How Much of Today is Recognition of Retail Sales?
Posted on | October 15, 2008 Time: 5:45 pm |
Today’s retail sales reading of -1.2% was well below expectations and a shade lower than my mental over/under of (1%) The September slump in spending shouldn’t be surprising to most, and many economists would have changed their old estimates more than they had prior if their egos weren’t so rooted in tradition.
So it’s essentially a Street meet, and yet the major indexes continue to deteriorate as the day progresses.
Of note is that consumer cyclicals are actually near the top of the list of sectors today. Bringing up the rear today are our old friends materials and industrials. There seems to be a growing consensus to trade the commodity stocks down, despite that even on lowered cash flow levels they will look like the most value of value stocks by the end of earnings season.
Echoing my commentary on Investopedia last week,
The U.S. consumer needs to quickly take center stage – we are the fuel for greater than 70% of GDP, and we are under fire. Non-farm payrolls fell dramatically in September, with the actual result 50,000 lower than the consensus of economists. Any and all stocks related to discretionary income should be watched like a hawk, or better yet avoided; downward revisions, earnings shortfalls and poor guidance are likely to dominate the news about the U.S. consumer.
On a side note, I am looking to add one more position to the portfolio, and the auto parts retailers are absolutely intriguing to me. Looking at AZO, AAP, and ORLY with a strong consideration towards O’Reilly which is down another 7% today. This group blew the doors off the averages during the last recession.
Ryan Barnes
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