Wednesday, October 12, 2011

A couple of articles from a newsletter I subscribe to

Posted: 12 Oct 2011 09:41 AM PDT
Outside of official government reports, many like to look at transport metrics such as railroad and port data.  Obviously to dictate the health of the U.S., imports are going to say a lot more than exports.  Based on August port traffic (ahead of the holiday season) it appears 2011 is not going to be as rosy at 2010.

  • Analysts have been raising their predictions for holiday spending ever since the back-to-school shopping season was stronger than most had expected.  But the people who work at the companies that ship and transport retailers’ goods are not nearly as optimistic about holiday sales.
  • When retailers expect that Americans will be crowding into their stores, their orders pile into the nation’s ports in August and September for delivery to stores by late October. But logistics companies say that is not happening this year.“We’re concerned, because usually at this time, you see this peak,” said Richard D. Steinke, the executive director of the Port of Long Beach in California. “We haven’t seen it.”
  • In Long Beach, the second-busiest container port by volume, August imports fell by 14.2 percent from August 2010. While the port has not yet released September volumes, a spokesman, Art Wong, said it expected about a 15 percent drop from September 2010.
  • The holidays receive outsize attention, because sales in November and December tend to make up about a fifth of retailers’ sales for the whole year. And retail sales are a crucial indicator of economic health, given the importance of personal consumption in keeping the economy afloat. 
  • In recent weeks, many retail analysts and trade groups have issued fairly positive forecasts about holiday sales. Last Thursday, the National Retail Federation said it expected holiday sales to rise 2.8 percent over last year. And late last month, the federation said it expected port volumes to rise by at least 4.5 percent a month for the final four months of the year.
  • In contrast, the people who work at ports, and at train and trucking companies, say the shipments do not seem to be high enough to signal strong holiday sales. Higher shipping volumes are “a prediction that sales are going to go up,” Mr. Steinke said. “The N.R.F. and some of those groups have said there’s going to be an increase in volume coming through the ports. When our August numbers are down and carriers say future loadings aren’t all that great, you wonder where that peak is coming from.”
  • While Mr. Steinke said that retailers occasionally delayed shipping for as long as possible to see how the economy progressed, he said they usually gave transportation companies a heads-up if they were planning a lot of last-minute orders. This year, he said, the retailers do not seem to be expecting that.  “We talk to the railroads, we talk to our ocean carriers, and they’re not seeing this big peak, or bracing themselves for a big late peak,” Mr. Steinke said.
  • The slowdown seems to be occurring on land, too.  “We’re not seeing any real, significant peak,” said Steve Branscum, group vice president for consumer products marketing at the Burlington Northern Santa Fe Railway, referring to the company’s import business. The railway typically has increased imports in August through November. But this year, he said, “the last three months, July, August, September, our numbers have been pretty flat compared year over year to the same month, and the West Coast imports have been down a little bit.”  
  • FedEx’s chairman and chief executive, Frederick W. Smith, said last week that shipping across the Pacific in June through August “was a bit lighter than we had thought it would be.” During that period, international priority shipments fell compared with a year earlier, the company said in its conference call in September. Alan B. Graf Jr., the chief financial officer, offered a detail. “Simply stated, we put capacity out anticipating traffic that did not materialize,” Mr. Graf said.
  • Mr. Smith said FedEx was now expecting a 2.5 percent to 3 percent increase in holiday shipping volumes this year; in 2010, it had a 15.4 percent increase.
Posted: 12 Oct 2011 08:10 AM PDT
Back in 2007 (while the market was still "forecasting" rosy times) [Dec 6, 2007: Target Shoppers Turning into Walmart Shoppers] and first half 2008, the stock of Walmart (WMT) really took off.  This was part of our ';pooring of America' theme, as I opined the U.S. consumer was finally going to take a massive hit without the house ATM to rely on.  Let's not read 'too much' into it yet, but Walmart is out this morning with a quite positive business review - and the stock seems to be breaking out.  If the Main Street economy is improving, you don't want to see a pick up in sales at Walmart.

Via WSJ:

  • Wal-Mart Stores Inc. says it is finally poised to end its nine straight quarters of declining sales at stores open at least a year in its core U.S. business. Executives for the world's largest retailer said during the company's annual meeting for analysts Wednesday morning that comparable store sales at U.S. Wal-Mart stores have been positive for the past three months, leaving Wal-Mart on track to report an end to its domestic slump when it discloses earnings next month.
  • "From about May we have been on an upward trend," said U.S. president Bill Simon, adding that the company has had positive comparable-store sales for the three months ending in September.
  • Chief Executive Mike Duke said the company is seeing signs of an emerging class in many developing nations, presenting opportunities for growth, yet is still seeing a depressed consumer in the U.S.  "Here in the U.S., there really is an income bifurcation," Mr. Duke said, adding, "Our customers still have concerns about jobs."
from Fund my Mutual Fund

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