Market outlook Jan. 8, 2009

Key numbers were announced this morning in pre-market. First, WalMart Sales were down from expectations. Analysts had expected 2.8% increase in Same Store Sales but instead they announced 1.7%. That's much less than expected. Another piece of data announced was the Weekly Unemployment Claims. That number showed a reduction of 27,000 jobs lost from the previous week's report. But Continuing Claims rose from 4.5 Million jobs lost to 4.6 Million Jobs lost. That is the most important number and it is showing a worsening situation, even though the weekly numbers seemed contradictory indicators. To me, one explanation is that Retailers may not have hired as many workers for the holiday season, as they knew it was going to be a poor retail shopping season. This would explain the contradiction of data, since there would be less people have to be let go after the holiday.

But think of this, if people didn't shop WallMart where did they shop? That is why WalMart, symbol WMT, is down about 10% in pre-market from yesterday's close of $55.54 to a low of $50.65, so far.

I have been observing the number of trucks on the highways as I drive to clients and there is a significant reduction. I also paid attention to the what businesses the trucks seemed to support. I noticed Waste/trash collection trucks, trucks hauling containers from China, Medical Supply trucks, Food chain store trucks, Beer trucks, Utility trucks and an occasional cement mixer. What didn't I see? Trucks hauling cars to dealers, trucks carrying lumber or carrying trees from logging, trucks carrying paper products, Rental trucks, which often pick up slack and are usually independent drivers, and technology truck suppliers. It seems to me there are about 35% fewer trucks on the roads in my area, than what I used to see. I have talked to both UPS and FedEx carriers and they say things are slow. I have talked to restaurant owners that usually have high traffic and they also report a significant drop in customers.

So, you want an early signal on how the economy is doing? Start looking at the traffic and what is happening. To me it looks bleak, although driving is a lot more pleasant.

Markets will most likely be down today and tomorrow. Keep your SDS and TZA!