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Posted
Aug 07 2009, 12:45 PM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
Stocks rallied hard on Friday after the government reported 247,000 jobs were cut in July compared to the 467,000 lost in June. It was the best employment report we've seen in a long time: The drop in employment was the smallest since late last summer. The unemployment rate fell 0.1% to 9.4%.
Yet, after digging into the numbers it's clear that the increase in the unemployment rate is being driven by discouragement, not improvement, in the jobs market.
Some 422,000 people left the labor force last month. Compare this to the 6,664,000 jobs that have been lost since the recession began and it's clear that a large percentage of people are simply giving up hope. Philippa Dunne and Doug Henwood of the Liscio Report note that there is "some serious labor force withdrawal" at work.
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Posted
Jun 25 2009, 03:59 PM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
While stock investors pushed the broad market to impressive gains on Thursday, credit investors sat on the sidelines with their arms crossed. They're not interested in the "green shoots" of optimism the stock bulls are peddling. Riskier, high-yield debt sold off modestly today in a sign debt buyers are more than a little suspicious of the economic data being used to justify higher prices.
Just look at breadth. On the NYSE, advancing issues outpaced decliners by a ratio of 4.3 to 1. In the credit market, things were more mixed: Advancers outpaced decliners 2 to 1. Also, look at risk appetites. Riskier credits underperformed more defensive holdings. But for stocks, the Russell 2000 small cap index outperformed the Dow Industrials by nearly 40%.
According to WJB Capital Group strategist Brian Reynolds, this difference of opinion can best be seen by the relationship between JC Penney (JCP) and Warren Buffett's Berkshire Hathaway (BRK.A). In late April, the credit market was saying that JC Penney was six times riskier than Berkshire. The stock market had a different opinion. As a result, JC Penney's stock has doubled since March 9 while Berkshire is up just 18%.
So which is right, the credit market or the stock market?
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Posted
May 14 2009, 07:36 PM
by
Charley Blaine
Rating:
Money Blog: Top Stocks Blog - MSN Money
The stock market managed a modest rebound on Thursday after Wednesday’s drubbing -- and for all the right reasons.
Friday will be a challenge.
Tech and financial stocks led the rally that pushed the Dow Jones industrials up 46 points. There was strength in materials stocks and energy stocks as well. Bears pulledback from pushing financial stocks lower. They'd hit the group on Wednesday through the ProShares UltraShort Financial ETF.
The CBOE Volatility Index dropped 6.8% to 31.37. It’s down 28.9% this quarter.
Earnings from Wal-Mart were in line with estimates, and the Street seemed happy with Urban Outfitters’ report. Upscale retailer Nordstrom’s earnings, after the bell, were well received. But the fact is that a rally, which had pushed the Dow up as much as 92 points at 2:30 p.m. ET, faded quite a bit at the close. The cause wasn’t clear. Let’s ascribe it to profit-taking.
But the close feeds into why Friday will be a test
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Posted
Feb 24 2009, 11:06 AM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
Everyone knew it was going to be tough. But as fourth-quarter results are reported, it's still shocking to see how bad the holiday shopping season actually was.
Deep discounts were needed to encourage sales, which pinched profitability. Macy's (M) revenue fell 7.7% during the quarter as earnings declined 59%. Target (TGT) saw revenue fall 1.6% while profits fell 41%. Sales at Office Depot (OD) were down 15% as it posted a loss of $1.5 billion. The list goes on and on.
This is just the beginning. America's retail industry is shrinking. Store closures, consolidation, and reduced expansion will bring per capita retail square footage back to levels last seen in 2003. As a consequence, millions will lose their jobs, investors in failed retailers will be wiped out, and shoppers will be presented with fewer choices at higher prices.
There are two dynamics at work here: credit and confidence.
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Posted
Feb 20 2009, 01:35 PM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
It was more bad news on the retail front today as J.C. Penney (JCP) reported a 51% drop in fourth-quarter profit on Friday as consumers drastically reduced holiday spending. Earnings totaled $211 million, or 95 cents per share. CEO Myron Ullman called the retailing environment "truly a time of survival of the fittest."
Sales were off nearly 10% during the quarter, to $5.8 billion. The huge drop in profitability, compared to the fall in revenue, was due to the deep discounting retailers were forced to make to clear inventory as the economic situation deteriorated in the three months ending January 31st.
With its value focus, J.C. Penney has actually been able to weather the storm better than more up market competitors like Saks Fifth Avenue (SKS). It has also been able to avoid deep layoffs, such as those made by Macy's (M) recently. But does the company have what it takes to survive the Darwinian process?
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Posted
Dec 29 2008, 12:51 PM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
The 2008 holiday shopping season looks like one of the worst in history. MasterCard reports that total retail sales fell 5.5% in November and 8% in December compared to last year. The worst affected were retailers of electronics, appliances and luxury goods.
Not even an epic fall in gasoline prices and the resulting boost to inflation-adjusted income could rekindle the acquisitive sprit as American consumers worked to strengthen their financial position.
While we won't know the true extent of the damage until same-store sales are reported next week, big changes are coming as the industry resizes to reflect new realities. Consultants at AlixPartners estimate that nearly 26% of the 182 large retailers it tracks are at significant risk of filing for bankruptcy over the next two years, up from just 4% two years ago.
For investors, all is not lost in this sector.
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Posted
Dec 26 2008, 05:50 AM
by
Bernhard Warner and Matthew Yeomans
Rating:
Money Blog: Top Stocks Blog - MSN Money
This post comes from partner site The Big Money.
Christmas is over, which means we can really start to be pessimistic about the retail industry. The Wall Street Journal gets things started by reporting that retail sales have fallen far beyond analysts' muted expectations. November sales were down 5.5 percent compared to last year, and December's numbers were down by 8 percent. This "despite a flurry of last-minute shoppers lured by the deep discounts," according to the WSJ. There's plenty of juicy data inside the report, including the devastated luxury-goods market, the 27 percent decrease in retail foot traffic, and the stubborn but still suffering online commerce market. The WSJ found a good sport willing to sum it up with a bit of holiday zest: "Retailers went from 'Ho-ho' to 'Uh-oh' to 'Oh-no.' "
Your daily Bernard Madoff update: The SEC is "casting a wide net" in the investigation of the $50 billion fraud, says the WSJ. Family members, accountants, and witnesses from Madoff's firm are all being questioned. In a story like this, the news trickles out in small bits, and this piece is full of those little details. Most interesting: "A longtime Madoff employee, Frank DiPascali, has been questioned and was described by investigators as having been 'evasive' in his answers."
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Posted
Dec 19 2008, 01:32 PM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
In the midst of one of the worst holiday shopping seasons on record, JC Penney decided that CEO Myron Ullman needed a little extra incentive: Assuming that the stock is trading 11.3% higher in three years' time, he will receive up to 500,000 shares through a grant award.
Flagged by the footnoted blog, the bonus is "to provide an incentive for performance during the current economic environment and to recognize Mr.Ullman's willingness to continue his service to the Company" -- you know, given all the other opportunities in retail at the moment. If this seems a bit superfluous, that's because it is: The 61-year old Ullman has a regular salary of $1.5 million and bought brought home a total of nearly $8 million last year, according to Reuters.
Of course, regular workers face long hours and layoffs over the next few weeks.
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Posted
Oct 06 2008, 06:34 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
Santa will be thinner this year, a sign that he cannot afford all that rich food. It is a good thing that he wears a beard because can't afford a razor.
By most estimates, this will be the worst holiday shopping season since 1991. That is optimistic. The better benchmark is probably the deep recession of 1973.
Some retailers may not have access to the credit needed to keep items in inventory. It won't matter much to them if shoppers show up or not. They won't have anything to sell.
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Posted
Feb 13 2008, 02:17 PM
by
Robert Walberg
Rating:
Money Blog: Top Stocks Blog - MSN Money
To paraphrase Mark Twain, the report of the American consumers' death has been greatly exaggerated.
As evidenced by Wednesday's retail sales report for the month of January, which showed a gain of 0.3%, we're all out there spending like usual despite the high price of gasoline, the credit crunch and the fear of recession. Given that consumer spending accounts for more than 70% of GDP growth, the data were a strong sign that maybe, just maybe, all this recession talk is much ado about nothing.
Now I don't want to put too much stock into one piece of data, especially given that the month of January now benefits from all the gift cards given at the holidays. Spending that used to be recorded in December now gets registered in January (or later when the cards are used). Nevertheless, the data seem to suggest that even under the stress of current economic conditions, consumers will fork over their money for a new shirt, a pair of pants or yet another product from Apple.
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