Daily Archives: January 13, 2008

Panic Hits The Retail Sector (WMT)(TGT)(AXP)(COF)

When an industry says it is in a state of disarray, investors may want to head for the hills. As the National Retail Federation began its annual meeting, one of its consultants Wendy Liebmann, chief executive of WSL Strategic Retail described the industry by saying "It’s anarchy," according to Reuters.

"Americans cannot control the big things such as oil prices, falling home values, mortgage costs and rising property taxes, so they want to control the small things," Liebmann said. "They are watching what they spend on everything."

True enough, so citizens are buying food and pet supplies while shying away from fashion, electronics, computers, and software. If this is true, retail is seeing a big change from the fourth quarter of last year when electronics and PC sales were relatively strong. That part of the cycle may have ended about the same time that American Express (AXP) and Capital One (COF) said that consumers suddenly ran out of money.

Observers at the big retail confab seem to think that the cutback in consumer spending will hurt Wal-Mart (WMT) and Target (TGT). But, there is not even anecdotal evidence that this is true. In reality, curtailed spending habits could help "big box" retailers because they are able to offer buyers substantial discounts on most products.

To put it briefly, there is a wide range of opinion about winners and losers in the retail industry because the number of sane heads examining the business has shrunk to near zero.

Douglas A. McIntyre

Posted on: January 13, 2008 – 5:47 pm in Retail, , , ,

Moody’s Says “No Recession”

Things may seem tight right now, but Moody’s does not think that the US economy will go into recession.

CNN Money writes that the agency’s view is that "the dollar is expected to contribute positively to economic growth in 2008 as its declining value increases the value of U.S. assets abroad."

That thread seems a bit thin. Based on recent housing and retail data, the consumer is already in deep trouble. News from Capital One (COF) and American Express (AXP) would indicate that default rates on credit cards are beginning to move up sharply.

No recession. Wishful thinking.

Douglas A. McIntyre

Posted on: January 13, 2008 – 4:51 pm in Economy

Toyota (TM) Beats Up On Ford (F) Pick-Up

Ford’s (F) new F-150 pick-up has to do well for the car market to have any kind of real comeback in the US. It is the company’s top selling vehicle and has a high profit-per-unit.

According to data out of Texas, which is where one of every seven pick-ups in the US is sold, Toyota (TM) is making a mess of things for US car companies. Toyota full-sized pick-up Tundra’s Texas market share "soared 79 percent,  while competitors’ shrank by 5 percent, said market-research firm R.L. Polk & Co."

Bloomberg writes "Ford’s F-Series fell to 31.9 percent of the Texas market through Sept. 30, down 5.5 percentage points from a year earlier, while GM’s (GM) Silverado was little changed at 26.7 percent and Dodge Ram rose 1.4 points to 19.8 percent."

If Toyota keeps it up across the country, that rebound in Ford F-150 sales may be a long time coming.

Douglas A. McIntyre

Posted on: January 13, 2008 – 4:45 pm in Autos, , ,

Boeing (BA) Goes To Bahrain

Gulf Air was good enough to order 24 Boeing (BA) Dreamliners with a face value of $6 billion.

The planes will not be delivered until 2016 so the delays in Dreamliner production should not be an issue.

According to Bloomberg "the deal includes a firm order for 16 787-8 planes worth $3.4 billion and options for another eight."

Douglas A. McIntyre

Posted on: January 13, 2008 – 4:36 pm in Uncategorized

Procter & Gamble (PG) NyQuil: Teenage Drug Of Choice

Getting high on cold mediciation appears to have become the "hot" path to a good time. And, it’s inexpensive and unregulated. Procter & Gamble’s (PG) NyQuil is now being headlined in the press as the most fun you can get in a bottle.

According to The Substance Abuse and Mental Health Sevices Administration "about  3.1 million people in the United States aged 12 to 25 (5.3 percent of this age group) have used over-the-counter (non-prescription) cough and cold medicines to get high at least once in their lifetimes." That puts its ahead of reported use of methamphetamines and about even with LSD.

The latest recipe for taking NyQuil is a mix of vodka, Red Bull and the cold medicine called a Purple Monster. The New York Post writes that the recipes for these cocktails are available online.

If  Procter & Gamble management wants to prevent a cascade of litigation and tremendouse negative PR, it needs to insist that their NyQuil products only be sold with a perscrption.

Douglas A. McIntyre 

Posted on: January 13, 2008 – 10:40 am in Pharmaceuticals,