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Real Time Insight

Expectations for this year’s holiday season are running high as worries over the fiscal cliff dominate the landscape. Investors are probably going to need some strong numbers on this front in order to soothe struggling equities and add a shot of optimism into the market’s arm heading into 2013.

There are at least some encouraging trends to support the hypothesis of a bullish trend such as decent e-commerce sales for the third quarter and a pretty high consumer confidence level. However, there are also some potential catalysts for a weaker-than-expected figure including recent weather events, taxation/policy worries, and a still uncertain job market.  

Personally, I can see one of four scenarios taking place:

1. Black Friday creep/early Thanksgiving help to boost sales- The combination of an extremely early Thanksgiving leads to more weekends before Christmas—and thus more shopping time-- while the current retailer trend of sales on Thanksgiving Day combine to act as catalysts for a strong season.  

2. Fiscal cliff worries keep luxury shoppers at home- I am skeptical that the average shopper is too concerned about the fiscal cliff but I am starting to worry that the cliff will impact big ticket items for higher end buyers. With all the uncertainty, it is very possible that they hold off on some items until after the cliff is taken care of.

3. Sandy hits discretionary spending hard- Although life has gone back to normal in much of the Northeast, many areas of the region have bigger worries than holiday shopping. If these consumers are focused in on rebuilding as opposed to shopping, it could drag down sales figures overall.

4. None of the above really impact sales leading to average sales numbers- Worries over Sandy, the fiscal cliff, and jobs don’t materialize, while retail sales calendar tricks don’t help either. The real question is, will the market view this as a disappointment?

I think we are in line for number one although #4 would not surprise me either at this point. However, I think the consumer confidence is just too high with too much pent up demand to see that weak of a season…

What about you? Which of the four scenarios—or do you have a different one?—look likely to be the result for this year’s holiday sales figures?

Let us know what you think in the comments below!

Zacks Releases Their 7 Best Stocks for September, 2014

These 7 were hand-picked from the list of 220 Zacks Rank #1 Strong Buys with earnings estimate revisions that are sweeping upward. Their stock prices are expected to rise sooner than the others.

Today, this Special Report is available to new Zacks.com visitors free of charge.

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