Confusing Consumer Behavior Debunked

Perhaps you were disturbed by the so-called disturbing consumer spending data reported last week. I know I was. However, I believe I have uncovered what was behind it, and I see a change in that same catalyst happening now for the better. Fresh data is verifying my view. Thus, I’m looking for consumer spending to be reported much improved in the months ahead. See more of this report here: Debunking So-Called Disturbing Consumer Behavior.

Security Sector	03-31-16 3:00 PM
SPDR S&P 500 (NYSE: SPY)	-0.3%
SPDR Dow Jones (NYSE: DIA)	-0.2%
PowerShares QQQ (Nasdaq: QQQ)	-0.2%
iShares Russell 2000 (NYSE: IWM)	+0.3%
Vanguard Total Stock Market (NYSE: VTI)	-0.2%
Financial Select Sector SPDR (NYSE: XLF)	-0.3%
Technology Select Sector SPDR (Nasdaq: XLK)	-0.3%
Energy Select Sector SPDR (NYSE: XLE)	-0.1%
Health Care Select Sector SPDR (NYSE: XLV)	-0.2%
Consumer Discretionary Select Sector SPDR (NYSE:  XLY)	-0.2%
Consumer Staples Select Sector SPDR (NYSE: XLP)	-0.5%
Utilities Select Sector SPDR (NYSE: XLU)	+0.4%
Materials Select Sector SPDR (NYSE: XLB)	-1.0%
Industrial Select Sector SPDR (NYSE: XLI)	-0.1%
iPath S&P 500 VIX ST Futures (NYSE: VXX)	+1.6%
SPDR Gold Trust (NYSE: GLD)	+0.6%
United States Oil (NYSE: USO)	-0.1%

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. 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).

Buffalo Wild Wings (BWLD) Should Benefit from NCAA Football Playoffs

When Buffalo Wild Wings (Nasdaq: BWLD) reports earnings this evening, I expect it will talk about its current quarter benefit from the new NCAA Division 1 Football Playoffs and Championship Game. The event is new, and so what once drew viewers for 1 game, just drew more viewers for 3 games. That means this quarter (Q1) will have an easy comp against the prior year quarter when it’s reported in a few months. I anticipate that the college football championship game drew more viewers this year than in any other year, and that the addition of the extra games and the hype about the finale drove foot traffic into Buffalo Wild Wings and will support its Q1 due for report in 3 months. BWLD was cheap before its last quarterly report, but has risen significantly into this report. I like the stock long-term, but am wary of playing around with it ahead of earnings this quarter due to its position heading into it. That said, I wouldn’t sell it if I owned it, and would buy more if it drifted. I expect it to close toward $190 tomorrow, up $10, taking it back toward its high. The PEG ratio for the stock is 1.5X based on a P/E of 30X this year’s consensus EPS estimate and the 20% long-term growth expected. Growth should exceed 20% this year and estimates should see revision higher. BWLD is a buy in my opinion, but I wouldn’t buy options ahead of the report, only stock, and I would buy this stock on weakness thereafter.

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.

GPRO – GoPro to Top Momentum Names in 2015

In case you hadn’t noticed yet, the tone of trading around GoPro (Nasdaq: GPRO) shares has completely changed. The shares had been beaten down heading into and on the IPO lockup expiration. However, since that focal point of trading has passed, now all investors have to look toward is reports of stellar holiday sales, exceptional operating results, product & market announcements and CES. It appears the significant short position against GPRO shares is unwinding swiftly, and I see even sharper rise in store for the shares ahead. GoPro could be the top momentum name for 2015 – see the report on GoPro here.

Walmart Outlook for 2015

Wal-Mart Stores (NYSE: WMT) is looking good as the year comes to a close, but that’s both good and bad for shareholders in 2015 in my view. Economic data is reflecting a healthy operating environment, but the stock is looking fat heading into the important turn of the year. Still, long-term holders should risk an early year dip and maintain holdings despite the stock’s P/E premium to its growth outlook, as upside surprises on lower gasoline pricing and economic strength could drive better than expected growth for the company and the stock. See our Wal-Mart Outlook 2015 Report here.

5 ETFs to Avoid

The nascent market downturn has picked up steam of late, leading me to begin to think about ETFs to avoid for the near-term. While some will say the issues offer buying opportunity on already marked decline, I suggest not attempting to catch the falling knife just yet. There remain longer term questions to be answered about the global economy and recent signs of underlying weakness.

Avoid Oil Complex Trackers

The United States Oil ETF (NYSE: USO) and the iPath S&P Crude Oil Total Return ETF (NYSE: OIL) are two of those atop my list today, for various reasons.

1-Year Chart at Yahoo Finance

The one-year chart presents what seems like stability for the securities here. The USO and OIL are well off their highs of last year now, when the economy was making marked improvement and it seemed global demand was building again. However, since then, questions have surfaced about oil supply and pricing given American reserve discovery and development. Obviously, recent weather has eaten into natural gas reserves, but that is a seasonal issue that I believe commodity traders are not yet ready to call the new normal. As a result, it’s not a serious long-term driver currently.

The oil market securities began to recover from late 2013 lows, but have this year been struck again by weak U.S. economic data found in the monthly Employment Situation Report nonfarm payroll shortfall. Add to that, weakness seen in economies globally, especially in China recently, and the oil outlook comes into question. Emerging markets are suddenly seeing crisis as well, so oil has a great weight against it, and as a result, investors will want to avoid the OIL and USO.

Emerging Market Weakness

Don’t try to catch the falling knife in the emerging markets today. While the one-year chart of the iShares MSCI Emerging Markets ETF (NYSE: EEM) seems to offer a buying opportunity, it’s too early to add to risk today.

1-Year Chart at Yahoo Finance

Turkey is in the midst of a crisis and other markets are likely to feel the heat near-term before things settle. Last week, all of Europe was deeply red and most of Asia. In Sao Paulo, the Bovespa was off 2.8% last week and is down 7.2% on the year through Friday. In Moscow, the RTS is down 5.5% year-to-date and fell 2.3% last week. India’s Sensex is only off fractionally on the year, but the Hang Seng is down 3.7%. Greek stocks were down 7.1% last week. We can see, then, that risk is definitely off. It’s not for the brave to buy now, it’s for the fearless. Therefore, investors will want to avoid the emerging market trackers including the iShares MSCI Emerging Markets ETF (NYSE: EEM).

Avoid Consumer Sensitive Issues

The retailers contributed greatly to this year’s selloff. Despite solid recent retail sales data, too many individual retailers are reporting on a thrifty U.S. consumer. Retailers Best Buy (NYSE: BBY) and Sears (Nasdaq: SHLD) had some extremely sour news to report this quarter and struggling J.C. Penney (NYSE: JCP) announced some store closures. We’re dealing with an oversaturated retail environment that cannot support current capacity in my view. While some names might still do well on individual drivers, the group on the whole is out of favor, in my opinion.

Chart at Yahoo Finance

The softness is clearly seen in the tail end of the chart here for the Consumer Discretionary Select Sector SPDR (NYSE: XLY) and the SPDR S&P Retail ETF (NYSE: XRT). Today’s Consumer Confidence Index improvement was contrary to recent trend, and offered lift for these two issues today. However, I think investors should not look past other indicators which have reflected problems recently. Weekly same-store sales data have been weak; while some of that is on weather, it’s coinciding with a failing weekly measure of consumer comfort published by Bloomberg and the Reuters/University of Michigan measure of sentiment.

While in the line of fire, these ETFs are dangerous to buy today, and so I suggest continuing to avoid them here. The factors that have come against the broad reaching issues are longer term in nature and so questions about the global and U.S. economies need to be answered before sustainable change occurs. While we may see improvement on a day-to-day basis, until employment trends are repaired and the China question is answered, I cannot see good reason to approach these five issues today. Avoid them for now.

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.

Astounding Retail Sales Justify Fed Taper

Retail sales were reported for the month of November Thursday and they were astounding. It reflects a very strong start to the holiday shopping season, and shows all around better consumer spending activity. It also offers the Fed all the more reason to begin tapering back asset purchases, but it justifies it as well, so it should make Fed action easier to swallow. Let’s take a closer look at this stellar economic report. Visit our blog for more like this.

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.

Retail Sales

Upward Revision to October

The prior month’s sales data was revised higher, and the revisions extended across the board. This is not always good news, because it could lead to a slower growth rate for the reported month, since the base that growth is calculated upon is raised. However, that was not the case Thursday, as the prior month’s upward revision joined the current month’s positive surprise in uplifting hope.

	Revised Oct. Change	Initial October Data
Retail Sales M/M Change	+0.6%	+0.4%
Retail Sales Less Autos	+0.5%	+0.2%
Retail Sales Less Autos & Gas	+0.6%	+0.3%

As you can see, previously reported headline retail sales were increased two-tenths to +0.6% for October. When we exclude automobile and gasoline sales, growth shows up even better, improved by three-tenths of a percentage point. So this is good news about the pre-holiday period. It’s even more impressive if we recall the federal fiscal chaos that enveloped the headlines in early October as the government shut down and the debt ceiling debate threatened to derail the American economy. Those key factors did have a detrimental impact upon reported consumer sentiment trends through the month. Yet, as Thursday’s data shows, real spending came through okay.

November’s Good News

	November Change	Economists’ Consensus
Retail Sales M/M Change	+0.7%	+0.6%
Retail Sales Less Autos	+0.4%	+0.3%
Retail Sales Less Autos & Gas	+0.6%	+0.2%

Despite the upward revisions to October’s data, growth exceeded economists’ expectations across the board in November. The numbers were more than just better than expectations; they were strong in absolute terms as well. November retail sales growth of 0.7% beat the economists’ very positive outlook, but when excluding strong auto sales and gasoline, they blew away the economists’ consensus and remained robust in absolute terms at +0.6%.

I caught a so-called expert criticize the report on financial television Thursday. He expressed his view that retail sales are strong, but retailers’ individual earnings have been poor. He vaguely suggested that this was because of necessary discounting and reflected a generally poor retail environment. While I agree that the retail store capacity of the United States has typically been oversaturated over the last decade, I cannot find much fault with the latest retail sales report. And it is well-established now that American consumers are deal seekers.

I do believe that the earlier discounting of retailers may have helped pull forward a larger portion of seasonal sales than usual though. Opening on Thanksgiving like Wal-Mart (NYSE: WMT) and Target (NYSE: TGT) did and the beginning of discounting even earlier than that, along with ongoing daily deals from the likes of Best Buy (NYSE: BBY) and others, have certainly helped frontload seasonal sales. I think you can see that in the year-to-year comparisons. Sales were 4.7% greater in this year’s November versus last year, and they were up 4.1% for the September through November period.

Looking at the retail segments, autos were especially strong, with those sales up 1.8% in November and 10.9% against the prior year period. The strong November was already noted by Ford (NYSE: F) shares though because of the monthly motor vehicle sales data reported earlier this month, so auto stocks hardly reacted to the news Thursday.

Gasoline stations posted a 1.1% decline in sales for the month and a 3.3% drop from the prior year period. This activity is always dictated by the volatile price of the commodity. We can see that the auto and gasoline sales trends offset one another, and so the headline comparisons nearly matched the change in the adjusted figure that excludes these two important retail segments.

Online sales are of great interest to us, given their growing importance and the rising prominence of players in the market like Amazon.com (Nasdaq: AMZN). The sales of “nonstore retailers,” which also include exclusive catalog sellers but are mostly driven by online retailers these days, increased 2.2% in November and were up 9.4% against the prior year. The faster pace of growth reflects the still increasing importance of Internet retailers and their steady market share gains. That trend is driven by the ease of online shopping and the often better pricing of goods online.

Another positive sign for consumer spending was evident in the 1.3% higher sales of food services and drinking places in November, and 5.2% year-to-year increase. The outsized gain in sales for this segment is important, as we believe it offers evidence of casual dining gains. Eating at Darden Restaurants’ (NYSE: DRI) Olive Garden is relatively inexpensive, but it’s probably still more expensive than eating in. Eating at McDonalds (NYSE: MCD) is another story, thanks to its expanding dollar menu. I think the growth in this segment more likely reflects a return of consumer spending following improving labor trends.

Real estate enthusiasts will be happy to note the 1.8% month-to-month and 5.3% year-to-year sales growth in building materials stores. Add to that the 1.2% and 9.7% sales growth at furniture and home furnishings stores and we have real reason to celebrate. Not only are home sales increasing, but people are actually furnishing and repairing them.

Chart at Yahoo Finance

The retail sales data on Thursday hardly lifted stocks, which were on the decline of late due to rising concern about Fed tapering and next week’s meeting of the U.S. central bank. Still, the slide in the SPDR S&P 500 (NYSE: SPY) did stall on the day, and that might have been because of the especially positive retail sales result. It is yet another data point offering evidence that the Fed might be justified in tapering back asset purchases now, and that the economy can stand on its own even so.

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.

Take Heed: Retail Sales Alarm Tied to Debt Ceiling

The International Council of Shopping Centers (ICSC) produces its Weekly Same-Store Sales data every Tuesday. This week, the data seems to offer indication that consumers are concerned about the government shutdown and debt ceiling uproar. For the economy, this is critical as we enter the busiest buying season of the year. Furthermore, other consumer relative data over the past couple months has shown about as well as yesterday’s fad, so perhaps investors in the retail sector should take heed as well.

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 ICSC Tuesday reported that the pace of weekly same-store sales at retailers’ stores open for at least a year were notably softer. While Redbook’s year-to-year measure typically runs higher than the ICSC view, it also indicated a slippage in sales growth this past week.

	Week Ended 10/5	Week Ended 9/28
ICSC Week-to-Week Change	-0.1%	+0.2%
ICSC Year-Over-Year Change	+1.8%	+2.1%
Redbook Year-to-Year Change	+3.3%	+3.8%

While weekly data can be influenced by weather and holidays, the year-to-year comparisons seem to vet that possibility and confirm slowing activity. What we do know is different about this week is the fact that the U.S. government is shutdown, and more importantly for consumer spending, the media is making sure Americans know about it. In fact, the truly dire consequences of a debt ceiling debacle have been described by the President, the media and everyone else who could benefit from the attention as potentially “catastrophic” and likely leading to a deep recession. That’s not the kind of discussion that inspires Americans to go out and spend money.

Meanwhile, and just as concerning, I recently noted one Tea Party Congressman’s misguided disregard for the October 17 deadline as he discussed an October-end Treasury auction on television Monday. In my expert view, even approaching the deadline could insight rating agency downgrade of America’s sovereign credit rating again, and that is highly troublesome to me. If two rating agencies were to downgrade our credit, it would be equivalent in its impact to the economy as a real default on our sovereign debt. Passing the deadline is unfathomable to just about everyone but the sector of Congress I describe as holding this issue hostage. It’s my view that the stock and bond markets will begin to truly reflect panic on or before October 17 if it appears the deadline will pass. Depreciating financial securities affect the pocket books of every American with a corporate pension plan, and thus, affect consumer sentiment and spending.

American consumers already have enough reason to worry, given a still fatigued U.S. economy with its lagging employment recovery. Though, until recently, investors have been unfazed by most crises. Still, the really serious issues do finally garner investor attention. For instance, Americans have gotten used to upheaval overseas, but when it seemed we might get involved in another war, stocks started lower. The same thing is happening as this unreasonable bargaining chip is placed on the roulette table. In fact, it’s Russian roulette that the U.S. Congress is playing, with the full faith in credit of the United States at stake. It’s not an issue up for gambling, and yet it is being put into play today.

Consumers and investors are being made aware of that fact, no matter which channel they choose to watch or website they determine to read. And now that the consumer seems to reflect worry, a recently hot group of stocks is also reflecting it. Consumer discretionary and retail store shares have been market leaders this year, as our table below illustrates. It may be time to take profits.

Security	Since September	Year-to-Date
SPDR S&P 500 (SPY)	-1.5%	+16.2%
Consumer Discretionary Select Sector SPDR (XLY)	-2.4%	+24.7%
SPDR S&P Retail (XRT)	-2.8%	+27.8%
Wal-Mart (WMT)	-1.4%	+6.8%
Amazon.com (AMZN)	-3.0%	+20.9%

Wal-Mart (WMT) stands out in this table, and not in a good way. It has lagged the performance of the other four securities, including its online rival, Amazon.com (AMZN), which is up sharply this year but down the most over the last week. Wal-Mart is America’s most important brick and mortar retailer, but it has struggled on a relative basis of late. That is in part due to a September report that inventory was piling up at the megastore chain. The inventory issue was described by an executive of the company, as relayed by a CNBC report I witnessed, as a part of doing business in retail. However, I posit that if Wal-Mart, the destination of America’s poor and new poor, is seeing slower sales, then there’s a broad-reaching problem.

Chart at Yahoo Finance

Amazon.com (AMZN) is down after this report by Barron’s, but its valuation has been questionable for some time. If consumers are cutting back even at discounters, then we really have a problem, and so might shareholders of even Amazon.com and Wal-Mart.

Chart at Yahoo Finance

There are profits to be taken in the consumer and retail sector, as evidenced by the gains in the XLY and XRT securities this year. Furthermore, the month of October often offers disappointment, and can be a transition period due to the end of fiscal year for many institutional investment funds around this time. With important profits at stake now in the retail and consumer discretionary stocks, and with signs of consumer sentiment falloff and spending issue, investors in the segment should likely take heed and sell the group.

Economists should also note the warning signs in this critical driver of the American economy. If I may conclude with one informal point: I believe that any economist not advising government representatives today of the dire risk in dealing in the debt ceiling issue is an irresponsible economist wasting his expertise. It is up to the experts to cure ignorance about economic issues. I’m doing my part here.

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.

Why the Week’s 4.7% Same-Store Sales Growth is Misleading

By The Greek:

It sounds fantastic! Retailers reported weekly same-store sales increased by 4.7% week-to-week in the period ending March 30. That is great news right? No, it’s not, and here’s why.

The International Council of Shopping Centers (ICSC) reported same-store sales rose 4.7% week-to-week in the March 30 period. On a year-over-year basis, sales were up 1.9%, though Redbook saw the yearly comparison for the period even better, at plus 3.5%. Perhaps readers suspect we might pooh-pooh the news by attributing the sales growth to discounters like Wal-Mart (NYSE: WMT) or to online sellers like Amazon.com (Nasdaq: AMZN), due to their stealing of market share from the Macy’s (NYSE: M) and J.C. Penney’s (NYSE: JCP) of the world. No, that’s not it. So what’s wrong with the numbers then?

Well, a peak at the prior week’s results offers a clue. In the week ending March 23, the ICSC reported same-store sales were down 1.7% week-to-week. The yearly comparisons were likewise poor, with sales only 1.0% higher according to the ICSC and 2.6% higher according to Redbook. The reason is really rather simple.

It’s about the Easter holiday and where it sits on the calendar this year versus last year. This year, Easter fell on March 31st, and last year it fell on April 8th. Sales were strong in the week of Easter and Passover because of the surge of seasonal sales tied to the holidays, not all of which are accounted for perfectly. Consider all the flowers 1-800-Flowers.com Inc. (Nasdaq: FLWS) sells and all the Easter Baskets CVS Caremark (NYSE: CVS) sells, all the Easter Bonnets Macy’s (M) sells and all the new dresses J.C. Penney (JCP) sells. Let’s not forget the Easter and Passover meals that lead families to gather together, and the necessary shopping at Kroger’s (NYSE: KR) and Whole Foods Market (NYSE: WFM).

For this reason sales picked up in the week before Easter as they do every year. From this understanding, we garner insight about next week as well, because last year the week incorporated Easter shopping and this year it will not. Thus, these same-store sales reports should show poor comparable results on a weekly and yearly basis when reported next Tuesday.

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.

Retail Sales Report for August Crimped by Gas Prices

In a day offering the first real test for stocks since the latest Federal Reserve quantitative easing program, with five economic reports on the slate, Retail Sales led the opposition. You would have thought that retail sales growth of 0.9% on the month, a Street beating figure (consensus at +0.8%), would be good news. However, as always, I’m here to put the report under the microscope and show you why it is not.

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.

While sales beat Wall Street on the headline, our survey of the report shows that to prove misleading. The first important point to make is that Retail Sales for the month before (July) were revised lower, to +0.6%, from +0.8% when reported initially. The effect of lowering your basis for comparison is to raise the percentage gain for the current period if the result comes close to being in line. Thus, unlike the percentage change superiority over the economists’ consensus, you bet your bottom dollar that the absolute forecast figure for the consensus is closer to the absolute real result for August.

The second point I want to make is that this data does not adjust for price changes, and so is influenced by price changes, including in volatile food and energy. Thus, when we take out the sales of autos and gasoline, we find that those sterilized retail sales only increased by 0.1%, against the revised higher July gain of 0.9%. Wall Street is not stupid, and so incorporated the monthly increase in gasoline prices to find an adjusted expectation for a 0.4% gain here. Obviously, that’s still too high and so the result is a disappointment on all counts.

Looking within this data, we see the catalyst is not autos. Ex-auto sales still increased 0.8% in August, off the unadjusted prior increase of 0.8% in July. So, you can contain your concern for Ford (NYSE: F) and General Motors (NYSE: GM) that might have been tied to this report. Those two stocks were up in the early going, probably because of market focus on this line detail.

However, gasoline station sales gained sharply on the higher price of gas in August. Those sales rose 5.5% against July, driving the top line of companies like The Pantry (Nasdaq: PTRY), but also of course Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX).

Retail trade sales, which is what most people think about when they hear this report cited, increased by 0.9% in August, against the 0.7% gain in July. However, we’ll need to once again focus on the specific types of sellers to really glean anything important for the stocks you own. General Merchandise Store sales declined by 0.3% in August, after a 0.1% increase in July. While this category would include Wal-Mart (NYSE: WMT), it also includes non-discount department stores like Sears (Nasdaq: SHLD), Macy’s (NYSE: M) and J.C. Penney (NYSE: JCP). Though department store sales, when broken out, rose 0.1% in August, against their 0.8% gain in July. I think that what this data is telling us is that the pie shrinking and so there will be winners and losers when these companies next report earnings.

Ahead of the new Apple (Nasdaq: AAPL) iPhone release, the sales of Electronics and Appliance Stores like Best Buy (NYSE: BBY) fell by 1.4% in August, versus their 1.0% gain in July. Obviously, things will change as we incorporate the new iPhone into forward sales.

Supporting the case for homebuilders and renovators, the sales of Building Material and Garden Equipment Supplies Dealers like Home Depot (NYSE: HD) increased by a solid 1.0% in August, following the 1.2% gain made in July.

Food and beverage sellers, including grocery stores, saw sales unchanged in August. Without incorporating any change in food prices in the month, this could be due to less eating out at casual dining establishments like those provided by Brinker International (NYSE: EAT) and Darden (NYSE: DRI) restaurants. With regard to grocery, Wal-Mart is gaining share from traditional markets like those provided by Supervalu (NYSE: SVU) and Kroger (NYSE: KR).

Clothing and accessories stores like Abercrombie & Fitch (NYSE: ANF) and The Gap (NYSE: GPS) may not have gotten a good enough lift from back-to-school shopping, given the segment’s sales declined 0.1% against July. Of course, this is also going to be a fashion and smaller pie story, with some stores gaining as others lose customers.

Non-store retailers, including some of America’s favorite destinations like eBay (Nasdaq: EBAY) and Amazon.com (Nasdaq: AMZN) saw no change in August sales, against a 1.9% increase in July. We might pin the July gain to the heat, keeping consumers in their air conditioned homes, shopping away on their laptop. August is a holiday period, but no change is unexpected here, given the heat and also back-to-school. Perhaps consumers don’t have time to wait for shipping, or be home to receive during the vacation period ahead of the start of school, but that’s just speculation. We’ll have to wait on September to know for sure.

All in all, August looks like a disappointment for retail sales in my estimation, save perhaps the auto industry and gasoline providers, and also the construction materials peddlers. It may be the higher price of gasoline that hurt the rest of the sector. As it looks like gasoline prices are only going higher from here, given geopolitical fires and capacity constraints, not much should change for the better. The consumer mood is deteriorating on a once again apparently weakening domestic economy. In conclusion, this report supports my case for the spread of recession to our shores not too long from now.

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.

Colorado Shooting Impacts Movie Business

Twelve people are dead and 58 wounded and traumatized. There’s no earthly value assignable to human life, and this article is in no way meant to overlook it. Our love and prayers are with the families of those lost and the survivors forever changed.

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Colorado Shooting and the Movie Business

Like the rest of the nation, theater operators have been profoundly impacted by the tragic events of last Friday morning, July 20, 2012. From the moment James Eagan Holmes entered that theater with his weapons and evil intent, the economics of the movie business changed. I know it seems insensitive to consider economic issues now, but the shareholders of these publicly held companies need to know what has changed and what has not with regard to their own personal financial security.

A similar event occurred overseas a decade ago, but it did not affect the way American theater operators do business. It was in Moscow, Russia, where terrorists entered a theater with conventional weapons and held 850 hostages while making political demands. In that case, it was actually the heavy handed actions of Russian authorities which were directly attributed to the deaths of many movie goers and militants alike. A chemical substance was pumped into the theater to subdue the assailants, but it killed many of them along with hostages. The casualties of that siege were 39 militants and 129 hostages. Strangely, the incident had absolutely no effect on the operations of the American movie house. What happened in Aurora, Colorado, however, could change things forever. At least it should, because in the days of CNN and the Internet, we can be assured that this event has planted a seed within the minds of the enemies of our State, including al-Qaeda.

The immediate economic aftermath of the horrific event produced an outsized decline for the stocks of movie house operators. The shares of the S&P 500 Index fell 1.0% Friday, but the shares of movie houses fell more. Cinemark Holdings (NYSE: CNK), which owns the theater where the atrocity occurred, fell 4.6% in Friday trading. The shares of its peers suffered as well, with Regal Entertainment Group (NYSE: RGC) down 4.4%, IMAX (NYSE: IMAX) off 1.6% and Carmike Cinemas (Nasdaq: CKEC) down 2.3%.

The most obvious and initial impact of the shooting would be a decline in “out of home” movie viewing across the nation. However, that is not likely to be a lasting result, affecting the current quarter perhaps and then fading sharply over each following period. Of course, there will be some people who will not attend a film for a long time or even forever because of the shooting, but that will be a miniscule portion of the population.

For the next few weeks, though, other forms of entertainment might benefit at the cost of the movie houses. Entertainment providers that could benefit would include the likes of Disney (NYSE: DIS), Six Flags Entertainment (NYSE: SIX), Cedar Fair (NYSE: FUN), Boyd Gaming (NYSE: BYD), Penn National Gaming (Nasdaq: PENN), MGM Resorts (NYSE: MGM) and International Speedway (Nasdaq: ISCA). Still, I don’t think it will be a meaningful difference, and general economic softening could very well undermine the entire sector.

In New York City, halfway across the country, the police chief placed officers at every theater showing The Dark Knight Rises. The action was meant to protect against “copy cat crime,” but really just served to reassure citizens of their safety. What it also did was preserve the profits of Time Warner (NYSE: TWX), which owns Warner Bros., the producer of the Batman film that still grossed $161 million over the weekend. Still, movie production companies like Time Warner are at risk this quarter, as are Lion’s Gate Entertainment (NYSE: LGF), DreamWorks (Nasdaq: DWA) and NBCUniversal, which is owned by Comcast (Nasdaq: CMSCA) and GE (NYSE: GE).

The more lasting issue for these companies might come in added costs to keep customers comfortable moving forward. Some of it could be forced by reactionary legislation. I expect we will find more movie attendants within theater showing rooms, adding to the cost of labor for theater houses. Also, we might find airport style metal detectors at the door to help customer comfort levels. Still, I’m not sure if the Aurora event will be the catalyst for the broad adoption of these cost increasing measures, except by legislation. A movie house could differentiate itself as the safe place to watch a film with family by doing so. If a strategy like that worked to take market share, new industry standards would be adopted. This lasting cost impact could destroy market value for the stocks mentioned, because if it becomes necessary, it will more likely destroy economic value than add to it. What we should do is examine what societal flaws might be disturbing the peace within our nation to get to the root of the matter.

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