Did Inflation Help Wal-Mart Beat?
Export shipping a part of the equation.
A quick hello from New York where, yes, I am in fact about to leave for another round of television round n' round. But I always have time to share some quickies, especially when Wal-Mart (WMT) reports:
It was an interesting apparel inflation number this morning. Here¹s why: China makes 25% of US clothing, give or take. "The Chinese Consumer" is always assumed to be a great thing ("they'll love our iPhones!").
Americans buy more clothes than iPhones. Chinese lifestyles going higher means A) companies like Liz Claiborne (LIZ) and the private labels of discount chains like Wal-Mart and Target (TGT) are starting to have to pay much more to produce clothing (or find a new impoverished nation to make the clothes) and B) the end prices will go higher for consumers (who, as we recall, are making less all the time).
To the former point, that's why I harp on shipping prices, even in one-off ways by looking at DryShip (DRYS), etc. Because there isn't an index tracking how much it costs to transport T-shirts from China, the simplest way to do it is gather information about how much it costs to move other stuff across oceans and land.
Suffice it to say Americans have gotten really, really used to the idea of T-shirts costing $5. If you're worried about the global meltdown you shouldn't be stocking up on gold; you should be stocking up on underwear.
- Wal-Mart guided higher. It is very good. The company is very slow money, as a stock, and there's nothing wrong with that.
- Some good, spirited debate about the Ags and such is going on in The Exchange.
- When I say the Ag bubble is like the Internet bubble I actually mean it in a (semi) good way. The Internet did, in fact, turn out to be every bit as big a deal as the bulls thought it would be way back in the 90's. I'm on the Internet right now, this very second. The magnitude of that success has done absolutely nothing for folks who rode, say, Yahoo (YHOO) from $100 to $20.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter