A version of this commentary originally appeared on Real Money Pro at 10:31 a.m. ET on Wednesday, Nov. 11. Click here to learn about this dynamic market information service for active traders.
Alibaba (BABA) -- or "Ali Blah Blah," as I prefer call it -- is down some $2 a share today despite lots of media attention over the company's sales surrounding China's "Singles Day."
Yesterday, BABA's Singles Day sales were tracking up more than 100% year over year. But overnight, they only tracked at around a +60% rate. This deceleration probably accounts for the stock's weakness today. As I've written in the past: It's not the news that counts, but how the market reacts to the news.
Among bricks-and-mortar retailers, Macy's (M) is down more than $6 for the session as I write this.
Many in the business media have fawned over Macy's CEO Terry Lundgren for several years now, but I'm not sure why. The stock has actually been falling for some time now. (Click here to see the stock's one-year chart.)
There are numerous signposts of weakening consumer demand across the globe. Stock-price declines, earnings misses and reduced forward guidance have hit not only Macy's, but also The Gap (GPS), Kohl's (KSS), Wal-Mart Stores (WMT) and other retailers -- and even Harley-Davidson (HOG).
As I suggested in my sector-by-sector analysis yesterday, the retail segment's outlook seems negative from my perch:
"The retail industry is being disrupted -- hard -- and that will continue. There are simply too many big-box chains, and I expect a cycle of bankruptcies over the next few years. The oversupply of restaurants is not dissimilar.
A slowdown in home refinancings (a source of consumer discretionary income), stands to be a headwind for the group -- as do higher wage costs. And ironically, the success of Apple's ecosystem is draining non-smart-phone retail sales.
On the other hand, a tightening U.S. job market should result in some improvement in consumer disposable income. But at the same time, recent rises in health care, food and other costs of living will probably eat into Americans' incomes. What I call the 'Screwflation of the Middle Class' remains a recurring threat.
I recommend particularly avoiding stocks of department stores and trendy, fickle specialty apparel. I have little exposure in this sector, as investors have already beaten the segment's share prices down. Vibrant smart-phone and sneaker sales are probably not a permanent 'affair,' and their recent growth trajectory is likely unsustainable."
-- Doug's Daily Diary, My Outlook for the Market's Major Sectors (Nov. 10, 2015)
