Retail Sales Sag, but God Bless Ex-Auto

Today's highly anticipated retail sales report offered quite a mix of color. Sales fell 0.2%, as you might have expected, but excluding autos, sales actually rose 0.5%.

April Retail Sales

We've been dreaming about this report over the past two weeks, which probably says something about the quality of life over here at Greek HQ. The report itself offered no letdown from the hype, as it portrayed a bifurcated world. As expected, given recent news from General Motors (NYSE: GM) regarding its plans to cut production further to better match soft market demand, auto sales weighed on the retail figure.

The graphs to the right depict the horror of the automobile industry in a fashion that Terror Film Festival founder "Claw" might enjoy best. That bar shaded in light gray to the right offers the pain of the auto industry via embarrassing public display.

But wait a second, the auto industry is suppose to be on the road to recovery is it not? Ford (NYSE: F) just got a great vote of support in Barron's, and management did not disappoint when America's greatest family run business, as The Greek's favorite cousin and dedicated employee of Ford likes to say, reported earnings.

The cheer was not supposedly limited to Ford either. Remember that breakthrough deal GM signed with the UAW... The company's efforts to cut pension and other employee costs are helping GM also improve its profit (they use to say "cost" over there) structure. Heck, things are well enough at Toyota Motors (NYSE: TM), that the company was recently emboldened to raise prices in the U.S. "So what gives then Greek," you must be thinking.

Hey, let's face it. Credit is tight and Americans are broke! Nobody is lending, and you could not afford it if they were. These legends of manufacturing are saving bucks on the cost end, but sales are not recovering yet. $600 from Uncle Sam might help The Greek make his rent this month, but it's not going to reach far enough for that Maserati I've been dreaming of (hint, hint... super wealthy Greek fans). Heck, it won't even get me a good bicycle in New York City, the showcase of the world. This place is just starting to see real estate values decline (inside Manhattan proper anyway). But it's no better for my fans outside this town either. So, while the auto companies and the stocks benefit from management actions to create value, the most important driver of earnings and value creation, sales, are not so hot.

God Bless Ex-Auto

Meanwhile, in the world "ex-auto" everything is hunker dory? Growth of 0.5% does not a celebration inspire, and the market is kind of drab today partly as a result. I like this term though, "ex-auto." I think the next time someone asks me how I'm doing, I'm going to respond, "well, I'm suicidal, but ex-auto, life's peachy!" Or, "clouds and rain color my day, but for the "core" Greek, rainbows and sunshine light my way!" Thank God for "core," "ex," data mining and the birth/death rate component of the government's employment data. Heck, if not for these things, and the media's coverage of economic cheerleading by Hank Paulson, Ben Bernanke and President Bush, you all might be as negative as the Europeans... Instead, look at you, all excited about buying a plasma TV with your government payout! God bless "ex auto."

Please see our disclosure at the Wall Street Greek website. Article interests AMEX: DIA, AMEX: SPY, AMEX: DOG, AMEX: SDS, AMEX: QLD, Nasdaq: QQQQ.