Friday 04-01-11

Expects inflation? What planet is he living on, it is here already. Wal-Mart CEO Bill Simon expects inflation U.S. consumers face "serious" inflation in the months ahead for clothing, food and other products, the head of Wal-Mart's U.S. operations warned Wednesday. The world's largest retailer is working with suppliers to minimize the effect of cost increases and believes its low-cost business model will position it better than its competitors. Still, inflation is "going to be serious," Wal-Mart U.S. CEO Bill Simon said during a meeting with USA TODAY's editorial board. "We're seeing cost increases starting to come through at a pretty rapid rate." Along with steep increases in raw material costs, John Long, a retail strategist at Kurt Salmon, says labor costs in China and fuel costs for transportation are weighing heavily on retailers. He predicts prices will start increasing at all retailers in June. "Every single retailer has and is paying more for the items they sell, and retailers will be passing some of these costs along," Long says. "Except for fuel costs, U.S. consumers haven't seen much in the way of inflation for almost a decade, so a broad-based increase in prices will be unprecedented in recent memory." Consumer prices — or the consumer price index — rose 0.5% in February, the most since mid-2009, largely because of surging food and gasoline prices. Core inflation, which excludes volatile food and energy costs, rose a more modest 0.2%, though that still exceeded estimates. The scenario hits Wal-Mart as it is trying to return to the low across-the-board prices it became famous for. Some prices rose as the company paid for costly store renovations. "We're in a position to use scale to hold prices lower longer ... even in an inflationary environment," Simon says. "We will have the lowest prices in the market." Major retailers such as Wal-Mart are the best positioned to mitigate some cost increases, Long says. Wal-Mart, for example, could have "access to any factory in any country around the globe" to mitigate the effect of inflation in the U.S., Long says. Still, "it's certainly going to have an impact," Long says. "No retailer is going to be able to wish this new cost reality away. They're not going to be able to insulate the consumer 100%." http://www.usatoday.com/money/industries/retail/2011-03-30-wal-mart-ceo-expects-inflation_N.htm The Next Stock Market Crash Courtesy Of… Sean Hyman (March 30, 2011) Every few months, I take a trip back to south Arkansas where I was raised, to visit some of my friends and family. My relatives there all know what I do for a living, so they usually want to “talk markets” with me. I don’t mind. Watching markets is not just a job for me – it’s my hobby. So I’m always happy to listen as they give me their opinions on stocks. On my last trip home, I noticed something interesting. All my relatives were saying the same thing. They are all thinking about buying stocks again! But wait…it gets better… When I got back to Dallas just two weeks ago, all my friends at my Church were also talking about buying stocks for the first time since before the recession. And frankly, their timing couldn’t be worse… Why the Crowds Always Lose! If there’s one thing I’ve learned in my 20 years in the markets, it’s when “the masses” all think the same thing, they are all wrong altogether. It’s because the crowds wait too long. They want a long period of confirmation before they feel comfortable risking their money in the stock market. They watch the financial news media talk about how stocks are going up, up and away. And day after day, they sit on the sidelines, waiting for the “perfect” time to enter the market. By the time they get up the nerve to enter the market once again, it’s usually a market top. (That means the big professional investors are about to dump their shares.) That’s exactly what’s about to happen here. I see a major stock market correction, or even a crash, coming. Today, I want to share with you the ONE tangible thing that pushes stocks to their breaking point. It’s the same catalyst that should knock stocks over a cliff this year. …Oil prices. Historically, whenever oil prices rise to a certain point, it forces a stock market correction. You can check it out on the chart below. (The S&P 500 is charted in red and oil is charted in blue.) Once Oil Tops $100, it Becomes Too Much for Stocks to Handle!

In the chart above, I’ve drawn a horizontal black line at the $100 a barrel level. As you can see, once oil hit that level, stocks plummeted. It’s pretty easy to see why… Large Corporations, Small Businesses and the Retail Consumers Can’t Afford $100 oil! When oil prices climb, everything costs more to produce and ship. Imagine the increased costs that FedEx and UPS must handle when oil surges. Imagine how much more Wal-Mart’s huge network of 18-wheelers must pay in gas to transport goods all over the country. Not only that, but think about all the small business owners who are just trying to keep their books in the black and recover from the last couple tumultuous years. When oil prices were at $33 a barrel, it lowered their fuel costs and their overall business expenses. But as oil costs have almost tripled in less than two years, it’s brought about an added tax on their business through higher fuel costs. Think about the retail consumers who must pay more for gasoline. They are just trying to mind their own business and provide for their families. But now it’s costing them $80 to $100 a week just to get to and from work (or up to $400 a month). New income stream pays 22-times more than treasuries Discover how to start collecting a steady stream of checks, as much as $757- $1,535, every month. $100+ Oil Takes Billions of Dollars Out of the Retail Market Each Month Imagine the “ripple effect” high oil prices have over 100 million U.S. workers when they have to take an extra $400 out of their paychecks each month just to pay for gas. That’s a ton of people who will be spending less in the retail market place on everything else. Suddenly our “consumer driven” economy slows to a standstill as large corporations, small business owners and even the “average Joe” gets pummeled by higher oil prices. If oil holds here at these horrific levels for any length of time, it will put a huge dent in consumer spending. That could tip us into another recession while stocks fall from the sky. I bring all of this up now because oil prices have largely held above $100 a barrel for an entire month now. The turmoil in the Middle East keeps jacking up oil prices. It’s not just Libya either. Things keep heating up in Yemen, Oman, Syria, Bahrain, etc. Some oil production facilities have suffered damage from the war, while others have simply had to evacuate their oil workers for safety’s sake. There doesn’t seem to be a “quick fix” to these problems either. Even if someone found a way to stop the violence tomorrow… it would still be months to a year before all oil production returned to normal. So is there a great chance that oil will hold at lofty levels for an extended period of time? Definitely. $100 Oil Will Force Foreign Currencies to Sell on the Cheap Stocks in Europe, Japan and U.S. are already feeling this pain from higher oil prices. All three of these countries have already started showing signs of weakness for the past two months as oil prices have soared and held above $100 a barrel. If this all continues (and I believe it will), then stocks will have a severe correction shortly. We’ll see “stock market sensitive” currencies like the Aussie dollar fall with the major stock indexes. That will force some incredible discounts in foreign currencies if you’re buying for the long-term. In effect, falling stock prices will mean that plenty of the most fundamentally strong currencies on the planet will be selling on the cheap. So get ready for the “full effects” of high priced oil to slap the markets in the face soon. When it happens, get ready to load up on foreign currencies at severe discounts. Have a Nice Day! Sean Hyman Editor, Currency Cross Trader Blog: http://wcw.worldcurrencywatch.com/ P.S. If you’re buying and holding currencies for the long-run, the best thing you can do is invest in high-yielding currencies that will produce income as stocks continue to fall. My colleagues and I have devised a special “accelerator income” strategy that lets you invest in foreign currencies – and earn high monthly interest for your trouble.

http://sovereign-investor.com/2011/03/30/the-next-stock-market-crash-courtesy-of/