In this morning’s Breakfast With Dave newsletter, analyst David Rosenberg talks last week’s retail sales report.
Don’t believe everything that you read, says Rosie. According to "raw data," retail sales actually FELL1.6% month-over-month in February, and you can’t just blame seasonality for this.
Breakfast With Dave: “It’s always best to look at what consumers do rather than what they think or say. They’re spending — that’s the main thing”. That goes down as the glib remark of the weekend — front page of the Investors Business Daily (Shoppers Perk Up, Lifting Retail Sales, By A Surprise 0.3%). Another pundit said pretty well the same thing in Barron’s and following the data on Friday there was an economist on CNBC who said that you never win by betting against the U.S. consumer.
What a load of you-know-what.
Let’s more closely examine that retail sales report.
First, the raw data actually showed that sales fell 1.6% MoM in February. Now it would be meaningful if February was usually a weak month for sales compared to January so that it would make perfect sense for the seasonal adjustment factor to give the raw data an upward skew. But in fact, retail sales rise over half the time in February. And while, on average, the not seasonally adjusted retail sales data are down 0.4% in each February over the past decade, the reality is that this past February was four times as bad as the norm — not to mention tied for the third worst February since 1998. Really good result, eh?
Second, here we have the greatest stimulus experience in seven decades and retail sales are still down 5% from the pre-recession peak and on a per capital basis are down 8%. Sales are actually lower today than they were in January 2006 — four years ago — even though the population has risen 4.3% over this time. And on a per capita basis, retail sales are no higher today than they were back in July 2005. Then adjust for inflation and draw the picture of real retail sales on a per capita basis (see below) and you shall see that they are down to 1996 levels. Don’t bet against the U.S. consumer? Sure thing.
Well, not for this market it seems as we make new highs on ever decreasing volumes. While I have been very skeptical of this rally, at some point you have to give in and go with the flow. As I said at the end of yesterday’s post, "We still have a bearish short-term stance but we will continue to watch our technicals and play the hand that’s dealt" and that’s what we did as our 9:42 Alert to members contained 2 bullish was to cover our short plays with the TNA Apr $52/53 bull call spread at .45, which finished the day at .60 (up 33%) and the DIA Apr $106 calls at $1.08, which finished the day at $1.40 (up 29%) so not bad for scrambling for covers!
That’s how we can hold our bearish positions as the tide moves against us. As our final upside resistance levels begin to break, it may be time to break up, and not just cover, our short positions. BUT, not until next week, when we’ll know, we’ll know that it’s true and not just some pumped up reaction to this week’s $150Bn Jobs Bill, which is really a $150Bn debt bill with 1/2 the money going to benefits extensions and $25Bn just to offset rising Medicaid costs that our states can no longer afford. That leaves $50Bn for actual jobs or enough to put 1M people back to work at $50,000 for one year if it is used with 100% efficiency.
We have 25M unemployed, discouraged and underemployed workers and that’s a lot bigger of a hole than a $150Bn band-aid is likely to fill. Still, we missed the last 250 points of the run-up and we’re committed to miss 50 more (10,700) but, come next week we’ll have to follow Mr. Cramer’s advice, as he said yesterday: "Don’t be so skeptical that you write off very big, very real trends,” Cramer said, “that I still think, even from these levels, could make you a lot of money." Let’s take a look at "these" levels then:
We’re still following the uptrending channel I drew on Tuesday’s S&P chart with the MACD line up 50% in 3 days of trading - a difficult trick to keep up. Aside from the Jobs Bill, we’re getting a nice boost this morning from a "leak" that the supremely doveish Janet Yellen will be Obama’s pick for Vice Chairman of the Fed so yay for the markets but boy are we loving…
The Commerce Department reported higher retail sales in January, the third increase in the last four months, as American consumers continue to open their wallets after one of the sharpest contractions in spending since the Great Depression.
Following an upwardly revised decline of 0.1 percent in December, overall sales adjusted for seasonal variations rose 0.5 percent in January and the gains were broad-based with a full nine of 13 categories posting increases.
After rising 0.1 percent in December, auto sales were unchanged last month and, excluding autos, overall sales were up 0.6 percent following a decline of 0.2 percent. Excluding both automobile sales and sales at gasoline stations, January saw an increase of 0.6 percent after a decline of 0.3 percent in December.
On a year-over-year basis, overall retail sales were up 4.7 percent and, excluding autos, sales rose 4.6 percent. As these figures are not adjusted for inflation and when considering the level of sales one year ago (see chart above), the recent data loses some of its luster, particularly when considering which components contributed most to the increase in sales over that time.
Sales of food and clothing, aided by government assistance to a degree never seen before, continued to rise at about the rate of inflation, but, with unemployment still quite high, incomes flat or falling, and consumer credit collapsing as it has over the last year, it’s hard to see how spending in the U.S. will rebound to anywhere near the levels seen during the middle of the last decade absent the hefty contributions from discretionary spending.
Moreover, as we move further into 2010, the year-over-year comparisons will become increasingly difficult since the worst of the spending slowdown occurred in late-2008 and early-2009.
For example, from last January, gasoline station sales rose 29 percent and this was due exclusively to higher prices since the average price at the pump was about 50 percent higher than a year ago. Other categories posting the biggest gains were sales at nonstore retailers that rose 12.4 percent and auto sales that were 6.7 percent higher than immediately after the virtual shutdown of the auto industry in late-2008.
Leading the declining categories from a year ago were electronic store sales with a 7.0 percent drop, home improvement stores with a 6.3 percent decline, and 4.4 percent lower sales at furniture stores, these categories being…
I had put out a post last night detailing how we ended up short at yesterday’s close and at 3:21, when I published it as I was checking the Asian markets (don’t ask, I keep strange hours) it looked like I had called it wrong as the Hang Seng went into lunch up over half a point and commodities were still hanging tough after yesterday’s ridiculous run up. In fact, at 12:07, in Member Chat, I just so happened to say: "Copper $3.13 - ridiculous… Very annoying movement, not very playable like this as it can all crash back down again very fast."
Fortunately, we let our levels be our guide and cashed out our long DIA day trades in my 1:41 Alert to Members as we hit our Dow 10,165 target from the morning post. We flipped bearish to the DIA $100 puts at .62, which should have a nice open this morning. We had an FCX short play with the $70 puts that I couldn’t bring myself to let go of, even after they broke over our $72.50 stop line and my 1:50 comment on that position was: "I’m in a 4x position at avg. $1.16, now .71 so not good but I think copper run was BS so I’m willing to stick it out but very happy just to get even now. I think a big squeeze was put on commodity bears today with no energy reports to point out the demand destruction. Copper up from $2.93 yesterday to $3.13 today after taking two weeks to fall that far on the way down - that is nonsense! If I were not full I would roll up or DD but, as I said, I’ll just be happy to get back out and, if not by tomorrow, I’ll sell some other sucker my puts and roll to March."
Needless to say, despite having a rolling plan to turn the trade into a spread, I was not a happy camper as things held up into the close and then, through lunch in Asia and into Europe’s open. My closing comment to Members at 3:44 had been: "I’m still generally suspicious that we’ve had such a strong day on very low volume (Dow 136M at 3:40) when there was a storm. An amazing coincidence if nothing else…. The fact that it was led by BS commodity sector making a radical move up on NO news at all (in…
The Big Picture has picked up on what appears to be an interesting development over at the NBER’s site. It seems like they are hedging there bets on a possible double dip recession beginning in late 2010 or 2011.
As you may know, the NBER is the organization which is responsible for the monthly dating of recessions in the United States. Back in May 2008, when Pollyannas were denying the recession, I wrote this prediction:
The NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. For more information, see the latest announcement on how the NBER’s Business Cycle Dating Committee chooses turning points in the Economy and its latest memo, dated 07/17/03.
There has been a lot of conflicting evidence in regards to this fake, stimulus-induced recovery we are now witnessing. NBER committee member Robert Gordon of Northwestern University made statements this past Spring suggesting he sees an early recovery dating (see Jobless claims may signal the end is near from April 2009). But Martin Feldstein, another NBER dating committee member, is holding out. He said last year:
[M]y reading of the evidence does not agree with that of those who claim that … a sustained cyclical recovery is likely to begin within the next few months. … But, although the recent news is not as encouraging as some have claimed, I expect that the next few months will see some real improvements that will reduce the rate of overall economic decline, or even produce a temporary rise in the GDP growth rate, owing to the Obama administration’s fiscal stimulus measures. …
But the key thing to bear in mind is that the stimulus effect is a one-time rise in the level of activity,…
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $353.0 billion, a decrease of 0.3 percent (±0.5%)* from the previous month, but 5.4 percent (±0.5%) above December 2008. Total sales for the 12 months of 2009 were down 6.2 percent (±0.2%) from 2008. Total sales for the October through December 2009 period were up 1.9 percent (±0.3%) from the same period a year ago.
Now remember, Census has some funny methodology in that they don’t count sales unless both the prior and current month is returned by the same store. This means they overstate sales during declines in the economy, and understate them during expansions.
Looking inside the report we see a number of surprises in the year-over-year numbers.
Electronics were down - so much for the so-called "strong Christmas sales" in that category that everyone on ToutTV has been crowing about.
Food and beverage purchases were up - price inflation?
Gasoline was up huge, accounting for a huge percentage of the year/over/year increase all on its own. Gee, that happens when the gas price goes up a lot, right?
Indeed, while there were positive changes in other categories (online was up 10%, as just one example) gasoline sales increased in dollar volume by thirty-four percent and accounted for a stunning $8.7 billion of the total $17.9 billion increase - roughly half.
What’s there to like in here? I say "little or nothing" - gas sale increases are not positive, they’re negative as most gasoline demand is inelastic (you need it to get to work) as is food.
The bright lights, such as they were, had clothing up 5% and general merchandise up 2%, both annualized.
Rather uninspiring when one considers that the inelastic components were the big movers on the positive side and that’s not good for discretionary spending capacity.
If you thought John Williams, who a month ago prophesied that the US could be facing hyperinflation as soon as 2010, has changed his tune, think again. In an interview conducted by Phil Maymin of the Fairfiled Weekly, the man who has made a business out of debunking the government’s data fabrication machine, dishes out some very hard to swallow truths about the US economy and where the fiat world is headed. As always, Williams’ perspectives are debate-worthy by all, whether inflationist or deflationist: in a field of media sycophants, JW is not afraid to speak what we all know, yet rarely wish to acknowledge.
*****
Maymin:So we are technically bankrupt?
Williams: Yes, and when countries are in that state, what they usually do is rev up the printing presses and print the money they need to meet their obligations. And that creates inflation, hyperinflation, and makes the currency worthless.
Obama says America will go bankrupt if Congress doesn’t pass the health care bill.
Well, it’s going to go bankrupt if they do pass the health care bill, too, but at least he’s thinking about it. He talks about it publicly, which is one thing prior administrations refused to do. Give him credit for that. But what he’s setting up with this health care system will just accelerate the process.
Where are we right now?
In terms of the GDP, we are about halfway to depression level. If you look at retail sales, industrial production, we are already well into depressionary [territory]. If you look at things such as the housing industry, the new orders for durable goods we are in Great Depression territory. If we have hyperinflation, which I see coming not too far down the road, that would be so disruptive to our system that it would result in the cessation of many levels of normal economic commerce, and that would throw us into a great depression, and one worse than was seen in the 1930s.
What kind of hyperinflation are we talking about?
I am talking something like you saw with the Weimar Republic of the 1930s. There the currency became worthless enough that people used it actually as toilet paper or wallpaper. You could go to a fine restaurant and have an expensive dinner and order an expensive bottle of wine. The next morning…
Overview of retail sales in November. On the surface, retail sales exceeded expectations, but there are a few underlying problems–for instance, increases in gasoline prices, sampling changes, and an unclear effect of a seasonal adjustment. - Ilene
Sales at U.S. retailers rose more than expected in November as consumers spent more on gasoline and a wide range of other goods, data showed on Friday, raising hopes of a self-sustaining economic recovery.
The Commerce Department said total retail sales increased 1.3 percent last month, the largest advance since August, after rising by a downwardly revised 1.1 percent in October. It was the second straight monthly gain. Sales in October were previously reported to have increased 1.4 percent.
Analysts polled by Reuters had forecast retail sales gaining 0.7 percent last month. Overall sales in November were boosted by strong receipts from gasoline stations, increased purchases of motor vehicles and parts, building materials and electronic goods among others. Gasoline sales surged 6 percent, the largest increase since June.
Compared to November last year, sales were up 1.9 percent, the first year-on-year gain since August 2008, a Commerce official said.
The Commerce Department reported that retail sales rose more than expected last month, up 1.3 percent in November after a gain of 1.1 percent in October. The November gain was the biggest increase since a 2.4 percent surge in August and brings the year-over-year change (unadjusted for inflation) back into positive territory for the first time in 15 months.
This came as something of a surprise to analysts because retailers across the country had been reporting lackluster sales during the holiday shopping season so far.
Though the overall increase was paced by a 6.0 percent gain in gasoline station sales, due largely to higher gasoline prices, gains were broad based, only three of the 13 retail sales categories posting declines. Excluding gasoline, overall retail sales rose 0.8 for the month.
Auto sales also continued to surprise, up 1.6 percent last month after a gain of 7.1 percent in October, continuing to recover from the Cash for Clunkers let-down a few months ago. Excluding autos, retail sales rose 1.2 percent.
Aside from gasoline, the sharpest increase in sales during November occurred at electronics and appliance stores where sales jumped 2.8 percent, likely an indication of the continuing fascination…
Remember last Thursday, when Japan went up 3.8% and our futures jumped almost 100 points? No not yesterday, LAST Thursday. Yes, and that day ended up going down about 100 on the day, which was nice because we shorted into the pump (and we were already short for the week anyway. So yesterday felt a little like that with just about 100-point gap up in the morning, followed by a downward slope all day. Today is now feeling like last Friday, where we got another 150-point run-up on the futures but finished the day up only 50 points. As I’ve been pointing out for quite some time, 200% of the last two week’s moves advances came in very thin, pre-market trading - the balance of the rest of the day is selling, punctuated by stick saves into the close.
Our man Cramer says you should take this as a sign to BUYBUYBUY (and Retail of all the stupid things) but I say it’s time to RUNRUNRUN as the inmates clearly have control of the asylum and we have better things to do in the last two weeks of the year than play "guess what BS moves the market this morning." Last Friday it was the Jobs report, which we already knew would LOOK great as the seasonal adjustments made easy comps but we also knew it was a fantastic shorting opportunity (see last weekend’s Wrap-Up).
So we woke up this morning to the same nonsense as last week and what do we do? We short the market of course! While you were sleeping we Emailed a 3:54 am Alert to our Members indicating the Dow Futures were ripe for a short play at 10,400. We followed through with that play in chat and were stopped out at an average of 10,389, just 11 points but very satisfying at $5 per point per contract. We don’t play the futures very often - only when it’s obvious. Our next entry point is a cross below 10,390 with a stop at 10,395 (10-point trailing to be safe ahead of Retail Data). This morning we had an international pump-fest including:
A regulatory change, designed to let them temporarily count billions in future tax benefits as capital.
That got Europe off in a foul mood this morning and poor earnings guidance from MMM didn’t help, nor did poor Industrial Production numbers out of Germany or new fears that Dubai World will cause massive losses (Nakheel lost $3.65Bn in it’s first half report). Then Moody’s Investors Service said today deteriorating public finances in the U.S. and U.K. may “test the Aaa boundaries” while Fitch Ratings downgraded Greece’s credit grade to BBB+. Ben Bernanke told the Washington Economic Club yesterday that the U.S. economy faces “formidable headwinds” but, on the bright side Japan’s government backed a stimulus package worth 7.2 trillion yen ($81 billion).
Before we know it, futures are off 100 points at 7:30. Hopefully we don’t break below 10,320 at the open as we covered our long DIA puts to that spot, more worried about a bounce up than a market move in our generally bearish direction. We had a very nice day yesterday with our $100K Portfolio already making it’s target $1,000 for the week so locking in the gains seemed prudent but maybe we could have been greedier…
“Central banks and governments around the world are totally right in saying that the recovery is still very weak,” Philippe Gijsels, a senior structured product strategist at Fortis Global Markets in Brussels, said in an interview with Bloomberg Television. “Going into 2010 I would be extremely surprised if we do not see a serious hiccup somewhere.” German industrial output unexpectedly fell for the first time in three months in October, led by a drop in production of energy and investment goods such as machinery. Output decreased 1.8 percent from September, when it advanced 3.1 percent, the Economy Ministry in Berlin said today. Economists forecast a 1 percent gain, off by 280%, according to the median of 38 estimates by "expert" economists in a Bloomberg survey.
Moody’s fingers the U.S. and U.K. among top-rated sovereign borrowers, saying they must prove they can reduce their bulging deficits or risk a downgrade to their AAA credit ratings. Under its most pessimistic scenario, the U.S. could lose its rating in 2013 if economic growth lags, interest rates rise and the government fails to shrink the deficit or recover its loans to the financial sector.
Our 25% lines held yesterday, other than the NYSE, and this morning we should get a proper test of Dow 10,250, S&P 1,100, Nasdaq 2,187, NYSE 7,200 and Russell 600…
It wasn’t easy to find in this sea of bulls, but there is actually a bank out there that is not full-blown bullish following the huge rally of the last month. Morgan Stanley...
Seek and ye shall find. Never has this been more true than combing through theStreet's (extremely spares) financials. As investors may have been digging through the company's SEC reports to find out just what the financial website's unadjusted EBITDA is (hint: much, much less than its "adjusted" cousin), one stumbles upon this gem just filed in today's Form 12B-25:
As a result of the need for the Company and its independent registered public accounting firm to focus attention on matters related to the Company's previously-announced review of the accounting in its former Promotions.com subsidiary, which subsidiary the Company sold in December 2009 -- including matters related to the preparation and filing by the Company in February 2010 of a Form 10-K/A for the year ended Dec...
The SP is trying to break out of the trend and hold it's gains. I would not get in front of this, unless you wish to guarantee an opportunity for an additional short squeeze. Remember, the wiseguys can peek into your collective hand at will, and read your strategy within milliseconds of your executing it. That is why playing short term trends is becoming increasingly difficult for the individual speculator.
more from Chart School
Solar energy is basically energy from the sun. It is probably one of the oldest forms of energy utilized by civilization, as the Greeks and Chinese arranged their buildings toward the south to provide light and heat. Greenhouses are a great example, converting solar light to heat, which allows production of certain plants and crops all year long. They were first used during the days of the Romans.
Solar energy is the generation of energy from the sun, usually utilizing heat engines or photovoltaics. The generation of electricity using solar energy is referred to as solar power. Solar power plants can be either concentrating solar thermal plants or huge megawatt photovoltaic plants. Current uses of photovoltaics are numerous and include all kinds of products such as battery chargers, solar powered ...
I love my clever title for this post. Today, we are going back into the retail sector again to look to make some money. Yesterday, retail was good to us with a pick up of Rue21 Inc. (
UNH - UnitedHealth Group, Inc. – Health and well-being company, UnitedHealth Group, commenced the trading session in the red after Goldman Sachs Group removed the firm from its ‘Conviction Buy List’. However, UNH is still rated as a ‘buy’ at Goldman, and the company’s shares recovered this afternoon to stand 0.60% higher at $32.73. A fire-storm of bullish activity descended on UnitedHealth during the middle of the trading day. Investors gobbled up April contract call options perhaps to position for continued bullish movement in the price of the underlying shares. Options players purchased 42,600 call options at the April $34 strike for an average ...
Let's take a look at Insider Buying and Selling over the last week or so. These are screen shots from Finviz - the significant buys against a green background first and significant sells against the pink background second. All the buys fit into my screen shot but the sells did not. Click here to see all the sells.
Note that the largest buy in the group, for KITD was at a price of 9.73 (KITD is currently at 11.54). The buy was part of an Equity Offering rather than an open market purchase. Tuzman Kaleil Isaza's (KITD's Chairman and Chief Exec. Officer) history of buys is http://www.insidercow.com/more from Insider
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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They say that 
Following an upwardly revised decline of 0.1 percent in December, overall sales adjusted for seasonal variations rose 0.5 percent in January and the gains were broad-based with a full nine of 13 categories posting increases.
Thank you China! 
Needless to say, despite having a rolling plan to turn the trade into a spread, I was not a happy camper as things held up into the close and then, through lunch in Asia and into Europe’s open. My closing comment to Members at 3:44 had been: "I’m still generally suspicious that we’ve had such a strong day on very low volume (Dow 136M at 3:40) when there was a storm. An amazing coincidence if nothing else…. The fact that it was led by BS commodity sector making a radical move up on NO news at all (in…
Courtesy of 
Over 100 people were killed by car bombs in Baghdad 
“Central banks and governments around the world are totally right in saying that the recovery is still very weak,” Philippe Gijsels, a senior structured product strategist at Fortis Global Markets in Brussels, 
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(