And Here Comes the Reality Check in Retail

We have been talking about this since day 1 of the blog.... and as recently as yesterday in the blog entry: A Lump of Coal for Christmas

Target (TGT) Lowers September Sales Outlook - Target cuts same store sales from 4-6% to 1.5-2.5%; weaker traffic particularly in Florida and Northeast.

Lowes (LOW) Issues Profit Warning - CHARLOTTE, N.C. (AP) -- Home-improvement company Lowe's Cos. on Monday said it now projects fiscal-year earnings at the low end or slightly below its prior forecast, citing lower-than-expected sales trends.
(oh and they blame it on drought conditions; amazing how the 5-7 year drought conditions weren't a problem the previous 4-6 years eh?)

Target was one of the stocks whose chart was still in decent shape whereas Lowes was too close to call. Judging by the fact Target is down 4% in after hours and Lowes 6%, you can kiss those charts good bye. Avoid 95% of retailers; this is just the beginning of what I expect to be a steady stream of lower guidance and excuses such as "cold weather" or "warm weather" or "too sunny" or "too rainy". The American consumer is pinched by lack of easy money via home equity withdrawals and inflation that the government believes is make believe. Period. Once this is priced into the stocks than you can buy these names. But we aren't there - there is still way too much belief that a fed cut here, a fed cut there, a little pixie dust here, a CPI report of 1.2% there, and the wallets will come in full force. I have no doubt the US consumer will come out in force for Christmas - that's what we do, that's what we are. But it won't be to the level people expect (save perhaps electronics/gadgets).

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