Wal-Mart
(WMT)
reported earnings and revenue above forecasts. One of the interesting things in the report was the revenue growth of 10%, and inventory growth of only 1%. This shows excellent logistical management. The earnings of .76 show excellent cost control, as many prices were cut to attract value buyers. The stock is selling off a bit on somewhat more conservative guidance for the current quarter, but comparisons for this quarter will be against a fairly robust number a year ago, so I wouldn't get too upset by some caution.
Retail sales were off -0.2%, as expected, but ex-autos, sales were up 0.5%, better than hoped for. Gasoline sales slipped -0.4%, which is good, and could be an indication that the headline Consumer Price Report tomorrow could be more benign than feared. This report does nothing to dissuade me from thinking the current-quarter GDP is on a positive track.
The TED spread has improved significantly. Remember, this is the difference between the rates on dollar loans offered in the U.S. and Europe. A wide TED spread shows fear in the marketplace and a reluctance by financial institutions to lend to one another. At its recent worst, the spread was 210 basis points in December of 2007. It is now a much narrower 85 basis points. While still above the 10-year average of 47 basis points, it is much better and indicative of an improving financial market.
Vincent Farrell Jr. is a principal of Scotsman Capital Management. Prior to joining Scotsman in April 2005, Farrell was chairman of Victory Capital Management of Cleveland and chairman of Victory SBSF Capital Management in New York. He was a founding partner of Spears Benzak Salomon & Farrell, which was acquired by KeyCorp in 1995. Vince held a variety of positions in his 23 years at SBSF, including chief investment officer, and he served as the portfolio manager on a number of the firm's largest client relationships. He is a regular guest on CNBC as well as other national print and broadcast media.
Prior to joining SBSF, Vince spent nine years at Smith Barney as a vice president, sales.
Vince graduated from Princeton University in 1969 and received his MBA from the Iona College Graduate School of Business in 1972.
