Regarding the Consumer Sentiment Celebration – I’ll Pass

Rejoice oh troubled masses of American investors, the consumer has been reported still living. Yes, the dead and depressed are walking and talking, and according to the headlines of the popular press, they are in a better mood for shopping too.

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.

The Thomson Reuters/University of Michigan Consumer Sentiment Index improved in mid-August to 73.6, from 72.3 in July (and 73.2 in June). This nascent revival broke a sorry streak of two consecutive months of deterioration for the data point. Apparently it was cause for celebration, as the SPDR S&P 500 (NYSE: SPY) pushed a bit further toward a 1.0% gain for the week. The celebration was more clearly seen in Friday’s 0.4% gain of the Consumer Discretionary Select Sector SPDR (NYSE: XLY) and the 0.7% rise of the SPDR S&P Retail (NYSE: XRT).

The measure of current economic conditions improved last month by 4.9 points, to 87.6. The latest stock market gains, as seen in the performance of the SPY, probably have something to do with that. The rise of the last couple months has continued a positive trend spanning the past year.


Chart at Yahoo Finance

Yet, it would appear the gains of both stocks and consumer sentiment are based on a weak foundation, supported by hope in the world’s central banks. The fresh consumer report showed consumer expectations about the future are much more pessimistic than the feeling about today. The Expectations Index decreased to a lowly mark of 64.5, from 65.6 in July, as investors look forward to a fiscal cliff, global economic demise and maybe a complex war in the Middle East. Meanwhile, in the U.S., gasoline prices are rising, unemployment is not improving, and business investment is limited by economic and political uncertainty, with regulatory uncertainty tied to that. So, if you’ll excuse me, I’ll save my champagne for another day.

Retailers’ shares also benefited from the week’s Retail Sales data, which showed July’s retail sales gained 0.8% and rose 0.9% when excluding autos and gasoline. Each data point far exceeded economists’ consensus expectations, but that was at least partly due to their following revised lower June figures. The XRT gained 2.3% on the week nonetheless. Still, the news didn’t help the nation’s most important retailer, Wal-Mart (NYSE: WMT), which reported results that didn’t justify its premium valuation to growth expectations. Individual data dictated the direction of many retailers during this reporting period for the industry.

Investors bought stocks generally Friday on the consumer report and data showing the Leading Economic Indicators Index (LEI) improved in July. Equities were also supported by Angela Merkel’s nod to European Central Bank (ECB) support of the euro and troubled area bonds. Joining the SPY higher, the SPDR Dow Jones Industrials (NYSE: DIA) and the PowerShares QQQ (Nasdaq: QQQ) gained fractionally on the day Friday. Meanwhile, the dollar and gold held about steady, with the PowerShares DB US Dollar Index Bullish (NYSE: UUP) and the SPDR Gold Shares (NYSE: GLD) each inching forward. The price of crude rose Friday though, on Iranian President Ahmadinejad’s latest provocation. The iPath S&P GSCI Crude Oil TR Index ETN (NYSE: OIL) gained 1.2%.

In conclusion, while traders celebrate the headlines, I advise investors to take a pass on the party.

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.

Consumers’ Dive No Surprise Here

In a recent article entitled, “Consumers Signaling Recession,” we highlighted the deteriorating trend of the Bloomberg Consumer Comfort Index over the past several weeks. We noted that it stood in contrast to the rise of the Reuters/University of Michigan Consumer Sentiment trend, but that deterioration could be confirmed by the Conference Board’s Consumer Confidence Index which was pending at the time.

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.

Relative tickers include SPDR S&P 500 (NYSE: SPY), PowerShares QQQ (Nasdaq: QQQ), SPDR Dow Jones Industrial Average (NYSE: DIA), Consumer Discretionary Select Sector SPDR (NYSE: XLY), SPDR S&P Retail (NYSE: XRT), Amazon.com (Nasdaq: AMZN) and Wal-Mart (NYSE: WMT).

Consumer Confidence Dive

Indeed our forecast was fulfilled, as the Confidence Index was reported Tuesday significantly lower for the month of May. The funny thing is that professional economists failed completely to foresee what was developing, as I suppose they relied on the University of Michigan data for guidance while ignoring events around financial markets and news about Europe. Bloomberg pegged the poorly conceived economists’ consensus for May at an index measure of 69.7, which was above the downwardly revised April figure of 68.7 (adjusted from 69.2 at initial report). Rather, May’s index actually fell sharply to a mark of 64.9, a surprise to most, save those following this column.

What I found most interesting about the latest confidence decline was what fueled it. Over recent times, I have noted that consumer expectations have varied at a greater degree than the swing of the consumer view of the current environment. However, May’s report offered a different message than usual, and one that I found a bit more concerning as well. The component of the index that measures the American consumer view of the future, or the Expectations Index, declined to 77.6, from 80.4 in April, whereas the Present Situation Index fell dramatically to 45.9, from 51.2.

Consumer spending is less likely to be correlated with consumer confidence when the consumer view for the future is skewed lower. However, when consumers are concerned about the near-term, it will more likely affect their real spending. It seems to me that the latest decline is matched with investor concern regarding the possibility of Greece falling out of the euro-zone and its fantastic repercussions. Recent polls seem to support Greek interests in ending austerity, but we recently wrote that this may not mean Greece will exit the euro-zone. Rather, Greeks may be successfully calling Europe’s bluff.

Still, the ambiguity of the situation, especially given the hard-line generally heard from Northern Europe, offers good enough reason for American concern. If I said it a thousand times it was not enough; 20% of American exports are destined for Europe, which is already impacting the American, Chinese and the global economies. If Europe disintegrates, things will mostly get worse for the rest of us. Already, Italian bond yields have widened to beyond 6%, and the rating agencies, Moody’s (NYSE: MCO) and Standard & Poor’s (NYSE: MHP), are actively preparing for the worst, cutting the debt ratings of Spanish banks while very likely considering other changes. We’ve already seen signs of economic impact here at home in manufacturing, consumer activity and other segments of the economy.

This report shows consumers see business and job opportunity deteriorated this month, while expecting worse over the next six months. And yet, if the European situation somehow sorts itself out, the stock market should find some life and consumer confidence should recover with it. A great deal hangs in the balance over the next month, for all of us. Thus, the SPDR S&P 500 (NYSE: SPY) dropped 1.4% again Wednesday, while the PowerShares QQQ (Nasdaq: QQQ) fell 0.8% and the SPDR Dow Jones Industrial Average (NYSE: DIA) dropped 1.3%. More closely tied to consumer activity, the Consumer Discretionary Select Sector SPDR (NYSE: XLY) fell 1.6%, and the SPDR S&P Retail (NYSE: XRT) collapsed 1.9%. The shares of major retailers Amazon.com (Nasdaq: AMZN) and Wal-Mart (NYSE: WMT) fell 2.6% and 0.4%, respectively.

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.

Surprise! Surprise? Retail Sales Demise

Was anybody really surprised to learn that retail sales stalled in August? Apparently economists were, given their consensus forecast for growth of 0.2%, based on Bloomberg’s survey. Census Bureau data reported Wednesday showed retail sales actually stuck around the same mark set in July. Considering the damage DC and S&P brought to the stock market and consumer confidence through the summer, there should be no surprise about August retail sales dribble. The job now ahead of our government is how to restore confidence before an economic death spiral gains momentum.

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.

Relevant Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Surprise! Surprise? Retail Sales Demise

Back to school or back to broke? The back to school shopping season tends to heat ahead of Labor Day, but this data is adjusted for seasonal variation, and so should not be seen as worse for it. And how bad is it really? On a year-over-year basis, sales were 7.2% higher. Even after adjusting for inflation, that’s not shabby growth. However, gasoline station sales increased 20.8% on a year-over-year basis, thus reflecting the rise in gasoline prices through the period. This leads one to wonder if gas padded the numbers. However, if we measure retail health excluding gasoline, it still doesn’t look that bad. Most of the categories listed in the report show better than inflation rates of growth on an annual basis. That said, and like I’ve often stated in the past, we slow before we stop and we stop before we reverse course.

The month-to-month 0.0% growth rate proved harder to digest because July’s growth was revised downward to +0.3%, from the initially reported 0.5% rise. The July data was reassuring to investors when reported, so this is like a rug has been pulled out from under us. Still, the stock market was higher through early afternoon trading Wednesday on the appeasement of investors by an Italian vote of confidence for its government and on the reassurances of Angela Merkel and other European leaders regarding a feared Greek default.

Surprising motor vehicle sales weakness cost the overall growth performance, as the rate excluding auto sales was a better +0.1%. Motor vehicle and parts dealers’ sales were reported down by 0.3% through the month. This was consistent with data reported at the start of September, with domestic auto sales estimated running at a 9.4 million annual rate, down from 9.5 million in July. Total auto sales were down to a rate of 12.1 million, from 12.2 million in July.

Significant softness was also seen in apparel sales (clothing & clothing accessories), which was reported down 0.7% month-to-month. And the August drop was preceded by a decline of 0.3% in July. Clothing is perhaps one of the more discretionary spends made by consumers. Department stores did especially poorly, with those sales down 0.3% month-to-month. That news has not hurt the stocks of the big boxes today, with shares of J.C. Penney (NYSE: JCP) up 4.1%, Macy’s (NYSE: M) up 2.8%, Kohl’s (NYSE: KSS) up 2.2% and Nordstrom up 0.3% at the hour of publishing here. Grocery store sales, an area of necessity, rose 0.5%; though food sales, like gasoline, may reflect rising pricing as well (Kroger NYSE: KR up 0.3%). Spending at restaurants and bars (food services and drinking places), which are certainly discretionary for most of us, declined by 0.3% in August; and that followed the 0.4% decline in July. Shares of Brinker International (NYSE: EAT) and Darden Restaurants (NYSE: DRI) are up 5.3% and 2.4%, respectively, nonetheless. This discretionary spending drop-off should make DC and S&P feel a little guilty, if either has a conscience, but it looks like investors in these companies expected worse news today.

Nonstore retailers, which is basically online business now (once dominated by catalog), saw a sales increase of 0.5% in August and a strong 10.4% increase year-over-year. This continues to be a market share story, as the web keeps grabbing business from the street. Perhaps a sign of renewing decline in housing, furniture and home furnishing stores saw a sales drop of 0.2% in August, and have only modest growth of 0.2% to report on a yearly basis.

Sporting goods and other hobby stores posted strong growth of 2.4% in August, and I continue to believe this is due to a little understood phenomenon among the tally takers. Heading into the school year, student athletes and musicians must restock on equipment and supplies for their game and music playing efforts. It’s my view that the seasonal adjustment has not been accounted for here, as I recall this happening in years past as well.

In conclusion, the decline in August, following a moderated growth rate in July, can be directly attributed to Washington D.C. and to Standard & Poor’s in my opinion. The two perhaps equally responsible entities managed to scare the consumer, both employed and unemployed, into their bunkers. The capital destruction that occurred in the stock market on dire debt ceiling debate and the prospective economic collapse threatened by a downgraded sovereignty kept Americans focused on preservation of capital, and perhaps food as well. Hopefully, American confidence can be restored as quickly as it was damaged, but it appears a self-feeding down spiral is more likely.

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.

HRL Q2 2011 EPS - Hormel Faces Challenging Pricing Dynamics

QUICK TAKE
Hormel Foods

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.

HRL Q2 2011 EPS

Hormel (NYSE: HRL) shares were down 5% Wednesday, as the company is having issue managing its pricing along with its rising costs. HRL grew EPS 41% to $0.40, but analysts were looking for $0.41 a share. Meanwhile, the company earned less income on stronger revenues than analysts had anticipated. It looks as though Hormel has not matched its rising costs perfectly, but the cure for its ailment may not be higher prices in a competitive environment. Hormel did raise its guidance, but analysts were already expecting that. The consensus view now for the full year is $1.71, sitting above the center of the company’s guidance for $1.67 to $1.73. In my view, Hormel seems to be executing rather well considering a difficult and dynamic environment, but it appears investors are worried about the environment more than Hormel’s execution.



Article should interest Smithfield Foods (NYSE: SFD), Brasil Foods SA (Nasdaq: BRFS), Tyson Foods (NYSE: TSN), Hormel (NYSE: HRL), Seaboard (NYSE: SEB), Pilgrim's Pride (NYSE: PPC), Sanderson Farms (Nasdaq: SAFM), Industrias Bachoco (NYSE: IBA), Balchem (Nasdaq: BCPC), Zhongpin (Nasdaq: HOGS), Bridgford Foods (Nasdaq: BRID), Sara Lee (NYSE: SLE), Pepsico (NYSE: PEP), Unilever NV (NYSE: UN), Unilever plc (NYSE: UL), General Mills (NYSE: GIS), Kellogg (NYSE: K), Campbell Soup (NYSE: CPB), ConAgra Foods (NYSE: CAG), Mead Johnson Nutrition (NYSE: MJN), J.M. Smucker (NYSE: SJM), McCormick (NYSE: MKC), Green Mountain Coffee (Nasdaq: GMCR), Ralcorp (NYSE: RAH), Del Monte (NYSE: DLM), Corn Products (NYSE: CPO), Flowers Foods (NYSE: FLO), Treehouse Foods (NYSE: THS), Gruma S.A.B. (NYSE: GMK), American Italian Pasta (Nasdaq: AIPC), Diamond Foods (Nasdaq: DMND), J&J Snack Foods (Nasdaq: JJSF), Lance (Nasdaq: LNCE), B&G Foods (NYSE: BGS), Seneca Foods (Nasdaq: SENEB), Smart Balance (Nasdaq: SMBL), Farmer Brothers (Nasdaq: FARM), John B. Sanfilippo (Nasdaq: JBSS), China Marine Food (Nasdaq: CMFO), MGP Ingredients (Nasdaq: MGPI), China Nutrition (Nasdaq: CNGL), Overhill Farms (AMEX: OFI), Omega Protein (NYSE: OME), Key Technology (Nasdaq: KTEC), Tasty Baking (Nasdaq: TSTY), Inventure Foods (Nasdaq: SNAK), Golden Enterprises (Nasdaq: GLDC).

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.

The Wide Divide Between the Confidence of Consumers and Investors

Equity Strategy

The shortened week started off by offering an intriguing contrast of economic data. A duo of confidence measures reached the wire at the same fateful moment, but that's about all they had in common. The Conference Board's Consumer Confidence measure and State Street's (NYSE: STT) Investor Confidence mark could not have been separated by a more wide divide. However, the simple act of turning on your television should give you the reason why.

Relevant Tickers: NYSE: XRT, NYSE: STT, Nasdaq: TROW, NYSE: JNS, NYSE: JEF, NYSE: BX, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: JPM, NYSE: C, NYSE: WFC

The Wide Divide Between the Confidence of Consumers and Investors

While the Consumer Confidence Index jumped by 5.6 points, the Investor Confidence measure fell by 9.2. Each of the two important economic barometers measured the month of February, so a difference in timing was not at play. The difference between the two measures is neither regional, as North American Investor Confidence fell in communion with Global Confidence, dropping by 6.8 points to a mark of 92.5 in February.

We should have led you by now to the key difference between the two measures. While North American consumers could care less about global unrest, North American investors find it quite meaningful. As gasoline prices rise toward $4 though, well then it should matter to the American shopper as well.

A Closer Look at Consumer Confidence

A closer look at the Consumer Confidence metric sucks some of the wind right out of the bubblistic expansion in the index. The consumers' gain in confidence was mostly prospective. As we've seen in similar past increases in this measure, though, those prospective hopes can quickly be pulled out from under us, leaving investors who had banked on gains as a result of them finding they are suddenly without footing.

Consumers' views of current conditions remained near despair, as the Present Situation Index increased to 33.4, from 31.1. While there was improvement in sentiment, the details show a very low count of respondents were actually found to be in a good mood. Only 12.4% of those surveyed said business conditions were good, and just 4.9% said jobs were plentiful. A great many more people felt like things were horrid. Some 39.6% said business conditions were bad, while 45.7% said jobs were hard to get. Do you see how the message changes when expressed in detail, rather than by the headline alone? While all measures gained, the absolute view remained the same, and that was that the business environment is terrible.

And while the respondent representatives of American consumers saw a bad current state, they were looking toward a better tomorrow. Ah the American spirit never dies. That optimism also helped the broader confidence index, as Americans were hopeful. The six-month outlook for business conditions improved, yes, but by just four-tenths of a point, to a measly 24.4%. Fewer people thought business conditions would worsen over the next half year, but that may simply be because they can't get much worse. As far as the job market goes, those expecting a better labor environment actually fell. Though, once again, fewer people thought things could get much worse. It's not such a rosy report at closer inspection, and that truth lends this overall article to lean toward the case for lighter stock positions.

Investor Confidence Shows Smart Money Running

February's Global Investor Confidence Index shed 9.2 points, dropping to a mark of 91.6, from 100.8. The North American Confidence Index moved to 92.5, from 99.3. Things were not much better in Europe or Asia. European investors were especially shaken by the unrest across their borders, with the representative index losing 13 points, moving to 19.8. The Asian Index lost 4.3 points to 92.2.

This index measures the movement of capital by institutional investors, or some of the smart money. Thus, this decrease signals that institutions are reducing equity positions this month (measures short of 100). State Street's commentary rightly attributes the majority of the blame on Middle Eastern and North African unrest. The money manager also reports that European softness is probably also seeing impact from its own region-specific issues, including the European Financial Stability Facility and upcoming March negotiations on sovereign debt. We will neither leave out the rising concern of the ECB with regard to inflation, which should lead the regional bank to begin the liquidity unwind ahead of the US Federal Reserve.

Conclusion: Lighten Up On General Equity Positions

State Street makes notation of favorable capital movement into the financial and energy sectors, some of which is clearly due to the Middle Eastern unrest. Meanwhile, technical indicators galore have continued to offer omen of upcoming correction. Given the catalyst of civil unrest, which seems to be contagious, the cut in confidence makes perfect sense. We expect if the unrest continues, then consumer confidence will wane as well. Gasoline prices affect the consumer mood significantly, as fuel use cuts into the American family's budget rather deeply. Considering the rise in price in all sorts of other goods, then we see all the more case to reduce US equity holdings near-term.



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.

Netflix (Nasdaq: NFLX) a Buy for Aggressive Investors

Stock Pick Long Idea

While not for the faint of heart, Netflix (Nasdaq: NFLX) shares look to me like a buy for aggressive capital. The company blew away fourth quarter EPS forecasts. Consensus estimates look too conservative, which have the effect of over-inflating the P/E and PEG ratios. Beware though that high growth and valuation bring with it sensitivity to news, and so any failing can be disastrous for capital.

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.

Relative Tickers: Nasdaq: NFLX, Nasdaq: TIVO, Nasdaq: CMSCA, Nasdaq: DTV, Nasdaq: AMZN, Nasdaq: AAPL, Nasdaq: MSFT, Nasdaq: YHOO, Nasdaq: GOOG, NYSE: DIS, NYSE: DWA, NYSE: CNK, NYSE: RGC, NYSE: RLD, NYSE: LGF, OTC: BLOAQ.PK, Nasdaq: RENT, Nasdaq: CKEC, Nasdaq: LSTZA, NYSE: MHP, NYSE: PSO, NYSE: JW-A, NYSE: JW-B, Nasdaq: SCHL, Nasdaq: CRRC, NYSE: NED, Nasdaq: PEDH, NYSE: BKS, Nasdaq: BAMM, NYSE: BGP, OTC: LYFE.OB, Nasdaq: NOOF, OTC: PUBM.OB, OTC: IFLM.OB, Nasdaq: PTSX, Nasdaq: SAPX, OTC: AFFW.OB, NYSE: TWX, Nasdaq: NWSA and Paris: VIV.PA, Nasdaq: QCOM, NYSE: ABT, NYSE: BA, Nasdaq: SYMC, NYSE: TER, Nasdaq: CTXS, NYSE: AF, Nasdaq: BOKF, NYSE: CP, Nasdaq: COHU, NYSE: COP, NYSE: CBE, NYSE: CVD, Nasdaq: ETFC, NYSE: EK, NYSE: GD, NYSE: ISH, NYSE: KYO, NYSE: LM, Nasdaq: LOGI, NYSE: LSI, NYSE: MKC, NYSE: MWV, NYSE: OXY, NYSE: ROK, NYSE: SAP, Nasdaq: SEIC, NYSE: SO, Nasdaq: SBUX, Nasdaq: TSCO, NYSE: UTX, NYSE: VLO, NYSE: WLP, NYSE: XRX, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ)

Netflix (Nasdaq: NFLX) a Buy for Aggressive Investors

Netflix (Nasdaq: NFLX) shares jumped 10% after-hours Tuesday and were up 14% through the premarket morning, after the pioneer in the movie rental business beat the street with its quarterly earnings. Netflix grew EPS by 55% in its fourth quarter, with its $0.87 in EPS exceeding the analysts' consensus of $0.71 by 22.5%. The growth came on 34% revenue growth, which was short of but close enough to the analysts' consensus for the top line.

The blockbuster growth was driven by better than forecast subscriber growth. The company added 3.08 million new subscribers in the quarter, some 500K more than analysts had forecast. Netflix grew subscribers at a fierce rate of 18% from the third quarter, and at a count of 20.01 million, it can now boast the third largest US video subscription service, behind Comcast (Nasdaq: CMSCA) and DirecTV (Nasdaq: DTV).

Subscriber growth was certainly lifted by its late year launch of its unlimited streaming-only subscription plan. The company's expansion into Canada, while generating an international operations operating loss momentarily, will be followed shortly with a launch into a second international market. I'll go ahead and speculate that to be the United Kingdom, because it just makes sense due to language, custom and technological consistencies. Netflix estimates that it will take about 8 quarters to turn that second market profitable; we say it will happen quicker, as is occurring with the Canadian market. We expect Netflix is underestimating its brand power and the nearness of the global community.

The leverage of revenue over operating expenses allowed for operating margin expansion and operating profit growth of 47%. Since the company had been buying back shares, the lower count allowed for even faster EPS growth. It appears the company also produced the most free cash flow in its history this past quarter.

We find Netflix's partnership with Amazon.com (Nasdaq: AMZN) quite interesting. What already appears to be a complementary fit, is now working together, and we have to wonder if either Netflix or Amazon knew exactly what they were doing by engaging the other when this deal formed. In case you were not aware, Netflix has shifted from its own servers to AWS servers, and things got a whole lot easier for them since.

I must say that I've read a lot of earnings releases over the years, and have rarely come across the tone found in Netflix's news. Perhaps this is the direction we're heading, casual conversation on corporate releases, but sometimes people and corporate executives speak perfectly and the words are all made up (God knows I've seen too much of that on Wall Street). One thing I like about the Netflix team though is the candid conversation, and perhaps this is why the company does not take live questions on its conference calls; they might accidentally say too much to the rightly posed query.

The management team of this firm might not be up to par with the task at hand, or perhaps it is precisely because the CEO and Founder cares about his company so much that it will continue to astound. Usually though, these guys are pushed out, and it's unfortunate, because these companies are their babies. I feel I should say congratulations to Netflix's founder, for thinking outside the box, and then doing it again when the box changed. All small businessmen should be inspired by this success. Still, I will say that the trouble with the forecasting we saw this quarter, which resulted in a wildly positive surprise and stock surge, might someday lead to a bad miss or reflect a poor decision.

That said…

Given the big miscalculation by analysts this past quarter, let's assume the high estimate for 2011 is correct, and NFLX will earn $4.55. Let's say the stock opens where after hours trading took it, at $202. That gives NFLX a P/E ratio of roughly 44 on the forward estimate. The growth that estimate projects for the company in 2011 is 54%, and it would seem, if this or somewhere near is more correct than the conservative consensus estimates out there, then the high flying stock might not be overvalued.

Whenever you get an unsustainable growth rate, though, and a P/E value that nearly matches it, you're going to find volatility and sensitivity to news. Thus, even though the PEG ratio might be 0.8 when applying that one-year growth, or close to 1.0 for a lesser three-year growth rate, owning the shares is not for the faint of heart. That said, the run up after hours appears justified to me, and the stock still seems a proper fit for aggressive investors.



Disclosure: I have no interest in any mentioned stock.

This article should interest investors in Disney (NYSE: DIS), DreamWorks Animation (NYSE: DWA), Cinemark Holdings (NYSE: CNK), Regal Entertainment (NYSE: RGC), RealD (NYSE: RLD), Lions Gate Entertainment (NYSE: LGF), Rentrak (Nasdaq: RENT), Carmike Cinemas (Nasdaq: CKEC), LYFE Communications (OTC: LYFE.OB), New Frontier Media (Nasdaq: NOOF), Public Media Works (OTC: PUBM.OB), Independent Film Development (OTC: IFLM.OB), Point 360 (Nasdaq: PTSX), Seven Arts Pictures (Nasdaq: SAPX), Affinity Medianetworks (OTC: AFFW.OB), Time Warner (NYSE: TWX), News Corp. (Nasdaq: NWSA), Vivendi (Paris: VIV.PA), Liberty Starz Group (Nasdaq: LSTZA), McGraw-Hill (NYSE: MHP), Pearson Plc (NYSE: PSO), John Wiley & Sons (NYSE: JW-A, NYSE: JW-B), Scholastic (Nasdaq: SCHL), Courier (Nasdaq: CRRC), Noah Education (NYSE: NED), Peoples Educational Holdings (Nasdaq: PEDH), Barnes & Noble (NYSE: BKS), Amazon.com (Nasdaq: AMZN), Books-A-Million (Nasdaq: BAMM) and Borders (NYSE: BGP).

Other of the day's corporate EPS Wednesday came from from Qualcomm (Nasdaq: QCOM), Abbott Labs (NYSE: ABT), Boeing (NYSE: BA), Symantec (Nasdaq: SYMC), Teradyne (NYSE: TER), Citrix Systems (Nasdaq: CTXS), Astoria Financial (NYSE: AF), BOK Financial (Nasdaq: BOKF), Canadian Pacific Railway (NYSE: CP), Cohu (Nasdaq: COHU), ConocoPhillips (NYSE: COP), Cooper Industries (NYSE: CBE), Covance (NYSE: CVD), E*Trade (Nasdaq: ETFC), Eastman Kodak (NYSE: EK), General Dynamics (NYSE: GD), International Shipholding (NYSE: ISH), Kyocera (NYSE: KYO), Legg Mason (NYSE: LM), Logitech International (Nasdaq: LOGI), LSI Corp. (NYSE: LSI), McCormick & Co. (NYSE: MKC), MeadWestVaco (NYSE: MWV), Netflix (Nasdaq: NFLX), Occidental Petroleum (NYSE: OXY), Rockwell Automation (NYSE: ROK), SAP (NYSE: SAP), SEI (Nasdaq: SEIC), Southern Co. (NYSE: SO), Starbucks (Nasdaq: SBUX), Tractor Supply (Nasdaq: TSCO), United Technologies (NYSE: UTX), Valero Energy (NYSE: VLO), WellPoint (NYSE: WLP), and Xerox (NYSE: XRX).

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.

Consumers Express Buyers' Remorse

Consumer Mood Sours

Some of the latest data around consumers seems to show that they are perhaps experiencing buyer's remorse after overspending through the holidays. That said, hope still seems to exist in their hearts as well, and so there remains the possibility of a future let down there too. Oh happy joy!

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.

Relevant Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: JPM, NYSE: C, NYSE: WFC

Consumers Express Buyers' Remorse

You might have missed the negative perspective expressed here with regard to the consumer related economic data released in mid-January, given that many publishers were writing about the strongest annual rate of retail sales growth in more than a decade. Lucky you have cheery old Greek to remind you that the last few years' joyous journey have not exactly set a high bar for consumer spending to climb over. With that in mind, the 6.7% growth in retail sales (excluding autos) through 2010, the fastest since 1999, is not so special. Mathematics tells us the biggest growth rates should come after the softest of periods. And the latest days have been especially lacking.

Furthermore, Retail Sales grew just 0.6% in December, short of November's 0.8% increase and under the 0.8% bar set by the economists' consensus for the more important month. We saw a similar disappointment in the month's chain store sales data, and we theorized that the let-down might perhaps have occurred due to weather, or more likely due to pulled forward purchases on early sales promotions. That said, at least sales were growing versus the other possibility. However, another data point, also released last week, reinforced worries about the mood of Americans, which is something that might have them now reconsidering their silly spending of November and December.

The University of Michigan, in concert with Reuters, reported on January Consumer Sentiment last week. The latest take on the consumer mood offered a Consumer Sentiment Index reading of 72.7, down from 74.5 in December. Could the American consumer be expressing remorse, after perhaps spending beyond his means over the holidays? Economists had forecast this preliminary reading for January would hit at 75.0.

The state of consumer affairs has not improved much for the unemployed, and they were just put through the wringer too when Congress considered not renewing unemployment insurance extensions. While credit may be available to those of you with jobs, people scraping by on government assistance aren't having such a good go at the bank. So we suggest all of the gains of 2010 have come on a crippled consumer, and his crutch has been in use for so long now that it's getting rusty. Meanwhile, the doctor is lacking the political will to continue prescribing replacement crutches.

I Digress

Thus, I'm not as psyched as some of Wall Street's highly paid (and out of touch with Main Street) strategists living up there in the Park Avenue clouds of their own special reality. A few were heard early this year raising their GDP estimates and consumer spending forecasts for Q4 and 2011. Rather, I'm in tune with the tone of Park Ridge (also in NY), where most of those guys wouldn't venture during the daylight. That daylight shines on the truth of our struggles though. There are no Saks (NYSE: SKS) stores up in that cement jungle; heck there's not even a Kmart (Nasdaq: SHLD). These poor people can barely afford to even come into the city anymore, given the hikes in subway fares they are being burdened with to keep the second avenue tunnel drill running.

Those with cars have neither missed the fact retail gasoline prices have sped well above the $3 mark. The Reuters/Michigan metric shows inflation is in fact one of the main worries of the American consumers surveyed. The guys up on Park Avenue wouldn't know about that though, since the company takes care of the car service. The survey's one-year inflation forecast jumped to 3.3%, from 3.0% when measured in December; and guess what, I think the regular folk have a better bead on inflation that most of Wall Street. Tunisians do too.

The Consumer Price Index (CPI) for December, published Friday, was consistent with the Producer Price Index (PPI) published Thursday. Both reports showed raw prices lifted above economists' expectations on higher commodity costs, including food and fuel prices. The Headline CPI showed a December increase of 0.5%, though it was only up by 1.5% for the full year; that's not inflationary. Core CPI, which leaves out the volatile and lately lofty food and fuel prices, only increased by 0.1%, the same as the prior month and in line with expectations. However, if strain remains on scarce resource commodities that fire the global economy, which includes sectors of the world which are in growth mode, then we continue to posit, they threaten to infect the prices of goods ranging all the way to the finished segment… aka inflation. And that does not even include the impact of diluted dollars, dinero, and euro…

The Europeans are apparently already worried about that possibility, perhaps a bit early for them, given the burdens they've allowed to be weighed on Portugal, Ireland, Italy, Greece and Spain (the affectionately labeled PIIGS). The ECB Chief, Jean-Claude Trichet, spent a good deal of time talking about price stability and the evidence for and threat of rising energy prices, which he said warranted close monitoring.

That said, and despite our struggles, optimism continues in abundance in America, with the Reuters/Michigan index that measures the 12-month economic outlook up at 87 – that's a positive outlook. Well, if buyers could express remorse after spending like drunks on borrowed money for Christmas, then they certainly could have their hopes quelled by an economic recovery that looks to be a slow go at best. Our hopes continue to be bet on a country run by antagonists, who allow criminals to purge our intellectual property; who invite our companies to break ground on their land so that they can copy and contain their wisdom; and who threaten us on an ideological level. Yeah, that sounds like the road to prosperity to me…



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), Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC).

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.

Rotation Out of Retail Stocks Near-Term

Sector Rotation

Individual retailers reported chain store sales results Thursday for December, and the mixed bag of data decidedly disappointed the market. Even as December disappoints, the full holiday shopping period proved positive. Still, stocks had priced in those early gains as they came, and the old adage now begs to question, "What have you done for me lately?" Thus, baring a magnificent Employment Situation Report, I expect a near-term rotation out of retail sector stocks.

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.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: JPM, NYSE: C, NYSE: WFC)

Rotation Out of Retail Stocks Near-Term

The general sales tally for stores open a year or more fell short of economists' and analysts' views for December. Retail Metrics Inc. reported sales increased 3.2% in aggregate in December, against a 3.5% expectation. Retail sector shares had gained over recent months on favorable reports leading up to today, but a late season fizzle is taking some steam out of them now. The SPDR S&P Retail ETF (NYSE: XRT) dropped off 1.4% today on the news, but is still up near 9% since the close of October.

Seeking answers, the pull-forward theme is garnering most of the darts. After all, Retail Metrics notes November sales had increased a sturdy 5.5%, and MasterCard Advisors SpendingPulse (NYSE: MA) indicated that the full holiday season saw 5.5% growth as well. That was the best reported gain in five years time. Maybe this year, folks spent some money in November and regretted it afterwards, keeping them inside for snowy December.

As for the blizzard, Goldman Sachs' (NYSE: GS) Senior Retail Analyst Adrianne Shapira reminded us that there was a snow storm on Super Saturday in 2009, and one on the day after Christmas this past year. Net, net, she says, it's always going to snow in the Northeast during the holiday shopping season, so that effect is a wash. These types of anomalies are going to be especially meaningless as we look at periods covering more than a month.

Prices generally got squeezed this year on sales to lure in early shoppers, as retailers smartly sought to steal some market share. At the same time, breakthrough, technologically advanced goods got a whole lot cheaper this year, as I can attest, with my Toshiba Satellite (OTC: TOSBF.PK) going for about $300 less than it went for as recently as May! High-definition big screen TVs, electronic book readers, netbooks and i-everythings priced lower, and so Best Buy (NYSE: BBY) and other retailers of electronics faced a tough challenge and missed. 3D technology apparently flopped as a pull, and I suspect will not be successful until you can watch it without the special glasses. BBY shares fell 1.3% Thursday as a result. Several discounters who deal in electronics, among other goods, also blamed the segment today on weak same-store sales. That list included Target (NYSE: TGT), as its shares were off 6.8% on a soft 0.9% December same-store sales gain.

Results were mixed in this fickle marketplace, and so it is a stock-picker's dream arena today. The apparel, department store, discount and teen retailers that did relatively well included Abercrombie & Fitch (NYSE: ANF) +15%; Zumiez (Nasdaq: ZUMZ) +9.2%; Nordstrom (NYSE: JWN) +8.4%; Saks (NYSE: SKS) +11.8%; The Buckle (NYSE: BKE) +6.1%; TJX Cos. (NYSE: TJX) +6.0%; Costco (Nasdaq: COST) +6.0%; Dillard's (NYSE: DDS) +7.0%; BJ Wholesale Club (NYSE: BJ) +3.8%; Ross Stores (Nasdaq: ROST) +4%; J.C. Penney (NYSE: JCP) +3.7%; Kohl's (NYSE: KSS) +3.9%; Macy's (NYSE: M) +3.9%; and Walgreen (NYSE: WAG) +2.8%. While the stores posted sales gains, some were short of expectations, like Macy's, with M shares falling 4% as a result. That said, if you compare November through December periods, sales were solid at Macy's.

December's relative losers on the sales front included:

American Eagle Outfitters (NYSE: AEO) -11%
Aeropostale (NYSE: ARO) -5%
The Gap (NYSE: GPS) -3%
Wet Seal (Nasdaq: WTSLA) -2.1%
Stein Mart (Nasdaq: SMRT) -1.9%
Hot Topic (Nasdaq: HOTT) -1.7%
Cato Corp. (Nasdaq: CATO) 0.0%
Bon-Ton Stores (Nasdaq: BONT) +0.1%
Fred's (Nasdaq: FRED) +0.2%
Rite Aid (NYSE: RAD) +0.6%
Destination Maternity (Nasdaq: DEST) +1.2%
Stage Stores (NYSE: SSI) +1.9%

Retail sales are expected to increase somewhere between 3-4% in 2011. Still, I expect capital to continue a sector rotation out of retail generally in the near-term, perhaps leaving a pool fit for stock-pickers alone. While it's harder to say where capital will go, it's easier to see it should come out of retail for now, with gasoline prices expected to rise and with unemployment still high. We may begin to see a dent taken out of unemployment in the coming quarter (perhaps even Friday - a factor that could stop rotation), but other threats stand poised against broad and sustained economic recovery. Those include inflation in waiting, a likely war in the Middle East, and fiat currency dilution spiked with a shot of civil unrest in Europe, Russia, and even China and beyond.



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), Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC).

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.

After Christmas Sales Astound in 2010

There's Nothing Left!

Retailers got you figured out, as the latest same-store sales data covering the week after Christmas showed impressive growth, despite the massive blizzard that buried the Northeastern US. Learn about what happened last week, and what to look forward to in this report.

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.

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After Christmas Sales Astound in 2010

Weekly same-store sales, as reported by the International Council of Shopping Centers (ICSC) in conjunction with Goldman Sachs (NYSE: GS), came in astoundingly well. The week after Christmas, after all, did include a blizzard that walloped the population-heavy Northeastern US.

The week after Christmas offers retailers their last chance to unload left-over inventory, and so post-Christmas sales are used to pull shoppers in and push sales to those who are using gift cards or returning unwanted items. Thus, it is a busy shopping period.

For the week ended January 1, sales increased 0.4% against the immediately preceding period. That's quite impressive against an especially challenging shopping period that included the national holiday of Christmas Eve.

Burdened by blizzard, crafty retailers again found ways to outsmart Americans and get them to spend money. It's official, retailers have figured you out, perhaps with teams of psychologists and marketers pouring over a vast database revealing your individual vulnerabilities and placing tailored advertisements on the websites you naively peruse.

The Christmas week, or the period before last, produced growth of 1.0%, and so any growth at all over that period is impressive; but with a blizzard in the mix, it's actually scary to me. I mean really, are you a robot programmed to spend on the broadcasting of keywords? Sales were higher than over Christmas? According to this report, they were. This is such a bizarre consequence that you would think there must be a seasonal adjustment. However, also boosting the period's sales, is the reporting of income tied to the use of gift cards in the week after Christmas. Gift certificate purchases do not count as sales on the retailer's end until that card is redeemed.

Year-to-year sales gained 3.6%, off last week's reported 4.8% growth, but were in line with expectations for the full month of December. The International Council of Shopping Centers did adjust its December expectations lower on this week's news, so the blizzard had a negative impact, though a stealth one. And despite the impact, we must agree that the Christmas shopping season appears to have been a wildly successful one. The ICSC will produce its holiday season sales figures on January 6; that's Thursday, which also includes the chain store sales reporting of individual retailers for the month of December.

It seems that a return to normalcy in the operating environment of the still employed has allowed their spending increases to lift us all over a prior year period that included tighter credit conditions and an overwhelming sense of fear. Certainly, the last minute passage of unemployment insurance extensions and tax breaks added confidence to the consumer mindset this season as well. But where we go from here without job creating economic growth is a troubling consequence to ponder.



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), Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC).

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.

Consumers Safekeep Holiday Spirit in 2010

Now for the Hangover

While it looks like Americans spent a bunch more money than many expected this year, we wonder if the sharp drop in consumer confidence reported for December 2010 is a result of their day-after realization of overspending and/or undergifting.

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.

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Consumers Safekeep Holiday Spirit in 2010

The latest consumer spending data released today covering holiday shopping activity showed Americans may have lost their jobs in 2010, but they retained their holiday spirit - perhaps at their own cost. Last week, we expressed concern about the weekly sales results, based on the data's benefit from the inclusion of Super Saturday and its absence from the prior year comparable. We expressed concern that the absence of Super Saturday from this week's same-store sales data, versus an inclusive prior year comparable might drive equal and balancing disappointment this Tuesday.

However, ICSC reported that same-store sales for the week ended December 25, increased 4.8% year-to-year. Redbook concurred, noting a 4.6% sales increase. It's important to remember though just how bad last year was. While the stock market had already recovered from the pit, the economy was mired in the mud at the bottom of it. Thus, consumers were not as enthused as investors, though they had certainly benefited from wealth restoral in stocks; at least those who had not sworn off the fever forever. The problem is that many had.

A thoughtful reader of our article at a syndicate site last week offered his view that the day off on Friday might balance out the weakness caused by the absence of Super Saturday from the data. The Christmas weekend was a three-day holiday both years despite the date upon which Christmas fell. However, last year, Christmas Eve fell on Thursday, a full work day, and this year it occurred on Friday, an off-day allowing for last minute shopping for all Americans. So, we thank our reader for pointing out an important offset to our concerns. We witnessed with our own eyes streets full of holiday shoppers Friday on the Upper East Side of New York City. This certainly saved the week.

We also wondered whether the fact that a great deal of Americans had already finished their holiday shopping was good news or bad for retailers, considering they had likely paid less this year while chasing early deals. In the end though, it appears the creative marketing that thrives within the retail sector allowed it to adapt and survive 17% underemployment. Even the blizzard that struck the population dense Northeastern US could not stymie retail marketers, who are extending after Christmas sales to fit. It also certainly helped that the government passed unemployment insurance extensions, giving confidence to folks hanging on the edge.

Today, MasterCard (NYSE: MA) Advisors' SpendingPulse, which measures all retail sales (not just credit purchases), said for the period extending from November 5 through December 24, sales increased 5.5%. The rate of growth compared against 2009's 4.1% holiday pace, and it marked the fastest in five years. However, rates of growth are relative to the base they are measured upon. That said, and despite the easy bar setting, this is still good news.

It just so happens that Consumer Confidence was measured and published by the Conference Board today for the month of December. Putting a damper on things, confidence moved against the trend of the sales data noted today. December's confidence index slipped to 52.0, against the prior period's revised 54.3 and economists' consensus forecast for 57.4 this month, as compiled by Bloomberg. It is likely that this news had the S&P Retail ETF (NYSE: XRT) down fractionally through the hour of publishing. Negative housing price data out of S&P Case Shiller certainly did not help either. Shares of Wal-Mart (NYSE: WMT), J.C. Penney (NYSE: JCP), Best Buy (NYSE: BBY) and Aeropostale (NYSE: ARO) are trading with only fractional variance at the hour of publishing.

We have to wonder if consumer confidence didn't deteriorate due to the perhaps season-swayed spending of Americans that they now regret, realizing only afterwards that they really couldn't afford it. Or maybe they are just bummed about the lesser gifts given and received this year, and the friends and family they had to cut out. I would not read too positively into spirited holiday shopping, as consumers are likely to remain tight-fisted due to necessity moving forward.



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), Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC).

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.

Misunderstood Same-Store Sales Surge Offers Opportunity for Short Investors

Oversight Misled Retail Stocks Tuesday

An important calendar difference was missed by major media and expert analysts alike Tuesday. The oversight, and the later promotion of the wrong message by pundits, looks to have inflated same-store sales growth and provided a special opportunity for short investors over the near-term, especially in retail industry stocks.

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.

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A Misunderstood Same-Store Sales Surge Offers Opportunity for Retail Stock Shorts

Loyal Wall Street Greek readers have gotten used to our regular debunking and uncovering of anomalies behind what can appear as strong economic data. Once again Tuesday, we uncovered an important and deflating detail that was overlooked and left out by every major business media outlet and even Wall Street's most respected retail sector stock analysts. This is a reminder of why you read the expert authored blog, Wall Street Greek.

When the International Council of Shopping Centers (ICSC) reported same-store sales Tuesday at a level that marked the best growth for the entire holiday shopping season, economists, strategists, analysts and portfolio managers alike got on television and radio and proclaimed the American consumer alive and well. Indeed, even I was left scratching my head, wondering why… for a second or two. After all, for the period ended December 18, same-store sales marked 1.7% growth, week-over-week, and 4.2% growth against the prior year comparable period. Redbook concurred, showing 3.8% year-to-year growth for the same period. The S&P Retail SPDR (NYSE: XRT) was up fractionally on the day, but Macy's (NYSE: M) moved 1.5% higher, while Target (NYSE: TGT) jumped 1.9% and Nordstrom (NYSE: JWN) gained 1.2%.

After researching the subject, I almost bought into the conclusion offered by some high-level industry folks. The big idea was that shoppers came out in force last week, packing in a good portion of their shopping during the period. The ICSC Index and report released Tuesday seemed to concur with this assumption, given that it showed 74% of consumers had finished their holiday shopping through December 18, which was up from 56.6% the week earlier. That surge in shopping activity could be behind some of the week's extraordinary growth. According to a Bloomberg article on the subject, Oppenheimer Analyst, Brian Nagle, seemed to agree. However, based on one important fact that most if not all of Wall Street and the business press missed, we have to disagree.

What Had Happened...

What the pundits and speak-easies missed was an important calendar difference between 2009 and 2010. Bloomberg Radio Host Kathleen Hays almost stumbled upon it when she asked an expert guest if the reason might be seasonal. He quickly and sternly stamped out that truth, saying it couldn't be seasonal, given that the growth was measured on a year-to-year basis. WRONG!!! Wrong! Wrong! Wrong! And shame on you Mr. Expert for leading Bloomberg's audience in the wrong direction by sounding like you knew what you were talking about. Kathleen, "The Greek" should have been your guest Tuesday. I know from my experience as an analyst, and from the advice given to analysts by a seasoned talking head back at my old firm, that it is widely believed that giving any answer to a television or radio interviewer is better than giving no answer. Wrong and unethical! Thus, many of the talking heads you see on TV answer confidently, when sometimes they are just regurgitating what they have read or heard somewhere else, or they are simply spewing out their best guess. In other words, sometimes the well articulated and seemingly sound advice of experts is completely baseless and hazardous for investors to buy into.

Super Saturday is the second most important shopping day of the year after Black Friday, with Cyber Monday and Christmas Eve likely on their heels. Super Saturday is the Saturday immediately preceding Christmas, but it does not always fall on the same calendar date each year, and this year a slight differential misled the entire market.

Christmas falls on Saturday this year, but it fell on Friday in 2009. Thus, Super Saturday fell on December 18th this year, and was measured in the latest week's same-store sales. However, last year, Super Saturday fell on December 19th, and so it was absent from this latest prior year comparable that the 4.2% growth climbed over; its impact will instead be seen in next week's report. Therefore, next week's same-store sales growth result has a good chance of falling short of expectations and disappointing investors, if our analysis does not restore market efficiency sooner than that. Given this week's message, or false message, investors who might have been misled into buying retail stocks Tuesday could regret their action shortly on market correction.

Other data and expert analysis seem to point toward trouble for the whole of the holiday shopping period. The National Retail Federation Survey released in the middle of the month noted that 62% of adults surveyed said they would spend the same amount of money or more this year than in 2009. This fact also seemed to enthuse a few fools Tuesday, especially while complementing the 4.2% inflated period growth. However, those of us who have a bit of math proficiency remind readers that if this is true, then 38% of shoppers will be spending less this year. That second bit of information, characterizing a large number of people who usually spend about the same amount every year, likely plays more importantly for retail revenues and profits… but not for headlines.

Retail guru, Jay Margolis, pointed out that consumers were following deals this year, and staying home if there were none. He noted desperate retailers' broad store-wide discounting late in the season but well ahead of Christmas, as shop managers seek to ensure the movement of inventory. Otherwise, retailers would be faced with excess, and need to discount even further post Christmas. This is a bad sign, and it means shop-keeps will be turning inventory, but at a lower ticket. That little ditty should keep revenues soft and profit margins tight come quarter end. Therefore, assuming the week's 4.2% growth doesn't coincidentally correlate with the direction and state of the sales season, then this potentially mistaken surge in retail shares could offer opportunity for short investors of retail sector stocks.



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: BAC, NYSE: JPM, NYSE: GS, NYSE: MS, NYSE: C, NYSE: PNC, NYSE: WFC.

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.