Thursday, August 15, 2013

Disaster or buying opportunity?

Walmart Earnings Disaster Exposes a Collapsing Economy: Davidowitz
"I don't think we're in a recession right now, but I think there's a 50 percent chance we'll be in one next year," Davidowitz shouts, and there's nothing the government is going to be able to do about it. "We've spent all the money, we've borrowed all the money, and we're in the tank."
 Yeah, I don't know.  I think we've really been in a recession for about a decade now, but my definition of a recession is a bit broader than the government's.  Otherwise, this is true, and we're probably headed for disaster.  We have spent all the money.  We have borrowed all the money.  But, we're not in the tank yet.  We've still got a long way that we can fall.

But, you know, I was really hoping that Walmart's results really were because Walmart (WMT) did suddenly get stupid, at least relative to Walmart shoppers.  Not so much because it might mean the economy was better than it really is, but that consumers were finally wising up to what Walmart and others are doing: they're making profits from government (for lack of a better term) welfare.  These companies can pay lower wages because the government will subsidize those wages, and then those subsidies get spent at, you guessed it, Walmart.  In case you haven't guessed, this isn't my favorite business model, and one that I think will ultimately ruin the U.S. economy, if nothing else does that first.

Unfortunately, it appears that sinking retail sales isn't just an affliction of the Walmarts of the world; Macys (M) also announced disappointing results indicating, perhaps, that more-affluent shoppers are cutting back as well.

As I'm writing this, the Dow is down 200+ points on the day.  Is it a buying opportunity?  It could be, but I think the market has a way to go down before I'd jump in with both feet.  Rising interest rates are making stocks more expensive, and for a while, at least, I expect to see more of the same.  I could, though, change my mind tomorrow, or even later today, so make sure and follow me on Twitter, or Google+, or subscribe to my RSS feed.  I'm going to add a Facebook page soon, so be on the lookout for that as well.

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