Earnings at Benchmark Stocks Wal-Mart and Home Depot Explain Consumer Sentiment, says Popular e-letter Profit Confidential

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Profit Confidential, the popular stock market and economic e-letter, says recent earnings reports, specifically same-store sales, of Wal-Mart Stores Inc. and Home Depot Inc. are a good indicator of current American consumer sentiment.

The really important numbers to help us understand what kind of economic year we will have in 2012 will be the Christmas 2011 retail sales in the U.S. — and we’ll be watching them like a hawk.

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Profit Confidential, the popular stock market and economic e-letter, says recent earnings reports, specifically same-store sales, of Wal-Mart Stores Inc. and Home Depot Inc. are a good indicator of current American consumer sentiment.

According to Profit Confidential, "Wal-Mart sales at its stores open at least one-year rose a pathetic 1.3% in the third quarter of 2011 compared to the same period of 2010. Sales at Wal-Mart, a company that caters to the lower end of retail is growing at a slower pace than American GDP. On the other end of the spectrum, Home Depot Inc., the world’s biggest home improvement retailer, saw same-store sales grow 3.8% in the U.S. in the third quarter of 2011 compared to the third quarter of last year.”

Profit Confidential says the persistent high unemployment in the U.S. is having a huge impact on low-end retail. At the beginning of a recession, you see consumers cut high-end retail spending and increase low-end retail spending. But as the economy has not turned around, with the underemployment rate at about 16%, consumers are cutting back on all kinds of spending, including low-end retail, which can be seen in Wal-Mart’s same-store results. As for Home Depot, Profit Confidential says the real estate market in the U.S. is still in disarray. People are not upgrading their homes because bank financing is hard to get and the underlying fear property prices will fall further persists. So what do homeowners do if they are not upgrading their homes? They improve what they have… which is why Home Depot same-stores sales are rising 3.8%.

Michael Lombardi, lead contributor to Profit Confidential, writes, “The really important numbers to help us understand what kind of economic year we will have in 2012 will be the Christmas 2011 retail sales in the U.S.—and we’ll be watching them like a hawk. Wal-Mart’s poor same-store sales number is another red flag for the U.S. economy.”

Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market... before it plunged.

Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%. To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.

Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.

Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.

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