Retail faces a defining week
When Home Depot and Lowe's report, we'll have a better idea of how the sector is doing.
The stock intelligentsia believes the public is still spending -- but only on the house, not the body. In other words, apparel is weak, much weaker, but home goods are strong. This debate will get settled next week when Home Depot (HD) and Lowe's (LOW) report.I am truly worried about retail. Our country seems, overnight, to have become a nation of savers. The borrowings are way down, and the money is not being spent at the mall. People seem to be hunkering down at precisely the moment they shouldn't be, when jobs are coming back.
There are two explanations. One is that Congress wrecked things with taxes and the sequester and people are feeling it, especially when the tax of higher gasoline prices is upon us. Another is that consumers are still spending but they are spending on their homes now that homes are going up in value. Anyone who has been on a Home Depot call knows that home spending has been below average for years and years. Maybe that's changing.
But if it isn't, look out below. That's why the risk-reward on retail is so daunting. If Home Depot and Lowe's say good things on their earnings calls, then we know consumers are spending, but not spending at traditional mall-based stores, so there may be no reason for traditional retailers to rally. But if consumers aren't spending on the home and that has cooled too, I have no doubt that all of retail will take a hit down to levels where the stocks represent better bargains than they do now.
Home Depot, at 20 times earnings, could easily trade down to $70 a share if it doesn't have a pretty darned good quarter. So could Wal-Mart (WMT) if that happens.
This group, to me, is in trouble. It has ridden the refinance and housing boom for ages. Those are over. These stocks will not be bailed out by an improving Europe or Asia. They will only be hurt by Congress when the summer is over.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and had no psotiions in stocks mentioned.
More from TheStreet.com
Maybe if you look more closely you will see that household income is down and people can't afford to buy crap anymore.
We're spending on groceries, keeping the lights on, and putting gas in the car....there's not much left after that.
And no one should be surprised by the crappy revenues, earnings and forecasts coming out of retailers. We've had 3 quarters now of sub 2% GDP growth. We're just not seeing enough job creation and most of the jobs that are being created pay crappy wages. Then we have Obamacare - no one still seems to know how or when it might be implemented, but it's still hanging over our heads like an ominous cloud. Add in rising interest rates and you've got a good recipe for poor retail performance.
"There are two explanations. One is that Washington wrecked things ....... Another is that consumers are still spending, but they......"
no. like after the grocery store stike we had in california years back, people learned how to shop differently.
people have rediscovered thrift stores and yard sales and craft shows. people have realized they have a closet full of stuff they can sell or trade with others. or just pass on to that local thrift store and go there later to buy new stuff for cheap.
The underground economy is flourishing.
Houses break down (as cheap as they are made this is more often than not) and thus people have to spend money on their houses. Clothes well last year's fashion is still this year's fashion and will be next year again.
Cramer just face reality main street is gone and the Fed Reserve is merely printing trillions of dollars a year just to service bad debt that is not being paid back -- mostly government bonds -- US,Europe and Japan.
By 2015 Sept 15 the whole western economy is going to come to a terrible collapse
Everyone knows this and the BRICS are switching to the Chinese yuan as fast as possible.
That is why China even though it's economy is growing at a twenty percent rate right now it is invisible as more and more trades are done in yuan and not dollars and people only track the dollars.
Expect the worst to happen and sooner rather than later folks.
I had a Mc'TOG Special....English muff, fresh tomatoes from garden, pork off the farm, egg from the kid's chickens and cheese we got from the food bank...All toasted up with butter and mayo..
God is life good, and sometimes cheap.
Time to hit those bridges....Ciao.
because to short-sighted jerks like him, NUMBERS are all that matters....he will let innovation fall by the wayside as he counts his pennies. May all of their competitors gain from his stupid thinking.
I hope he is haunted in his dreams for the rest of his greedy life. Poor thing is only making 11 million dollars a year.
Since about 2007 or maybe a little longer? Americans have been saving more and have fallen in-line with peers or other saving Nations...
With the downturn in that year and worst in 2008; Americans have become very tight with their monies.
Baby boomers and others loss much of their investing dollars, many went to cash and low yielding instruments, others may have even bought gold or silver?? Those commodity prices had some pretty good runs in those time frames..
Out of fear and survival techniques, we have been very slow to maintain a full Recovery from our deepest Recession.
No doubt older Generations, have hunkered down and younger generations, have not found the need to purchase permanent homes or many durable goods..
Having read some studies, many younger people are also not buying cars..
I'm assuming a larger percentage, have moved back home and living cheaper by any means necessary.
Plus others, young and old alike have turned to leasing, renting, etc..
With realizations of not collecting a lot of stuff like generations before them..
Plus the job factors entering into the picture of the need or wants of being a "Mobile Society."
The young for jobs....The old for more comfortable retirement surroundings such as winter or summer condos or leasing temporarily.
I thought someone (Skeedaddle) called Jimmy boy a fag earlier...Then I put my glasses on and it had mentioned something about a "flag"...
The girls/ladies have all went out for a 3 (ehem) hour lunch, just me and the dogs left...
I'm all set for marketwatch, got the 1 p.m. report from CGT...
Guess I'm gonna take a ride in my old truck, and check bridges for Fatty Cakes.
Strangely the Indices/Markets are not down much percentage wise, but many or several equities are down 1-2%....Maybe it relates to the RUT2K or Russell...??
But it is a somewhat disturbing factor in today's trading.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
These hot movers could rise by double digits in coming months.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.