Don't Buy into Consumer Confusion

Based on the hype of headlines from Black Friday through the holiday weekend and Cyber week, you would think consumers had been surprisingly free-spending of late. As that superficial view stirred my stomach into an acidic storm, I was compelled to take a closer look, plus an antacid tablet.

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.

Consumer Confusion

Over the course of the last few weeks, we received data on the state of the consumer mindset, on November chain store sales, including the activity through the big bargain days, and motor vehicle sales. If you perused the headlines covering Black Friday and Cyber Monday, you noted so many “records” you might have gotten your old DJ equipment spinning again. It’s my belief that the press on the subject single-handedly stirred the stock market into a reckless rally. Investors bought into a phantom American buyer, while ignoring Fitch’s downgrade of the American outlook and S&P’s cutting of U.S. banks with international exposure and its warnings to France and Germany. The market also blew off a panic-stricken economic warning from the OECD as well. Neither did it mind that the European Union and U.S. Congress look set to stay divided until the end of us all!

The week ago period brought with it the monthly chain store sales data for November. Thomson Reuters reported that same-store sales for stores open for at least a year rose 3.1% in November year-to-year (3.2% based on ICSC data). Surprisingly enough, the growth was only about in line with analysts’ expectations, based on Thomson Reuters’ data. Furthermore, when taking into account population growth, the rate itself is not so impressive. Actually, the more I think about and analyze it, the less impressed I am.

Over the course of the last several years we’ve seen a move of shoppers down the ladder of value, with an increasing portion of America’s spending occurring in discount store chains and even deep discount or “dollar” stores. Indeed, Costco (Nasdaq: COST) noted 9% same-store sales growth for November last week. Wal-Mart (NYSE: WMT) does not report monthly, but we expect that given its decision to stay open on Thanksgiving and to start sales at 10:00 PM, it appears it did relatively well. Looking for shoes, I perused a Wal-Mart store and was surprised to see a passable pair of sneakers selling for just $15. If not for my concerns about long-term mobility and osteoporosis, I may have indulged in some frugal futility. Shoes, however, are a critical tool for a motivated entrepreneur, and cannot be sacrificed for savings.

At the other extreme, the luxury retail market has been recovering since panic eased among the richest of the rich post that March 2009 scare. There was also a brief period around the time Bernie Madoff topped the headlines, in which some of the rich were especially careful not to flaunt their wealth. However, in November, Saks (NYSE: SKS) posted same-store sales growth of 9.3% and Nordstrom saw sales soar 5.6%, each exceeding analysts’ expectations. With securities and alternative investment markets stabilized and much higher off those aforementioned panic-level lows, the rich feel free to spend again.

There’s now a deeper division though between the rich and the poor, leaving the middle ground retailers scrapping for profits. You’ll find department stores sourcing more goods at lower cost and driving more sales via creative marketing. Macy’s (NYSE: M) seems to have gotten ahead, doing well in recent years after a soft patch around the aforementioned economic turmoil. In November, Macy’s, which operates its stores by the same name and upscale brand Bloomingdales, saw same-store sales growth of 4.8%, also above expectations. However, J.C. Penney (NYSE: JCP), which held to its laurels and refrained from Thanksgiving infringement, suffered because of it. Its November same-store sales declined 2.0%. Still, opening early didn’t save Target (NYSE: TGT), which posted November chain store sales growth of just 1.8%, short of expectations. Perhaps the bad publicity around its Thanksgiving Day Grinch game plan and its disgruntled petition-signing employees kept shoppers away.

November’s sales growth may only highlight that shift we’re talking about in the number of shoppers desperate for value. In other words, many shoppers may be done now. They may have filled not only their holiday needs, but may very likely have cured all their current needs. We could very well see that illustrated in a dearth of shopping that could occur through December and into 2012 as a result. The latest ICSC Weekly Same-Store Sales data supports this view, as week-to-week sales dropped a sharp 2.3% in the post Black Friday period.

Analysts are waiting to see how the discounting that drove sales may have impacted profit margins. Also, given the early starting hours at the nation’s discounter, Wal-Mart (NYSE: WMT) and its rival Target (NYSE: TGT), their sales may have actually taken a bite out of economic value, not to mention bitten into the sales of department stores and specialists.

Yet, according to the popular press, consumers are feeling better for some unexplained reason. The most recent Conference Board reporting of Consumer Confidence showed a dramatic improvement, but from dire levels in October. The Board showed its Consumer Confidence Index gained to a mark of 56.0 in November, up from an obscene 40.9 in October. Much of the gains came in future expectations, which jumped to 67.8, from 50.0 in the prior month. I’m always wary of gains that come due to the volatile expectations query, since they are based on hope and prayer. Perhaps the holiday cheer got to some foolish folks, or too much eggnog fogged the view.

The press will point to the improvement in the unemployment rate in November, but half of that superficial gain was driven by a large drop in the workforce. While some speculate that this is due to demographics, or the retirement of our aging population, I say it’s more likely due to the depression of our long-term unemployed. The strict requirements of the check circulators can easily lead a depressed fellow to fall out of favor. Once cut off, he’s out for good, yet just as unemployed as he was the day before.

But motor vehicle sales surged in November, they’ll say, as Toyota (+6.7% NYSE: TM), Chrysler (+45%), GM (+6.9% NYSE: GM), Ford (+13% NYSE: F) and Nissan (+19% OTC: NSANY) reportedly did especially better than last year. Overall, the annual rate of motor vehicle sales was 13.6 million, up just a bit from 13.3 million in October. Domestic vehicle sales ran at an annual rate of 10.3 million, up from October’s 10.1 million pace, but short of expectations for 10.4 million, based on Bloomberg’s survey of experts. Given that interest rates are incredibly low, and the aging of vehicles on the road through the economic slug, I do not see a blockbuster pace of activity here. The improvement is notable, but not so awesome.

In summary, I suggest investors temper their enthusiasm tied to the latest consumer data. Instead, money minders might look at what is unfolding economically speaking across the Atlantic, where 20%+ of U.S. exports are sold. Political gridlock, both in Europe and in the United States, threatens to test the rating agencies, who hold too great a power at this critical juncture. Their untimely threats against European bookends, and their overhanging threat clouding the American sovereign rating, are not just reflections of current reality. They are also determinants of future upheaval. While the markets may rally on appetizing actions taken in Europe, the longer term seems, at least to me, to hold an unsavory entree’ in store. Therefore, take the latest consumer data lightly, and instead look at what might kill those hopeful expectations and spending in the near enough future.

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.

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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.

Consumers Souring on the Economy

Consumer Shock

Two separate consumer confidence measures offered a consistent message over the last several days. Consumers are souring on the economy. Global economic recovery, combined with the pressure applied from Middle Eastern unrest, has a difficult environment further burdened by rising gasoline and other prices.

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 Souring on the Economy

Both the University of Michigan/Reuters measure and the Conference Board's measure published on Tuesday concurred that inflation is the main concern of consumers today. It has them very worried about the affordability of gasoline and food and other goods over the months ahead. As higher necessary gasoline expenditures cut into pocket books, other spending is threatened as well.

The Conference Board's latest take for March showed its Consumer Confidence Index fell to 63.4, a notable decline from February's measurement of 72.0. The mark was the worst in three months in fact. As we have discussed here previously, most of the last year's gains in confidence have been counted in the expectations portion of the survey. The outlook of consumers had improved, surely benefiting from a rising stock market and positive economic data. We continue to be suspicious though of the reported gains in employment, and we've suggested the true unemployment rate is closer to 9.4% then 8.9%. Expectations, however, are easily spoiled, and vulnerable to swift change, as seen in the monthly collapse here.

Last week, Reuters/University of Michigan reported its Consumer Sentiment Index fell to 67.5, from 77.5 in February. That was the lowest reading for the index in more than a year. The expectations index here fell to 57.9, from 71.6 in February; this was the lowest level for consumer expectations since March 2009. The Conference Board's report issued today showed its consumer expectations measure fell to 81.1, from 97.5.

In both cases, the surveyed consumers indicated it was inflation concerns that bothered them most. Inflation expectations moved higher in each report, and the reason is clear, as gasoline has been highly pressured by the events in Libya, Bahrain and the Middle East and North Africa generally. However, even before the turnover of government in Egypt, commodity prices had been steepening. In fact, higher food prices were at the core of the unrest in Tunisia, since the impact is felt more sensitively by these third world nations, where food costs represent a greater proportion of income than in the U.S.

The Conference Board's report has not proven positive upon close inspection, even before today's news. While it has noted better relative results, on an absolute level, the survey displays a clearly miserable state of affairs. For instance, consumers claiming business conditions are "good" increased, but only to 15.1% of those surveyed. Those claiming business conditions were "bad" decreased, true, but only to 37.0%, from 39.3%. And some 44.6% of consumers said jobs are "hard to get", while just 4.4% said jobs were "plentiful".

Study of the numbers shows a pitiful confidence environment, that much is clear. Just 20.6% of consumers expect business conditions to improve over the next six months, and that is down from a still sad 25.2% last month. The numbers are not any better with regard to the jobs outlook or for income expectations. Representing 70% of the American economy, consumer spending is threatened, as is the housing recovery and GDP. Thus, concern is heightening about the possibility of another recession, and the likelihood of QE3 is increasing.

I noted Larry Kudlow Tuesday pointing to manufacturing strength and Jim Cramer spoke recently of the good health of the American multinational. Both statements are true. However, manufacturing alone will not survive the American economy, and the good health of American multinationals will neither support significant US job growth.

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.

Economic Reports - Pending Home Sales and Personal Income and Outlays

Economic Reports

Monday offered two economic reports, Pending Home Sales and Personal Income and Outlays data for February. We cover both briefly here for you.

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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Economic Reports - Pending Home Sales & Personal Income & Outlays

Pending Home Sales February

Contrasting against last week's housing data, Pending Home Sales offered good news today for the month of February. The Pending Home Sales Index rose 2.1%, to 90.8 in February. Last week's data marked contract closings, but this report covers new contract signings, which is a forward looking indicator for future sales. Even so, the Pending Home Sales Index was still down 8.2% from last February. The National Association of Realtors focused attention to the fact that the trend line shows rise since last June. Regionally, we saw growth in all segments except the Northeast, where an excessively snowy winter likely played a role in limiting foot traffic.

Personal Income & Outlays February

The Personal Income & Outlays Report is watched mainly for its consumer spending data and its price gauge. Both those data points offered intriguing information Monday too. Personal Outlays increased 0.7% in February, against economists' consensus expectations for a 0.6% rise. The increase came on a prior month revised higher count, so it got no benefit from revision. However, real PCE, excluding price changes, only increased 0.3%. Thus, price drove much of the change. That was seen in the 0.2% increase in the Core PCE Price Index and the 0.4% increase in the price index including food and energy prices. Personal Income rose 0.3%, less than the 0.4% expectation by economists and against the 1.2% revised growth seen in January.

Article should interest investors in Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), State Street (NYSE: STT), Janus (NYSE: JNS), T. Rowe Price (Nasdaq: TROW), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

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.

(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)

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.

(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 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.

(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)

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.

Holiday Shopping Spending in 2010

Topic of Debate

Are you spending more, less or the same amount of money for gifts this holiday shopping season versus last year?

There are a plethora of reports littering the pages of major publishers these days offering varying views of the health of this year's holiday shopping season. We suspect spending is down this year, considering the length of time too many of us have been unemployed or underemployed. Yet, we find retail stocks surging today on a report of strong same-store sales (be sure to see the article that follows this though, since we debunk that deceptive data).

The National Retail Federation Survey released in the middle of the December noted that 62% of adults surveyed said they would spend the same amount of money or more this year than they did in 2009. Looking at this same data from another perspective, perhaps 38% of those surveyed are going to spend less money this year, and this seems to be more important for retailers, in our view.

We thought we might take this opportunity to survey our readers and ask:

How is Your Holiday Shopping Spending Shaping Up in 2010?

DEBATE TOPIC ARCHIVE

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, NYSE: XRT.

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.

Political Fervor Taints Consumer Confidence Numbers

Tainted Tea & the Confidence Numbers

While The Greek is concerned about the significant decline in consumer confidence, something we have been warning would threaten the housing market and the general economy, we also smell a rat in the survey. Consumers have good reason to be troubled, don't get me wrong, but seasonal factors may be playing a role now as well. One such seasonal is of the irregular sort, and of political taint.

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)

Political Fervor Taints Consumer Confidence Numbers

Consumer Confidence sank to a mark of 48.5 in September, according to the Conference Board, which reported the news this morning. The data marked a new low, down from 53.5 in August. In fact, the index has shed 14.2 points since May. Economists were shocked by the degree of depression, with Bloomberg reporting the consensus expectation for the data point at 52.0. Considering that consumer confidence and spending is critical to the US economy, you should be paying close attention to this news.

The Horrible Truth

Consumers have had plenty good reason to sour, including a stagnant and sad labor market. With little new hiring occurring, surely the unemployed are growing increasingly depressed. Depression is certainly a good describer of just how hopeless the survey participants seem to be feeling. Their view of current conditions deteriorated in this latest check, with the Present Situation Index slipping to 23.1, from 24.9 in August. Still, it is their view of the future that should bother you more. The Expectations Index dropped precipitously, to 65.4, from a higher ledge of 72 last month.

The Director of the Conference Board said, "Overall, consumers' confidence in the state of the economy remains quite grim. And, with so few expecting conditions to improve in the near term, the pace of economic growth is not likely to pick up in the coming months." Regarding the present situation, those viewing business conditions as "bad" increased to 46.1%, from 42.3% previously. Only 8.1% said business conditions were "good." With regard to the job market, the number claiming jobs were hard to get depicted a dire environment as well.

Expectations

The American household outlook is indeed grim, and we can find no better descriptor. The percentage of people expecting business conditions to worsen increased, as did the number anticipating fewer job opportunities. This future outlook can have a dramatic impact on spending, because as Americans worry about income and wealth, they will spend cautiously.

Seasonal Impact?

Indeed, back-to-school shopping can have a way of reinforcing the inadequacy of an unemployment check. As such, we expect survey participants were a little more stressed than usual in September.

Conspicuously, we wonder what degree of impact political passions had in influencing the responses of Republican respondents during this special fall month. While things are bad, we can understand easily how worse they can seem by turning on C-SPAN to catch Republican House Leader John Boehner giving a speech. Or, you could switch on Fox television. Active Republican election campaign staffers and simple backers are surely included in the 5,000 households surveyed by the Conference Board, and so as we near November elections, their fervor is no doubt intensified. Perhaps they are also captured in these numbers...

I would assume any self-respecting Republican would express their complete discontent with the state of the economy now, given the other party runs the show today. So, while we see good enough reason for further deterioration in confidence, we warn that there may also be a taint to the tea in this particular reading.



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