1. Retail SpendingToday, the International Council of Shopping Centers announced that retail sales expanded at the highest pace since September 2006. Luxury retailers posted an eye-popping 8% rise in sales. Seems like consumption is our culture.Some people think the US consumer has changed. Personally, I would never bet against the DNA of a tribe... and ours is shopping. As my brother Derek said, "In the Great Depression we had bread lines. Now, there are Apple (Nasdaq: AAPL) iPhone 4 lines." That is a mind-blowing distinction.
2. Corporate SpendingLast year, corporations were forced into a spending freeze. Now they are upgrading software and hardware. In 2009, global tech spending dropped 4.2%. This year corporations are expected to increase their spend 3.8% to $1.5 trillion. Companies such as Microsoft (Nasdaq: MSFT), Dell (Nasdaq: DELL), Oracle (Nasdaq: ORCL), Cisco (Nasdaq: CSCO), SAP (NYSE: SAP), and Adobe (Nasdaq: ADBE) have all issued strong earnings and positive sales guidance for the remainder of 2010. Here are some notable stats for our models:
- Microsoft has sold 150 million copies of Windows 7 -- the fastest-selling operating system in MSFT history;
- Global personal computer shipments are on pace to increase 22% year-over-year;
- Dell said revenues will rise up to 19% versus a 13.4% decline in 2009;
- SAP sales are expected to rise 7% versus a 8% decline in 2009; and,
- Emerging market sales to China, India, Brazil, Russia, and others have helped diversify dependency away from the US and Europe.
Back Peddling BearsThere is a reason bears such as Nouriel Roubini, David Rosenberg, and now Doug Kass are offering a more tame outlook. The data doesn't support an all-out economic collapse.
For the record, we are not bulls. We see a lot of major problems in the global economy. However, we see a much more mixed picture than the apocalyptic bears who seem to have blinders on when it comes to anything disproving their case.
A recovery starts slowly. First companies cut costs. Then they spend. Then they hire. Then the economy heals. Seems like the first two phases are taking root.
Do you think the economy is about to fall off the cliff? Do you think we are amidst a textbook recovery? Is it more complicated than that? Let us know in the comments below...
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