Wages are rising at their fastest rate in a decade. That’s what we told you in yesterday’s Daily…
In October, the average worker earned 3.1% more than this time last year. That’s the biggest increase in wages since 2009. 82.3% of Americans between the ages of 25 and 54 have jobs—the most since 2010.
Of course, more money and more jobs have people feeling pretty good. The latest University of Michigan Index of Consumer Sentiment shows that.
The current index reading is 98.3. The last time the index read this high was in 2004. The market continued rising for another three years after that.
Consumers haven’t felt this good in a long time… And when people feel good about the economy, they open up their wallets.
With the Christmas season coming up, it looks like it will be a merry season for retailers—and their investors.
Record Christmas Expected for Retailers
Market research firm eMarketer forecasts total U.S. retail sales will surpass $1 trillion this holiday season. That’s a 6% increase from last year… and the strongest growth since the market came out of the Great Recession in 2011.
In its 33rd annual holiday retail survey, consulting firm Deloitte said that the average U.S. consumer is likely to spend $1,536 this year. That’s up from $1,226 last year.
“Almost half the people we surveyed said they think the economy will improve, the highest number we’ve seen in years,” said Deloitte vice chairman Rod Sides.
The early indicators suggest a great holiday season ahead of us. That’s why hedge funds are positioning themselves now for the rise in retail stocks.
Institutions Are Getting Into Retail
Last Friday, our Wall Street insider, Palm Beach Trader editor Jason Bodner, sent a memo around to the PBRG team.
Regular readers know Jason spent years as a trader at storied New York firms such as Cantor Fitzgerald. He created a proprietary system that scans nearly 5,500 stocks every day to find the best of the best.
His system looks for stocks that have unusual institutional buying. That means someone with a lot of money—and presumably a lot of knowledge—is getting into those positions. These are the guys we want to follow.
In his memo, Jason wrote:
What I’m really noticing is that the retail and consumer space is coming to life. This is interesting because a year or so ago, people expected Amazon to put retailers out of business. The space was a blood bath. But now, that has reversed.
Jason’s system is flagging quite a few retail names, including Walmart—the world’s largest retailer by sales. In the past three months, Walmart has flashed seven unusual institutional buying signals.
Now, this shouldn’t surprise long-term Daily readers.
In December 2017, I wrote about the rise of the new “omni-shopper.” (See December 12, 2017 Daily, “Why the New ‘Omni-Shopper’ Is Choosing Walmart.”)
“Omni-shoppers” are people who shop in-store and online—simultaneously. They go to the store to find what they want, and do a price check for the item online. Then, they buy it from the cheapest outlet.
Walmart has a strategy to profit from these shoppers. First, it price matches every product it sells. That means if you find an item at a lower price somewhere else (including online), Walmart will offer the same price.
The company also has beefed up its online presence over the past couple of years with its acquisition of online retailer Jet.com.
According to the International Council of Shopping Centers, 81% of shoppers who pick up their online orders at the store end up purchasing more stuff. So Walmart will also get a boost from people who order online and then come in to retrieve their items.
Those are two reasons why large institutions have likely picked up on Walmart. No company will benefit more from what could be a record-setting holiday shopping season.
Analyst, The Palm Beach Daily
P.S. Do you plan to shop in-store or online this holiday season? Maybe you’re an omni-shopper and will do both… Tell us your holiday shopping plans right here…
Readers appreciate Teeka Tiwari’s warning about a potential crypto scam in Monday’s interview…
From Jeremeeh K.: Dear Teeka, once again, thank you for this insightful interview. I’m not a subscriber yet, but I am your biggest fan.
From Christo Z.: I have been a Palm Beach Letter subscriber for a year and really enjoy the content. I do appreciate your effort and all the knowledge you send our way.
From Austin S.: Just a quick note to the entire team: You all are doing a great job. I have gotten a ton of value from your services. People send in hate mail… but I want to praise you, and let you know the hard work is appreciated. Keep on keeping on.
America has a new super fuel.
This new fuel source was first discovered in Idaho… in a little-known area in Lemhi County.
Today, President Trump—through several executive orders—opened up over 2 million acres of land in Utah where deposits of this super fuel can be found.