Always Low Prices?

Said an analyst: "Time for rethinking
Whether Wal-Mart is rising or sinking;
Though still they do well,
Their core clientele
Find their incomes and credit lines shrinking."

Kelly Evans, the Wall Street Journal's Ahead of the Tape scribe, writes that Wal-Mart is at a crossroads: though retail analysts see the company's earnings growing at 10% a year, surveys indicate that 60% of Wal-Mart's customers no longer believe it has the lowest prices. This leaves Bentonville, Arkansas' big-box powerhouse in the awkward position of moving up from its financially troubled core demographic to compete more directly with the likes of Costqueau and Targét. Wal-Martre, anyone?

More Dollars to Gold(en Arches)

Said McDonald's competitors recently:
"While the rest of us lag, they do decently;
We must capture, like they,
An original way
Of promoting the spread of obesity."

In times of dollar distress, investors take to gold. The same holds true for the golden arches of McDonald's (NYSE: MCD) which, practically alone in the fast food industry, continues to grow same-store sales at a healthy (if that's the word for it) pace. Perhaps, as Kelly Evans writes in the Wall Street Journal's Ahead of the Tape column, it's due to the traffic drawn to those fruity smoothies and sweet iced coffee drinks. Or maybe those golden fries really are a store of (caloric) value.

Don't Buy Retail

Wall Street sees contrary sentiment
In retail investors' presentiment,
So, when Mom or Pop's right,
One asks if it might
Be the good call that coincident'ly went?

The Wall Street Journal's Kelly Evans writes in her Ahead of the Tape column that the American Association of Individual Investors' sentiment survey has been showing more predictive power than usual in the first half of this year.   Market professionals often see retail investors as a contrary indicator; small investors typically react in a herd to broad market moves, such that, as Stifel Nicolaus strategist David Lutz puts it: "If everyone's on one side of the boat, I like being on the other one."  The fact that the S+P 500 index climbed 6.6% after a bullish reading of the AAII December survey is an interesting departure, but how soon before Mom and Pop revert to type?

Fed Funds Folly

Said a wavering dove at the Fed:
"With no growth in employment ahead,
We're tempting the fates
By holding down rates,
So we'd best fight inflation instead."  

As reported by Kelly Evans in the Journal's Ahead of the Tape today, even some dovish governors of the Fed are worried that inflation may return ahead of job growth.  All signs point to a "no-hire, no-fire" job market, in which companies earn renewed profits from a skilled and less dispensable  work force, while many unskilled jobs have structurally disappeared and cannot be brought back by monetary stimulus. Meanwhile, both headline and core inflation figures show signs of picking up, leading erstwhile doves to make hawkish suggestions for gradual 1% hikes in the Fed funds rate.

Quitting Time

Economists, seeking a sign
Of the end of employment decline,
Infer a renewed
And more confident mood
If more workers decide to resign.  

America needs more quitters!  That's the message from the Wall Street Journal's Kelly Evans in her Ahead of the Tape column.  The quit rate (= numbers of quitters per month / total work force) has not moved up very much from its 2009 low of 1.3%, but a higher rate would signal more confidence in the job market.  Yesterday's announcement of the Labor Dept's Job Openings and Labor Turnover Survey, however, shows that quitters have not yet given the economy the needed "JOLTS"; rates of hiring and quitting remained unchanged in December. 

Too Small to Prevail

The diminutive banks in the land  
May be showing less profit than planned,  
If for growth they're depending  
On small-business lending,  
For which there is flagging demand.    


Kelly Evans writes in the Journal's Ahead of the Tape that smaller banks do not appear set to report the earnings improvements that the largest banks generally have of late.  The chief reason for this disparity is the smaller banks' greater dependence on lending, which has been slow to recover from the financial crisis.

Fed-Up Stock Market

Sinking rates was the Fed's one desire
In becoming a big T-note buyer;
Though for naught they did meddle
In bonds, they can settle
For driving stock indices higher.   



The Wall Street Journal's Ahead of the Tape columnist, Kelly Evans, notes that "QE2" (the second round of quantitative easing) failed in its goal of lowering long-term interest rates, but has been correlated with a 19% increase in the S&P 500 index since August.  Should we take stimulus any way we can get it?

The Big Dipper

Said a well-economically-versed one,
"I see bubbles and I've got to burst one:
The one way we'll skip
The next double dip
Is we never got over the first one."

With apologies to David Rosenberg of Gluskin Sheff  as seen in The Big Interview with Kelly Evans of the Wall Street Journal.

Payroll Report

In discussing employment statistic'ly
Economists measure holistic'ly;
When the news is depressing,
They're sure to be stressing
The parts that read more optimistic'ly.


Thanks to Kelly Evans of the Wall Street Journal's News Hub and Ahead of the Tape for the challenge of taking the sting out of a bad payroll report.