Friday, June 11, 2010

Retail Sales Data Sadden Bipolar Speculators

Once more each day is upon itself revolving around that day's news, and the previous day means nothing.... a truly bipolar world of speculation, now that we've chased off all long term investors.  This morning's "good news" (in my book) has the savings rate up; but unfortunately that means despite 7M some American households not paying for their housing, that retails sales fell.  I assume a lot of this is because many Americans received their tax returns as soon as possible (since half the population no longer pays federal taxes and hence gets 'paid' early in the year) - so we're losing that beneficial effect.

Frankly, I give little credence to government data and if I want retail sales I'll go observe the retailers earning reports, but in this market every data point must be worshiped as if it means a complete 180 degree change in the world.
  • Sales at U.S. retailers unexpectedly dropped in May, signaling consumers boosted savings as employment slowed and stocks fell.  Purchases decreased 1.2%, the biggest drop since September 2009, following a 0.6% April gain that was larger than previously estimated, Commerce Department figures showed today in Washington. 
  • Retail sales were projected to increase 0.2%.
  • Demand plunged at building-material stores, reflecting the end of a government appliance rebate, and sales fell at auto dealers, in contrast to industry figures which showed a gain. (exactly my point, why do people listen to government reports rather than the companies? boggling)  The decrease at building-material stores followed an 8.4%jump in April and a gain in March that may have reflected a surge in appliance sales propelled by a provision of the government’s stimulus package last year that provided rebates for purchases of more energy-efficient products. 
  • Spending also decreased 3.3% at service stations, 1.3% at clothing stores and 1.1% at general merchandise stores, which was the biggest drop since December 2008

Rather than listen to government, I continue to use Target (TGT) as the best tell on the great American middle class. [Dec 26, 2007: Target Shoppers Turning into Walmart Shoppers] .. Walmart (WMT) is thriving due to many former middle class now becoming lower class, [Oct 30, 2009: Costco to Roll Out Food Stamps Nationwide]
[Nov 10, 2009: Walmart Executive - "There are Families Not Eating at the End of the Month"] and the higher end is the high end - mostly immune and now embracing the new American upwardly mobile - the federal government worker.
  • “Comparable-store sales were somewhat below our expectation,” said Gregg Steinhafel, chief executive officer of Target, in a statement May 19. “Our recent experience reinforces our belief that we will continue to experience volatility in the pace of economic recovery.”

If you believe in (somewhat) efficient markets, the retailing stocks - after galloping in Q1 2010 - were telling us something the past 6-7 weeks, deadcat bounce the past 3 sessions notwithstanding.

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