More Reason to Sell in May

The economy got a gut check today when the monthly Retail Sales Report for April was published. Stocks are mixed on the day, despite the report proving better than expected. That’s probably because in its positive comparison, it was still very poor in absolution. Business Trade data was also reported today, and it was likewise weak, providing further evidence that our economy is in poor shape. Given that this is not reflected in the performance of stocks so far this year, we continue to suggest investors sell in May and go away. Find all of our economic and company specific analysis and review for Monday below.

Our 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.

Sell in May!

Economic Events

Retail Sales rose slightly by 0.1% in April, against the economists’ consensus forecast for a slip of 0.3% against March levels. The gain followed last month’s sales decline of 0.5%, which was revised lower from -0.4%. The revision means the absolute level of activity was still very poor this month, and would have held steady otherwise.

Excluding autos, sales fell 0.1%, meeting the economists’ expectation and matching against the March decline of 0.4%. Excluding both autos and gasoline, sales increased 0.6%, versus expectations for a 0.4% increase. This illustrates how important changes in gasoline prices have been over the last month. The prior month’s activity excluding autos and gasoline was revised higher to no change from an initially reported decrease of 0.1%.

The trend-line for this data had been showing a slowing pace of growth, so this month’s report was good in that it reflected growth, especially excluding changes to gasoline prices. However, those same changes, which were increases, while at some level reflect economic activity, also serves to moderate economic growth and consumer spending.

Business Inventories were reported unchanged for March, against economists’ forecasts for a 0.3% increase; this follows February’s 0.1% increase. Unfortunately, business level sales fell 1.1% in March, whereas, last month, sales growth exceeded the increase in inventories. We had an indication that this month’s sales would prove inadequate, and mentioned it in this week’s preview published for our followers, getting them ahead of the game. Last week, we also saw wholesalers’ sales matched poorly against an inventory build at that level. This poor business level report led the inventory-to-sales ratio up to 1.29 from 1.28 in February; it’s bad news.

Commodity Markets (10:40 AM ET)

WTI Crude	-1.3%
Brent Crude	-1.4%
RBOB Gasoline	-1.6%
NYMEX Natural Gas	+1.6%
Gold Spot	-1.0%
Silver Spot	-0.7%
COMEX Copper	+0.1%
CBOT Corn	+3.0%
CBOT Wheat	+1.6%
CBOT Soybeans	+0.7%
ICE Sugar	-0.5%
ICE Cocoa	+0.8%
ICE Orange Juice Conc.	+2.7%
CME Live Cattle	+0.5%

Overseas Markets

EUROPE	11:00 AM	ASIA/PACIFIC	CLOSE
EURO STOXX 50	-0.5%	NIKKEI 225	+1.2%
German DAX	-0.2%	Hang Seng	-1.4%
CAC 40	-0.4%	S&P/ASX 200	+0.1%
FTSE 100	-0.0%	Korean KOSPI	+0.2%
Greek ASE	+3.0%	BSE India SENSEX	-2.1%

Fresh off the weekend’s G7 meeting, in which the Group of Seven ministers agreed to work together against tax evasion, euro-zone finance ministers are meeting today. President Obama is meeting with British Prime Minister David Cameron, and later in the week with the Turkish PM... I suppose read into that something about Syria and/or Iran…

Corporate Events

Yum! Brands (NYSE: YUM) is under pressure, down 2.4% after reporting its KFC sales in China were down 29% last month due to the new strain of bird flu.

The JMP Securities Research Conference offers presentations by Alexander & Baldwin (Nasdaq: ALEX) and American Capital (Nasdaq: ACAS). Atlas Pipeline Partners (NYSE: APL) is presenting at the Bank of America Merrill Lynch Energy & Power Leveraged Finance Conference. Companies holding investor or analyst meetings include everyone’s Russian favorite Gazprom (OTC: OGZPY.PK), and also FelCor (NYSE: FCH), SodaStream (Nasdaq: SODA), ServiceNow (NYSE: NOW) and American Water Works (NYSE: AWK). Mosaic (NYSE: MOS) is holding a conference call to review its capital management philosophy. Tallgrass Energy Partners is set to offer shares in an IPO.

The earnings schedule highlights news from 7 Days Group (NYSE: SVN), AirMedia (Nasdaq: AMCN), Anthera Pharmaceuticals (Nasdaq: ANTH), Arotech (Nasdaq: ARTX), Biglari Holdings (NYSE: BH), ChemoCentryx (Nasdaq: CCXI), China Green Agriculture (NYSE: CGA), China Yuchai (NYSE: CYD), Cimatron (Nasdaq: CIMT), Copa Holdings (NYSE: CPA), CTI Industries (Nasdaq: CTIB), eLong (Nasdaq: LONG), Engility (NYSE: EGL), Fortegra Financial (NYSE: FRF), Granite City Food & Brewery (Nasdaq: GCFB), Highpower Int’l (NYSE: HPJ), Home Inns & Hotels Management (Nasdaq: HMIN), IFM Investments (NYSE: CTC), Information Services Group (NYSE: III), InfuSystem (Nasdaq: INFU), InterOil (NYSE: IOC), KYTHERA Biopharmaceuticals (Nasdaq: KYTH), Lehigh Gas Partners (NYSE: LGP), LGL Group (NYSE: LGL), Merrimack Pharmaceuticals (Nasdaq: MACK), Michael Foods (Nasdaq: MIKL), NAPCO Security Technologies (Nasdaq: NSSC), Nordic American Tanker (NYSE: NAT), Northern Tier Energy (NYSE: NTI), PDI Inc. (Nasdaq: PDII), Perion Network (Nasdaq: PERI), Pointer Telocation (Nasdaq: PNTR), Post Holdings (Nasdaq: POST), Primus Telecommunications (Nasdaq: PTGI), Pro-Dex (Nasdaq: PDEX), pSividia (Nasdaq: PSDV), Rainmaker Systems (Nasdaq: RMKR), Renren (Nasdaq: RENN), S&W Seed (Nasdaq: SANW), Saratoga Resources (Nasdaq: SARA), Sky-mobi (Nasdaq: MOBI), Stereotaxis (Nasdaq: STXS), Stratasys (Nasdaq: SSYS), Summer Infant (Nasdaq: SUMR), Summit Midstream Partners (Nasdaq: SMLP), Supernus Pharmaceuticals (Nasdaq: SUPN), Sutor Technology (Nasdaq: SUTR), Take-Two Interactive (Nasdaq: TTWO), Tandy Leather (NYSE: TLF), TearLab (Nasdaq: TEAR), The Coast Distribution System (NYSE: CRV), Tianli Agritech (Nasdaq: OINK), Velti plc (Nasdaq: VELT), Versar (NYSE: VSR), Warwick Valley Telephone (Nasdaq: ALTV), WuXi Pharmatech (NYSE: WX) and ZBB Energy (NYSE: ZBB).

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.