Bulls & Bears – Wal Mart earnings and what to make of Paulson who bails on banks

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Q 1 – WMT/HD positive earnings…Real sign of life for consumer spending or not? (and picks in sector-RETAILERS)

A – Wal-Mart – once again international shares save the day and are up 16% accounting for 26% of the revenue. This is not surprising to me given the deleveraging we’re seeing amongst American consumers. Wal-Mart tried to get to fancy, they took their eye off the ball and tried some things that took them outside the core values Sam Walton adhered to and it’s hurt them. I don’t know that they’ll be back because the door they opened for the competition is proving to have been opened wider and longer than they understand. Generally, I am not a fan of retail right now but if pressed, I’m with Target…clean stores, attractive merchandising, groceries for busy people.

Q2 – Big hedge fund manager John Paulson cutting his stake in banks–  message to average investors to get out, too?

A – Paulson’s actions – I don’t think people should read too much into this: 1) old data; 2) you don’t know if he’s making tactical or strategic decisions; 3) he is rotating so this may not be a question of abandoning banks as it is seeing greater opportunities. I think it’s interesting that he’s rotating into Wells Fargo, Life Technologies and News Corp. If there is a message, it’s that guys like Paulson are always thinking offensively.

No conflicts, no ownership, no banking.