Time to prepare for stimulus
The $155 Billion economic stimulus package checks will start coming out in full swing starting in May. It’s time to prepare for record quarterly earnings this year, more specifically this quarter. The industries most likely to benefit are those that are associated with financing and down payments. It is likely that automobile manufacturers, home improvement stores and large appliance vendors will do particularly well.
The $155 Billion has to go somewhere and I think companies like Sears are that somewhere. With a family of four getting a fat check of $1800 overnight, that money is more likely to be spent than saved. The American consumer has maintained a steady negative savings rate and that trend will probably continue. I’m expecting that just a few of the 40% of people who plan on paying down debts with the money will in fact spend it on luxuries they don’t really need. That is the American dream.
Sears looks like a good place to start for a stimulus portfolio. As the stimulus checks begin in May, Sears is a perfect store to collect a large portion of that money. Lawn mowers, home improvement and power tools seem like the perfect purchase with the stimulus.
Luckily for investors, quarterly earnings are compared to the same quarter last year. This year we have $155 Billion moving into the economy in just a few months, last year that was nowhere to be found. Expect stores like Sears to blowout last years earnings as people spend the stimulus checks on unnecessary luxury. If the $155 Billion happens to make it into the market, that’s fuel enough to send the Dow up even if just for a few months.
Home improvement, large item purchases and even homebuilders should see a decent gain from this package. Quarterly earnings over the summer are going to be the highest yet recorded. While we don’t like inflation, we do like the prospect of protecting your assets and using it to grow your portfolio. Look for record numbers this summer.
