MAY 2008 BEACON
Ready for the Rush?
S&P Says Ready or Not, Rebate Rush is Coming!
<BusinessWeek><May 7, 2008>Standard & Poor’s Equity Research, in a story appearing on BusinessWeek.com, says government tax rebate checks are coming and computer and electronics retailers are set to be one of the prime beneficiaries. S&P chief economist David Wyss believes that the economy will benefit from the tax rebate program.
“Analysis of the 2001 tax rebate suggests households spent about 60% of the rebate within 90 days,” Wyss was quoted to have said in the story.
What about all those stories we heard about consumers using their checks to pay down debts? Well Wyss says that even were the consumer to use their rebates to pay off credit card debt, they “are likely to build them back up rapidly, in our opinion.”
And where will this money be spent? New Rolex? Down payment on a new sports car?
No, says S&P’s Equity Research…based on an analysis of index price performance, they believe that the Computer & Electronics Retail subindustry will benefit. Using technical analysis, S&P says that the S&P1500 computer & Electronics Retail subindustry index (see chart above) moved above its 39-week moving average…a favorable signal. And, the moving average is trending upwards…another favorable signal.
The S&P Index includes well known electronics retailers Best Buy, GameStop, and RadioShack.
S&P analyst Michael Souers says the industry is poised for a positive cycle powered by hot products such as advanced TVs, MP3 players, video game consoles and digital imaging products. Declining TV prices will further drive sales, Souers believes.