inventory. In fact, very little brand loyalty was found in this year's ambush, as consumers were clearly looking for the best bargains. Wal-Mart's Sanyo 50" flat screen for under $600, was one of the favorites of the weekend.

Black Friday (and most of December) is the glory days for retail. A weakening spending per consumer is not necessarily a good sign. Sure, fundamentally, it is better that consumers are spending less and saving more. However, for the sake of a stronger economic recovery, it has adverse effects.

I spent the early mornings of Black Friday in the major big box retailers. As always, there were a lot of people. However, I did notice the large amount of "Looky Lou's" that were present, who were not pulling out their credit cards. Also, it looked as though holiday gifts were the main purchases for this last Black Friday. Retailers are hoping that consumers did not get most or all of their holiday shopping done this past weekend, because many are expecting a very strong December to break even.

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We are entering into holiday volume at this point, which becomes very vulnerable to big market movers and manipulation. I expect to see (as we did last year) big moves in opening and closing minutes, with a fairly mellow mid day trading pattern. 2010 still bears some big pot holes for many companies, and will be a very trying year for many businesses. If the government begins to start letting things unfold naturally, we could be in for quite a shock. Happy Trading.

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