While Inditex fell below long-term support earlier this year, the stock price has managed to retrace much of that move down:Meanwhile, retail sales posted a yearly gain for the first time since 2010:
Sony reported lower than expected sales and EPS estimates and lowered its full year profit guidance yesterday, serving as a stark reminder that Abenomincs is hardly a panacea for Japan’s struggling consumer electronics industry.
Per some of our previous posts, it is getting harder and harder to find interesting large-cap consumer discretionary stocks. Many of the well known retail concepts like Target or Nordstrom are breaking down, while some of the luxury names, like Coach or Ralph Lauren are locked in persistent declines.
There doesn’t seem to be a trend in the US economic releases recently. In the past week we have had weaker housing data (Pending Home Sales), an ok production data point (Industrial Production), below consensus employment report (ADP), a weaker regional survey (Dallas Fed), and now today a blow-out regional survey (Chicago PMI).
The Treasury Department reported that in September the government had a surplus of approximately $75 billion. The budget deficit as a percent of GDP has basically halved since the end of 2011.
Coach and Ralph Lauren are two US luxury retail stocks that are currently out of fashion with investors. Coach has been in a persistent downtrend since the beginning of 2012, and it has accelerated on the downside so far in 2013.
LinkedIn sold off hard today (-9.3%) as management guided slightly lower than analyst’s were expecting for the final three months of the year. LinkedIn has been on a tear this year. Before the sell off today, LNKD was up 136% and had outperformed the MSCI World Index by 90% over the past year.
Two of the largest expenses for consumers are housing and gasoline. The gain in house prices suggest that the owner’s equivalent rent portion of CPI will rise in the coming months. Meanwhile, retail gasoline prices suggests that the gasoline component of CPI will fall.
As we mentioned a couple of weeks ago, most European equity indices are in positive territory this year (lead by the peripherals).
The overall consumer confidence index fell from 80.2 to 71.2 in October due mainly to the government shutdown this past month. The consumer confidence survey also takes the temperature of consumers in different income brackets. What caught our eye was the difference in confidence between the richest and poorest Americans.