Why Wal-Mart’s Disappointing Earnings Report Should Concern You
As many long-time readers know, over the past couple of months I’ve been raising concerns that a market correction is highly likely to occur fairly soon. One of my concerns is the level of corporate earnings that we are seeing, as much of the low hanging fruit has already been picked.
I believe that much of the good news regarding corporate earnings has already been priced into the market. What this leads us to is a situation in which any marginal disappointment will leave investors rushing to the exits, creating a market correction.
As everyone should be aware, the vast majority of the U.S. economy is led by consumption. While the economy has been showing some signs of improving, we are far from having anything close to an optimal economy. Job creation is still lackluster, especially the stagnant level of wages.
Wages not increasing is a serious problem for companies that generate corporate earnings from selling goods to the average American. I’ve been quite worried that we are going to see disappointing corporate earnings numbers from retailers in this space, which could be a trigger for an overall market correction.
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