Retail giant Wal-Mart (
) is off to its worst start in seven years and American consumers
are spending less money. The pinch of higher payroll taxes, which
began on Jan.1, 2013 is already translating into less spending.
Here's what Jerry Murray, Wal-Mart's vice president of finance
and logistics wrote in an internal email obtained by
"In case you haven't seen a sales report these days,
February month-to-date (
) sales are a total disaster. The worst start to a month I have
seen in my ~7 years with the company."
Wal-Mart along with 42 other stocks including Procter &
Gamble, Coca-Cola, and Costco, is part of the Consumer Staples SPDR
Among the 386 companies within the S&P 500 that reported Q4
2012 earnings, 81% of consumer staples have beaten earnings
estimates, according to FactSet Research. However, based upon
current earnings estimates, Q1 2013 earnings for the entire S&P
500 are down -0.04%.
Consumer discretionary (NYSEARCA:XLY) and consumer staples
(NYSEARCA:XLP) are the two ETFs that carve out consumer focused
stocks within the S&P 500 (NYSEARCA:SPY). Combined together,
both XLP and XLY account for 22.26% of the S&P 500's equity
As we wrote to readers in the March 2013 edition of the
ETF Profit Strategy Newsletter
, the American Tax Payer Relief Act of 2012 has nothing to do with
genuine tax reform or relief. Unlike before, Americans now pay 2%
in Social Security taxes on their first $113,700 in income. For a
person making $40,000 per year, this means$780 of lost wages.
Furthermore, taxes were increased to a top rate of 39.6% for
individuals earning $400,000 a year and $450,000 for couples. "This
will inevitably translate into less consumption and less
For a familyearning $50,000 the tax bite is equal to a basket of
groceries every single month, according to Wal-Mart's analysis.
XLY and XLP have both gained just over 7% in value since the
beginning of the year.
Meanwhile, rising gasoline prices are another negative
trend. The average price for a gallon of regular gas
nationwide has rise from $3.30 in January, to $3.52 today,
according to AAA.
ETFs like the ProShares UltraShort Consumer Goods ETF
(NYSEARCA:SZK) are designed to increased 200% daily, when consumer
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