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Thursday, December 29, 2011

Consumers Still on Suicide Watch

consumers suicide watchMost of the tally-taking of the holiday shopping season is reporting a joyous occasion marked by the revival of the consumer. This may have been evidenced by the Conference Board’s December reading of its Consumer Confidence Index Tuesday, as it rose to near a post-recession peak. However, I suggest you take a closer look, because you’ll see that the situation remains bleak.

occupy bloggerOur founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Consumer Suicide Watch



At 64.5, the Consumer Confidence Index was up a bunch from November’s 55.2 mark. November, not coincidentally, saw the start of holiday shopping deals and also a 15 point surge from October’s 40.9 depressed state. So, it appears consumers’ pseudo-drunken state was the sole source of satisfaction. The same driver was likely behind the general rise in retailer shares over the last half of the year, but we have a warning about that as well, entitled, Sell Consumer Stocks Now, or something like that. Let’s be clear, an index reading 64.5 here does not mark a happy state of affairs, just a better state sadness.

Even Lynn Franco, the Director of the Conference Board Research Center, warned, ”While consumers are ending the year in a somewhat more upbeat mood, it is too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes.” I still see mostly bad attitudes where I look. For instance, the Conference Board reports that the number of those surveyed who thought business conditions were good improved all the way up to 16.6%. Those who said business conditions were poor measured a far greater number, at 33.9%, but that was up from 38% the month before. Is this really good news?

Get this, those claiming jobs were plentiful improved to as high as 6.7%, way up from 5.6%. Meanwhile, those who felt like finding employment was difficult in December measured 41.8%, better than November’s 43%. Merry Christmas? Is this really a reason to spread holiday cheer by spending scarce dollars?

Most of the month’s confidence gains came in the expectations portion of the survey. In the past, I’ve warned that investing on this is like putting your money behind a hope and a prayer. Now, I’m the religious sort, but I tend to like to see some evidence of opportunity before investing on it. In the past, confidence gains driven by expectations have been proven easily deflated.

This latest measurement showed the Expectations Index rose to 76.4, up from 66.4. Take note now that the Present Situation Index measured a much lower 46.7, though up from 38.3. Those surveyed who saw business conditions improving over the next six months only increased to 16.7%, up from 13.7%. These gains from the prior month are what you are betting on if you invest on the basis of this month’s data. As you can see, the current state of affairs remains depressed. Of those surveyed, those anticipating improved job opportunities in the months ahead gained to just 13.3%, but that was up from 12.4%. Those who expected fewer jobs numbered a greater 20.2%, but that was improved from 23.8%.

The details of these reports are important, and it remains my pleasure to dissect the data and present it to you in easy reading form so that you may make informed investment decisions based on more than the porous reports of the traffic seeking popular press. The headlines of late have been preoccupied with the apparent positive shift in attitudes and lift in consumer spending, but I still see this economy on suicide watch.

Article interests investors in: S&P Retail ETF (NYSE: XRT), Wal-Mart (NYSE: WMT), Pier 1 Imports (NYSE: PIR), Ethan Allen (NYSE: ETH), Hooker Furniture (Nasdaq: HOFT), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Apple (Nasdaq: AAPL), Best Buy (NYSE: BBY), The Limited (NYSE: LTD), Chicos (NYSE: CHS), Ann Taylor (NYSE: ANN), The Gap (NYSE: GPS), Macy’s (NYSE: M), JC Penney (NYSE: JCP), Nordstrom (NYSE: JWN), TJX Company (NYSE: TJX), Kohls (NYSE: KSS), Costco (Nasdaq: COST), Target (NYSE: TGT), Wet Seal (Nasdaq: WTSLA), Hot Topic (Nasdaq: HOTT), American Eagle Outfitters (NYSE: AEO), Aeropostale (NYSE: ARO), Abercrombie & Fitch (NYSE: ANF), Saks (NYSE: SAK), Tiffany (NYSE: TIF), Talbots (NYSE: TLB), Lumber Liquidators (NYSE: LL), Builders Firstsource (Nasdaq: BLDR), Fortune Brands (NYSE: FO), Leggett & Platt (NYSE: LEG), Tempur-Pedic International (NYSE: TPX), Acuity Brands (NYSE: AYI), La-Z-Boy (NYSE: LZB), Select Comfort (Nasdaq: SCSS), Sleepy’s (NYSE: ZZ), Furniture Brands (NYSE: FBN), Natuzzi (NYSE: NTZ), Sears (Nasdaq: SHLD), Dillard’s (NYSE: DDS), Bon-Ton (Nasdaq: BONT), Cost Plus (Nasdaq: CPWM), Baker’s Footwear (Nasdaq: BKRS.OB), Bebe Stores (Nasdaq: BEBE), The Buckle (NYSE: BKE), Cache (Nasdaq: CACH), Casual Male (Nasdaq: CMRG), Cato (Nasdaq: CATO), Christopher & Banks (NYSE: CBK), Citi Trends (Nasdaq: CTRN), Collective Brands (NYSE: PSS), Destination Maternity (Nasdaq: DEST), Dress Barn (Nasdaq: DBRN), DSW (NYSE: DSW), Finish Line (Nasdaq: FINL), Footlocker (NYSE: FL), Gymboree (Nasdaq: GYMB), Guess (NYSE: GES), J. Crew (NYSE: JCG), Jones New York (NYSE: JNY), Jos. A Banks (Nasdaq: JOSB), New York & Co. (NYSE: NWY), Men’s Wearhouse (NYSE: MW), Syms (Nasdaq: SYMS), The Children’s Place (Nasdaq: PLCE).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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