More than ever, Wall Street cares about you. Not you personally but average folks who don't have multi-billion dollar bonuses, pay obscene rents to live in a refrigerator-box sized apartments or have to write essays to get their children admitted to nursery schools that are more selective than some universities.
Believe it or not, you with your 2.5 kids, house in the suburbs and job with your annoying boss are very much on the minds on Wall Street heading into the third quarter. Your pessimism about the economy perplexes pundits and politicians who continually argue that the economy is strong. A recent ABC News/Washington Post poll showed that 35% of Americans rate the economy as excellent or good.
So who's right, Wall Street or Main Street?
So far, it depends on the neighborhood where the consumer lives. Costco Wholesale Corp. (NASDAQ: COST), whose customers tend to be well-heeled, today reported fiscal fourth quarter results that while not great, beat Wall Street's expectations. Meanwhile, Petsmart Inc. (NASDAQ: PETM) shares are tanking after the pet supply retailer cut its third quarter and 2007 profit forecast, citing weak consumer spending. So, consumers are confident enough to buy huge bags of pet food but worried about buying regular sized bags of Alpo.
Tomorrow, we'll see if consumers are drowning their sorrows in caffeinated beverages. PepsiCo Inc. (NYSE: PEP), which now is facing a consumer revolt over bottled water, is expected to report a 10.7% gain in sales this quarter. Earnings are expected to rise to 96 cents compared with 88 cents a year earlier, according to Thomson Financial. Analysts expect Coca-Cola Co. (NYSE: KO), which reports Oct. 17, to have profit of 68 cents compared with 62 cents a year earlier on revenue of $7.3 billion.
Consumers will be back in focus when results are reported in the coming weeks for companies ranging from Citigroup Inc. (NYSE: C) to Mattel Inc. (NYSE: MAT) to General Electric Co. (NYSE: GE) to Google Inc. (NASDAQ: GOOG) to Delta Air Lines Inc. (NYSE: DAL) and to Domino's Pizza Inc. (NYSE: DPZ). Not only will Wall Street be paying attention, but so will the presidential candidates who will be discussing the economy ad nauseum as the primary season looms.
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Reader Comments (Page 1 of 1)
10-10-2007 @ 4:10PM
WhoseAskingU said...
Both are right depending on if you mean the global economy or the US economy. If you're invested in global corporations, especially China or Dubai you're probably thinking the economy is booming. If you're invested in the US you're probably thinking what's wrong? Your average worker is not better off, wages are lower and benefits are disappearing. So your average consumer thinks the economy in the US is bad, because of outsourcing and war spending. As for Costco, that's a bulk shopping store for the frugal shopper. You pay less per oz. on items. So if Costco's sales have gone up I would assume it's because more people are trying to get more bang for their bucks. They're trying to stretch a devaluing dollar. Your average homeowner has lost equity in their home, and has credit card debts with rates going up. So they have to cut corners and change their lifestyle, they can't shop like they used to.