Retail spending is down 3.9% from last year.
And, there are 6 less days between Thanksgiving and Christmas than we had last year! That's the bad news, the good news is E-Commerce sales are up 17.3% as it's Brick and Mortar that's dying, not Retail on the whole. We'll see how XRT performs, we're short the ETF but it's not a good picture of retail because it includes RAD, SWY, AMZN and EXPE among it's top holdings – not a pure play on brick and mortar operators...
AMZN, in fact, will be flirting with $400 this week (where we will short), especailly after Jeff Bezos threatened to unleash his drone army upon America in last night's 60 Minutes interview.
Sure, it's a great idea to give an egomaniacal Billionaire permission to privately operate thousands of army-quality drones across the country – what could possibly go wrong (and now I have an idea for the next James Bond film!).
Actually, the business I'll be going into is selliing EMP guns to people who want to see free goodies drop from the sky!
We're also waiting for our equity markets to drop from the sky but no luck there as we continue to defy gravity and, according to Nobel Prize-Winner, Robert Shiller, logic!
"I am not yet sounding the alarm. But in many countries stock exchanges are at a high level and prices have risen sharply in some property markets," Shiller told Sunday's Der Spiegel magazine. "That could end badly," he said.
"I am most worried about the boom in the U.S. stock market. Also because our economy is still weak and vulnerable," he said, describing the financial and technology sectors as overvalued.
"Bubbles look like this. And the world is still very vulnerable to a bubble," he said. Bubbles are created when investors do not recognize when rising asset prices get detached from underlying fundamentals.
If all is truly well, then FXI is a no-brainer for 2014, right? That ETF is languishing at $40 and you can sell the 2016 $33 puts for $3.20 to give yourself an additional 25% discount at a net $29.80 entry or you can leverage your bet on China rising next year and picking up the 2015 $40/48 bull call spread for $2.20, which still leaves you with a $1 credit and a worst-case net $32 entry – still 20% off the current price of FXI.
The Shanghai Stock Exchange is STILL 36% off it's March, 2009 low! Now THAT's underperforming! While I have said hundred of times to our Members over the years to stay away from Chinese (mainland) stocks and their phoney-baloney books, at this point I'm saying that IF this rally has legs into next year, THEN investors are likely to look at Shanghia stocks as a worthwhile risk as they are literally 100% behind the next-worst index (India).
Speaking of overvalued Financials (Shiller quote), FAS is testing $85 and we're going to like them short too but we can play that with FAZ, the 3x ultra-short Financial ETF, which is down at $23. which has put the April $20 puts at $1.05 and we can sell those to fund the purchase of the $24/30 bull call spread at $1.20 for net .15 on the $6 spread with a 3,900% potential upside on the cash outlay in 4 months – nice rate of return if you can get it!
Meanwhile, there's plenty of Data coming up for the week, so we'll see what's what with all the PMIs (3 days' worth) and we have the Beige Book on Weds and Euro-Zone GDP and Retail Sales earlier that day as well. Rate decisions from the BOE and ECB on Thurs along with Draghi-speak, of course (8:30) along with our GDP (3.1% expected), Factory Orders and Consumption Data followed by the Big Kahunah, Non-Farm Payrolls on Friday.
So it doesn't matter what happens today or tomorrow, things get very interesting at the end of this week!
