Retail and tech spending appear to be showing modest boosts, and that has been a major driver of stocks.
We all know the consumer is in tough shape, but retailers are in much better shape than last year:
1) Profits will be much higher than Q4 last year because margins are better. Remember November 2008? Remember those 50 percent off sales...in November! You won't see that this year because the inventories are far leaner, and the stores have cut personnel and all sorts of other costs. Yes there will be sales in December, but nothing like last year.
2) Some signs of life at the high end. Lots of comment about Nordstrom likely posting a positive comp store sales number for the fourth quarter, indicating that at least some high end consumers are coming back.
Still, there are lots of unknowns:
1) CEOs have less idea than usual how the consumer is going to act at Christmas. There are some signs of optimism: JC Penney said on their conference call this morning that they plan to be ahead of plan in November.
2) Consumer sentiment for November was below expectations; not a good sign for holiday sales.
3) Comparable store sales for the fourth quarter look to be flattish overall. That's a mild disappointment considering the disaster that was the fourth quarter of 2008.
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