It’s been a rough week for shares of Bed Bath & & Beyond.
The seller’s stock has actually dropped more than 24% because its Thursday profits report, which mentioned slowing traffic in shops and increasing expenses connected with the supply chain.
With FedEx and Nike flagging comparable problems in their most current reports, traders and financiers might require to reevaluate their direct exposure to retail, Joule Financial Chief Investment Officer Quint Tatro informed CNBC’s “Trading Nation” on Thursday.
“This is very concerning to us, especially the price action,” Tatro stated. “The magnitude of the decline tells us that traders were significantly poorly positioned for this news.”
“Investors and traders have to look through their portfolio, and I don’t think they have to be shy in raising some cash across the board, especially in these sectors,” he stated. “We might get bounces along the way, but this is a time period, in our opinion, to start being very defensive.”
Investors must undoubtedly get more mindful in the retail area, MKM Partners’ primary market service technician J.C. O’Hara stated in the exact same interview.
“This is a shot across the bow not just to the consumer, but to retail in general over the next one to two quarters,” he stated. “Supply chain issues are small until they become large, and we saw Bed Bath & Beyond and the comments from the CEO suggest that this is no minor issue.”
He expected a various seller’s report to validate his issue.
“Next Tuesday, Oct. 5, we get a report from Levi’s,” O’Hara stated. “I’ll be very curious to see if, one, they cite supply chain issues, which I’m sure they will, but also what about inflation from commodities?”
Prices for cotton, which is commonly utilized in Levi Strauss items, are at years highs after an almost 35% run this year, O’Hara stated.
“This is real inflation. So I wouldn’t be surprised if there’s some further downside to Levi’s sitting on key support right here,” he stated. “We could see it down another 20% following earnings, so that’s my bellwether I’m looking at closely next week.”
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