Lucidity in Retail for Once

Today is the first day of rational trading in retail in a long time - stocks that perform are up, and the junk people have been flying into on the "gasoline down 50 cents will drive people into the malls en masse" are being punished. I can enjoy this one day of rationality. That seems to happen whenever facts like this morning's same store sales figures across the sector are announced. On the plus side for hedgies those facts can be dismissed the other 29 days of the month in favor of "thesis". But today the facts win out.

We own 3 retailers to take advantage of the "early cycle nonsense" theory, and have been promoting Walmart (WMT) as our "Pooring of America 101 #1 retailer" as well - these are among the only names I see up out of my retail watch list.

Buckle (BKE) had same store sales of 22.4% and continues to impress. Even more impressive is they had a huge number a year ago (nearly 17%) but even topped that. But don't worry they will sell this one off and run into Home Depot (HD) or Macy's (M) soon enough because those stocks are "rebounding and have easy comparisons" and Buckle "can't keep it up much longer" - that's the Wall Street way. So they'll punish the good and reward the bad - that's been the pattern. But not today, when "facts" are used. Buckle is up 4%.

• Teen retailer The Buckle Inc. said Thursday its same-store sales rose 22.4 percent in August. Last year in August, same-store sales rose 16.7 percent.
• Year-to-date, same-store sales increased 25.9 percent and total sales rose 34 percent to $407.5 million from $305.3 million.

Aeropostale (ARO) also continues to impress in the "teen" space - we don't own but have liked the results this company has been posting

• Aeropostale Inc., with its focus on value, was as usual a bright spot in the sector. Same-store sales rose 13 percent, easily surpassing analysts' expectations.

The "conspicous consumption" stores like Abercrombie (ANF) suffer as fewer pooring American parents can justify the $130 jeans for their kids to justify their social status. I shed a tear for these kids who will have to live with $80 jeans and last seasons $47 Tshirt (sniffle). They are probably getting beat up in the school hallways as we speak for this transgression. We used to really like this stock when people used their homes as ATMs and soccer moms were buying their kids "what Johnny deserves and what I can draw out on my 2nd mortgage combined with HELOC". Now that's a bit more tough of a thing to swing so Johnny might have to go shop at American Eagle (AEO) - the horror.

• Abercrombie & Fitch Co. said same-store sales fell 11 percent, also a bigger drop than analysts expected.

Meanwhile, our other major retail name BJ Wholesale (BJ) posted another ripping month

• BJ's Wholesale Club Inc. said Thursday that same-store sales rose 15.4 percent in August, boosted by gas and grocery sales. Analysts polled by Thomson Reuters had expected a 14.1 percent rise
• For the four-week period ended Aug. 30, total sales rose 17 percent to $774.4 million.
• Sales of food rose 11 percent, boosted by perishables, and computers and health and beauty products also sold well.
• Weaker categories included air conditioners, cigarettes, jewelry, storage, summer seasonal merchandise, televisions and prerecorded video.

Big Lots (BIG) did not report a number today.

Folks this "economic weakness or strength" game is not that hard. Forget the lousy government reports who are so bereft of truth they've become useless. When Target (TGT) starts to get some of its customers back from Walmart, when dollar stores stop reporting great numbers, and when conspicuous consumption is back in vogue - THEN the economy is back on track. Until then it's just hopes, dreams and Kool Aid.

It really is as simple as that - we've turned our economy into "shopping and home building" with 15% exports thrown in just to be a little old school. So it's not that tough to figure out when our economy rebounds. When homes start being built, your aunt tells you excitedly about the 2nd income she is getting from her real estate license, your brother in law talks about how he is flipping houses "like the old days!" and your teenage niece is showing off the cool bags she picked up from Coach (COH) and how crazy hard it was to find those ripped jeans for $160 (the line was out the door!). Then we are back to what we do best - spending over our heads to show off to each other. That's who we are and who we've become - heck when we have a national trajedy our President gets on the megaphone and tells us to "shop... or the terrorist have won". When we face an inkling of recession, our government rushes to send us our grandchildren's money so we can "shop and keep the economic engine revving!". Spending over our heads, creating multiple bubbles, and fleecing the middle class to sustain the economy is the new "service economy" mantra. This is what we do, and we excel at it. When you see those things happening again, then that's when the United States of Subprime will be back.

Until then, just cool it on the recovery talk CNBC folks.

Long BJ's Wholesale, Buckle, Big Lots in fund; no personal position