Thursday, April 28, 2011

The economic outlook - WMT CEO

Who better to know the economic outlook of the United States than the CEO of the largest private employer and retailer (400k employees and about 10% of retail sales in the United States).  I would suggest that his data is better and more current than that of anyone in the nation.  Mike Duke CEO of Walmart said over a month ago that inflation was moving up.  Check, this was just confirmed by no less that the head of the Federal Reserve. 

Mike Duke just said:

WalMart shoppers, many of whom live paycheck to paycheck, typically shop in bulk at the beginning of the month when their paychecks come in.  Lately, they're "running out of money" at a faster clip, he said.
"Purchases are really dropping off by the end of the month even more than last year," Duke said. "This end-of-month [purchases] cycle is growing to be a concern.

So how do we benefit from this information.  We can short WMT, buy puts, etc. - no less than the CEO is telling us things don't look good.  So I took a look at WMT - here is a visual:

If the past is a guide WMT should break below 50 (46-47?) before July.  If things are getting worse as Duke suggests then under 45 would not be a surprise.

Gl traders.  Not often we get a CEO suggesting we should short their stock (OK, he didn't say that, but the implication was there).  Hehehe
  

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