Business

Morning Market Roundup: Bank Stress Tests, Walmart’s 10,000th Store

This is what’s important in the financial world this morning:

World Markets: The purchasing managers indices (PMI) of China, German and France all signaled slow growth or contraction in November. It is a sign that demand for exports and consumer expenditures are in free fall. China and Germany have large enough consumer economies that their numbers are a surprise. Concerns about future income and jobs have slowed consumer activity in even these two comparatively stronger economies. The PMI figures also signal that demand for goods in the U.S. and EU, the two largest regions based on GDP, has faltered. If PMI is an indication of purchases to come — both by consumers and businesses — then the global economy has tipped closer into recession.

Retail: Walmart has opened its 10,000th store, a new Sam’s Club in Mexico. That country has been as critical to Walmart’s growth outside the U.S. as China has. Mexico has some advantages over China for the world’s largest retailer. China still has tight restrictions on labor, protection of unions and the ability to refuse the construction of new stores on little more than a whim. The news also shows that, while Walmart’s sales have slowed to a crawl in the U.S., overseas demand for the goods and services the company stores offer is still accelerating.

Black Friday: Projections about retail sales over the Black Friday weekend range widely. The National Federation of Retailers expects foot traffic to rise as much as 10 percent. Some analysts believe that retail sales may be flat for the final two months of the year. E-commerce experts expect sales to be in the low double digits, driven in large part by revenue growth at Amazon.com. The question that will remain unanswered until January or February is whether traffic, both online and in stores, translates into profits. Discounts may be so deep to lure buyers that revenue will turn into losses for many products.

Banks: The Federal Reserve said it will conduct another series of stress tests on America’s largest financial firms. The tests will be based on extremely pessimistic assumptions. Among these is that U.S. unemployment will reach 13 percent in early 2013. The statistic has not been that high since the Great Depression. Wall St. has already said it expects the financial services industry will be badly damaged by a slow economy and bad loans. The stocks of Bank of America and Morgan Stanley have reached bottoms close to those last hit in March 2009, when the market had created a trough that took it from 14,000 in 2007 to just below 7,000.

Europe: Two-thirds of the respondents to a new Barclays poll think Europe will fall into a recession. The other third are likely to be wrong. Signs are many that a recession in the region already began more than a month ago.

“Their pessimism about Europe stems from the debt crisis plaguing the region, with nearly 40 percent of investors citing it as the key theme for markets in 2012,” CNBC reports. If it is a “key theme,” expect U.S. stock indices to fall through most of next year.

(Douglas A. McIntyre—24/7 Wall St./The Blaze)

Comments (6)

  • FuturePresident
    Posted on November 23, 2011 at 11:33am

    OK if you haven’t seen “The High Cost of Low Prices” go watch it. That is what walmart is doing to our country and around the world. Back in the day a buisness would have to benefit America in order to opperate within our country. But now it seems that isn’t the case politicians are allowing these companys to steal our money. Go look at all the grants and incentives walmart has received nationwide…Its criminal and to be honest whats the point of hiring 10 million people into SLAVERY. Do you honestly think it is any different? For some people the choice is, work for minimum wage at walmart or die. That isn’t being free so dont try and tell me this is how America is supposed to be. I don’t mind people making money, but I do mind people being forced into poverty in my country especially when companies are making as much money as they are. If you think people can actually live on minimum wage, go try for yourself. I figured it out. America is dying and one word can describe why. Greed. Weither is be walmart, bankers, politicians, or wall street. It is greed killing our country. Lincoln was right. We lose our country when all the wealth is agrigated. It has all been agrigated at this point. If I EVER open a buisness i wouldn’t open it unless i could afford to pay my employees a decent wage. And by decent wage I’m talking about well over the poverty line. There is no point opening a buisness that puts people into poverty just to become rich. Greed is the reason we are fai

    Report Post » FuturePresident  
  • blazingaway
    Posted on November 23, 2011 at 11:06am

    They always need a crises to justify change. Europe needs to put an end to their free hand-outs. They can’t do so without a crises. When they finally make the changes things will begin to recover.

    Report Post » blazingaway  
  • PATRIOTGRUNT
    Posted on November 23, 2011 at 10:00am

    Get your money out of 401k-IRA’s out now. Europe will go belly up. US will follow. You will not be able to get your money out of the Banks when SHTF.

    Report Post » PATRIOTGRUNT  
    • JRook
      Posted on November 23, 2011 at 10:44am

      Ah yes, another milestone for the race to the bottom for the American worker.

      Report Post »  
  • Snowleopard {gallery of cat folks}
    Posted on November 23, 2011 at 9:11am

    13% inflation expected, more bank “stress tests” and the like…anyone smelling more massive sets of regulations and shove-down-the-throat bailouts for ‘too big to fail’ businesses who if they are that bad off, need desperatly to fail?

    Can anyone say “power grab by the Fed’s?”

    Report Post » Snowleopard {gallery of cat folks}  
    • JP4JOY
      Posted on November 23, 2011 at 9:39am

      I’ve been seeing this for some time now. The FED’s will very likely take all tax deferred financial instruments ( IRA, 401K’s, KEOGH’s, etc.) and invest them in Treasuries. The Fed won’t be able to get buyers in any other way and there is a nest egg of a couple of Trillion dollars there. The other thing that may happen is that Fannie/Freddie will start renting out their foreclosed properties and buying out underwater loans because of the mantra of housing being a right. This will further collapse the housing market and make F/F the largest property owner in the world. Rent controls will steal the properties mom & pop landlords have saved for in some cases for generations. Welcome to the new equality era.

      Report Post » JP4JOY  

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