Remember that old bit about watching out for falling prices? Well, according to Businessweek shares of
Wal-Mart Stores hit an all-time high of $74.80 on July 27, having recently
pierced levels they haven’t visited since 1999. The stock’s 25 percent
year-to-date return is nearly triple that of the Standard & Poor’s 500
index. Over the past 13 years, the chain that put Bentonville, Ark., on the map
went from earning $4.4 billion on $137 billion in revenue to now clearing $16
billion on sales of $446 billion. Unemployment has since more than doubled from
its New Economy-charged days of 4 percent.
Wal-Mart’s high, which comes on its 50th anniversary, speaks volumes
about the economy and market.
I first learned of the milestone in a rather terrifying note
put out earlier in the week by Gluskin Sheff Chief Economist David Rosenberg.
He wrote:
“This is looking more and more like a modern-day depression.
After all, last month alone, 85,000 Americans signed on for Social Security
disability cheques, which exceeded the 80,000 net new jobs that were created:
and a record 46 million Americans or 14.8 percent of the population (also a
record) are in the Food Stamp program (participation averaged 7.9 percent from
1970 to 2000, by way of contrast). … Increasingly, the U.S. is following in the
footsteps of Europe of becoming a nation of dependents.”
Which immediately made me think of how, in September 2010,
Wal-Mart’s U.S. chief admitted at a Goldman Sachs (GS) conference (of all
places) that on the last day of every month, “it’s real interesting to watch.
About 11 p.m., customers start to come in and shop, fill their grocery basket
with basic items … and mill about the store until midnight. Our sales for those
first few hours on the first of the month are substantially and significantly
higher. If you really think about it, the only reason somebody gets out in the
middle of the night and buys baby formula is that they need it, and they’ve
been waiting for it….”
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