U.S. Wage Growth, Tax-Bonuses Spark Shopping In Retail Stocks

In Daily Commute by MR Magazine StaffLeave a Comment

U.S. fund managers are betting that rising wages and the effects of the Republican-led corporate tax cut will prove a lifeline to middle-market retailers who have struggled to remain relevant in the age of Amazon. Wells Fargo, CM Advisors and Plumb Funds are among those asset management firms that are increasing their positions in companies that focus on shoppers who earn near the average family income of $74,000 annually. These include children’s apparel company Carter’s Inc, department store Big Lots Inc, men’s apparel company Tailored Brands Inc and discount retailer Wal-Mart Stores Inc. With unemployment at 17-year lows, companies are having a hard time filling low to middle-income jobs. As a result, wages for those workers are expected to rise more than 3 percent this year, the largest increase in the category since April 2009, according to data from the Federal Reserve Bank of Atlanta. Given the expected rise in wages and one-time bonuses resulting from the Republican-led tax cut signed into law on Dec. 22, fund managers are betting that workers will spend more, thus helping drive up share prices of retailers. Read more at Reuters.

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