For Immediate Release
Chicago, IL – August 31, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Franklin Resources (BEN), United (UAUA), The Gap (GPS), J.C. Penney (JCP) and Family Dollar (FDO).
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Here are highlights from Friday’s Analyst Blog:
Savings Rate Dips in July
We have already seen a dramatic improvement in the trade deficit over the last year — more than cutting it in half. However, most of that improvement is due to the fall in the price of oil, and we are past the anniversary of the oil price peak, so that effect is going to fade. We have seen some pick-up in the economies of other major countries recently, but they are far from booming (with the exceptions of China and India, but even there things are going slower than they used to). That does not auger well for a dramatic increase in exports.
Thus, by process of elimination, it means that we will have to dramatically reduce our non-oil imports (or cut the volume of oil imports if we are not getting the help on the price side). The only other option is an increase in Government as a share of GDP.
This is a trend that has all sorts of implications. If we are going to be saving more, it should help investment management companies like Franklin Resources (BEN). On the other hand, if we are consuming less, it means that the consumer discretionary sector will face a particularly stiff headwind. People will take fewer vacations which will hurt airlines like United (UAUA).
Retailers, particularly in the mid-range like The Gap (GPS) and J.C. Penney (JCP) will find growth very hard to come by. Spending will not come to a stop, but it will slow, and people will be more concerned with cost as opposed to cash. This makes discounters like Family Dollar (FDO) relatively much better positioned.
Keep in mind here that I am talking about a trend that will play out over a decade, and it will not be a straight line, so from time to time some of the less-well-positioned firms might be good trades, but I suspect that they will be lousy long-term investments.
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