the data

–WMT reported earnings before the New York open this morning.  While comp store sales in the US were down for the third fiscal quarter (ends in October), the company has seen sequential improvement in year over year comparisons for the past several months. And it expects comps to turn positive over the holiday season.

–DIN (Dine Equity, parent of Applebee’s and the International House of Pancakes) reported September quarter earnings on November 2nd.  On of the most striking aspects of the recent recession (to me, anyway) has been the reversal of a decades-long trend of American consumers away from preparing/eating meals at home in favor of take-out and eating in restaurants.  Applebee’s, which DIN acquired in 2007, had its comps turn negative in 2006–and stay there.  But third quarter comps for company-owned stores were +3.3%.  Franchisees’ were +3.8%.

It’s not just Applebee’s.  According to the Financial Times, a trade source, the Knapp Track Report, shows the casual dining industry has been comping positive for about four months.  This is the first time since 2006 this has been happening.

–ATVI recently released its latest enter in the Call to Duty series, named Black Ops.  Black Ops had sales of $360 million in the US and UK during its first day (5.6 million copies).  That’s a video game record, and about 20% higher than first-day sales of the mega-hit Call of Duty:  Modern Warfare 2, which was last year’s entry.  Gamers tell me MW2 is the better game.  What’s changed is the economy.

–In its recent earnings call, DIS reported that bookings for its theme parks and resorts were up 5% year on year so far in the fourth quarter, at rates that were 5% higher than a year ago.  It’s a small thing, but higher room rate normally produces lower occupancy, as DIS’s results over the last year illustrate.  The idea is to trade the two variables off against one another in a way that makes revenue (rooms sold x room rate) the highest.  It’s a significant sign of strength when both metrics are moving up at the same time.

what this means

From early in the year, it has been clear that affluent Americans were beginning to feel their jobs were secure and that they could begin to spend a little more freely than they did in 2009.  In fact, sales of luxury goods have been surprisingly strong in the US recently (see my posts on the annual Bain luxury goods report).

These data suggest that everyday Americans have been adopting a similar, more positive outlook–probably starting in the summer.  They’re signs that people think their jobs are safe, that layoffs in their firms are at an end.

This conclusion is reflected in the latest Employment Situation report from the Department of Labor Statistics, which shows the US added about 159,000 private sector jobs in October, and which revised up the August and September figures to 143,000 and 107,000–a gain of 93,000 for the two months over the prior month’s estimate.

It seems to me the evidence points to the US having reached an inflection point where the economy is beginning to heal itself.  Slowly, it’s true, but healing nonetheless.  I’d read the 7%-8% drop in the 30-year bond over the past two weeks as the start of the process of normalization of interest rates, a process that will go on until the 30-year bond yields over 5% and the 10-year yield breaks through 4%.

For stocks, the situation will likely be more complex.  In the past, stocks have held up well during the post-crisis transition period (see my post from April on this topic). The critical question this time around, though, is what individuals do with the mammoth amount of money they’ve poured into bond funds over the past few years.  Do they simply stop allocating money to bonds for a while?  or do they actually withdraw funds?  Where does this money go?  I presume it makes its way into stocks.