This week has seen a lot of earnings reports coming from the retail sector, and especially for several of the big-name stocks, the numbers are looking pretty good. This tracks with the data we have on consumer spending. Despite constant warnings of a looming recession from some financial analysts, a strong labor market and subsequent wage gains have kept the economy chugging along all year.
That's making a lot of retail stocks look pretty good right now, especially if you look at year-to-date gains. But I'd be careful before just snapping up any retail stock that's beaten earnings and is on an upward trend.
The reasons for that is all about timing. Those stocks have gone up largely because consumer spending has remained strong, and if you got in earlier this year, you're probably a really happy camper.
But how far up can those stocks reasonably go? We're not talking about growth stocks, like big tech companies that are tapping into expanding markets like AI. And there's good reason to believe that headwinds are on the way which could stop retail's momentum dead in its tracks.
For example, credit card balances are shooting through the roof, surpassing $1 trillion according to the Federal Reserve Bank of New York. With interest rates remaining higher for longer, inflation staying stubborn, and stimulus money mostly spent, it's only a matter of time before consumers pull back and retail starts to feel the pinch.
And if we go into the holiday season with an American public concerned about conserving cash, we could see a lot of these stocks giving up all their gains, or worse.
So this week, I wanted to review some of the biggest movers in retail right now, give you the lay of the land, and point out the best opportunities. And as a bonus, I also have an update on two semiconductor stocks you should be following.
It's all in this video:
Toward the end of this video, I talk about a major deal in the semiconductor industry gone wrong thanks to interference from China. You can expect more upheaval in the semiconductor sector as the ongoing U.S.-China trade conflict heats up. With President Biden's recent executive order to limit American investment in Chinese tech, and Beijing threatening "necessary countermeasures" in response, we're getting ever closer to an overt confrontation.
And with the fate of the next generation of AI-enabled "superchips" at the center of it, the stakes couldn't be higher. Any provocation could send global markets into a tailspin.
I've got a full briefing on how China's bid to secure this emerging technology could impact you, and what you need to do with your money now to not only protect yourself, but to find the highest profit potential in the markets that this "chip war" will create.
For everything you need to know, click here.
The post What You Should Do About the Retail Stock Surge Right Now appeared first on Total Wealth.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.