Thursday, June 5, 2008

Exceeding (Inflation) Expectations

Retailers report May results above expectations

Costco said same-store sales rose 9 percent, ahead of the 6.9 percent analysts were expecting.

I really hoped to give Costco shareholders a solid 10 percent. I'm just one guy though. There's only so much I can hoard. Sorry!

Wal-Mart was one of the few retailers to specifically mention a benefit from stimulus checks. The world's largest retailer said same-store sales rose 3.9 percent, or 4.4 including fuel sales while analysts surveyed by Thomson Financial predicted a 1.6 percent rise.

Wal-Mart is second on my list, after Costco. I bought a LOT of small rectangular pyrex pans there (and gold toe socks!). I find them perfect as a TV dinner replacement for the freezer (the pans, not the socks ;)). A friend of my girlfriend recently said she bought a lot of pyrex pans for freezing as well (no idea that we'd done it too). I wonder how many others have done it or are planning to do it? I can safely say from personal experience it doesn't happen unless you are planning to permanently change your long-term behavior.

Rival Target Corp., which has a somewhat more upscale clientele, said same-store sales fell 0.7 percent, while analysts expected an 0.2 percent drop.

I dropped by Target a few days ago and walked out empty handed. I balked at the prices. Apparently I'm not alone.

J.C. Penney Inc. said same-store sales fell 4.4 percent, better than the 5.8 percent analysts expected.

J.C. Penney is still in business? Who knew?

This is all great news though.


Stocks rise following jobs report, retailer data

Alfred E. Goldman, chief market strategist at Wachovia Securities, contends the market is entering a stronger period because of investors' ability to not overreact to some bad news such as rising oil prices and a weak dollar and to focus instead on the retail sales and jobless claims numbers.

We wouldn't want to overreact to $120+ oil. That's for sure. Funny that housing and credit didn't make his list. I guess those are the crazy aunts in the attic for a banker. Probably best not to mention them. Further, why focus on the weaker dollar when we can instead focus on the freshly printed "stronger" dollars (tax rebate checks) to help temporarily drive retail sales and temporarily protect the jobless claims numbers?

"What investors are doing is looking beyond the valley to the peaks ahead," he said. "The big picture is that we're in a market that's transitioning from a bear to a bull."

Wachovia? Why weren't they able to see this "bear" coming and profit off their own demise? As a side note, we have just the one valley but we'll be getting multiple peaks? Is that the big picture? There has never been a better time to be in a valley? David Lereah eat your heart out.

Meanwhile, the Fed struggles with wave theory (the idea that there isn't one valley for every peak) too it seems.

Objective collapse theory

In order to keep these theories from violating the principle of the conservation of energy, the mathematics requires that any collapse be incomplete...All of these options seem counterintuitive.

Surely there must be some intuitive solution when you've got the ability to print free money. Maybe they just need to print it faster than the price of energy increases? Would that work?

Complete Collapse: Making Sure "It" Doesn't Happen Here?

It all makes sense now, at least in my twisted world. Too bad I had to change the title slightly though. No, it isn't the first part that's concerning. It is the addition of the question mark.

4 comments:

Anonymous said...

Yeah, today was a day a (we) short biased investors just stepped aside and let the locomotive pass.

The financial industry was making hay of retail numbers and trying to "prove" we therefore weren't in/going-into a recession.

Whatever. Walmart and Costco beating the number while two days ago another casual dining biz went bust does not show renewed economic strength to me.

Another interesting counter-point, while the sales numbers were unexpectedly up, the traffic numbers were flat. So yes, it is folks spending more, as opposed to more folks spending. A bit more market strength wouldn't surprise me, but it's hardly anything that is making me question my bias.

Stagflationary Mark said...

AllanF,

A bit more market strength wouldn't surprise me, but it's hardly anything that is making me question my bias.

Perhaps we can hang our hopes on India.

Galloping real estate prices may hit retail boom hard
http://www.ibnlive.com/news/galloping-real-estate-prices-may-hit-retail-boom-hard/66544-7.html

Here’s a typical scene in a mall in India. A family out in full strength gazing at the big brands and the experiencing the retail rush but look a little closer and you will notice that very few are actually buying anything.

There's a clever solution though: Volume!

India is slated to have 400 new malls in the next 3 years - innovative business models could hold the key to converting these footfalls into some serious money.

You know mall real returns will stink when businesses must be innovative. I'm picturing some sort of blood extracting device for turnips and/or lead to gold/oil machines. I bet those would help.

Speaking of questionable real returns, State Farm keeps sending me the same letter over and over again telling me how I can "save $369*" on my auto insurance. I see that letter about once a week I'd guess. One can only imagine how much money they've spent trying to convince me.

Call me skeptical. I only pay $371 on my car insurance right now (1996 Camry, no collision insurance). I find it very hard to believe State Farm will only want $2 in annual premiums from me. That wouldn't even come close to paying for the junk mail, lol.

I'm also seeing a tremendous amount of Capital One offers flooding my mailbox again. If memory serves, the last time I was getting this kind of volume I turned bearish (2004). If history is any indicator, I guess I'm supposed to turn bearish again. How can I turn bearish when I already am bearish though? What a conundrum! No wonder wave theory is so complicated!

These aren't complaints though. If I was going to complain I'd simply suggest that both companies make their offers even bigger. Literally. It is difficult to cover the bottom of a bird cage with small offers to save me money. Grocery stores know what I want though. Free full color flyers of vegetables really do improve the bird's mood. Keep it up! :)

Anonymous said...

Well today kind of sucks. I was hoping for an extra day or two of lift and then was going to add to my shorts. Figures. And this obviously is my bias, but if I were a long that had bought yesterday, I'd be pretty worried right about now.

Stagflationary Mark said...

AllanF,

There were much worse places to be than the sidelines today.

I've been feeling the pain in my TIPS for the past few months as people felt that the crisis was behind us. Real yields were rising. I wasn't sure what to expect today. There's been so many anti-TIPS articles lately. Was my baby being thrown out with the bathwater yet again?

Nope. Real yields fell off the side of the cliff again today. My TIP fund was up 1.22%. That's the second biggest one day jump in the history of the fund (going back to 12/5/2003). The record was 1.33% on 2/28/08.

It isn't just a stagflation story though. The 20+ year nominal bond fund had a slightly better day (TLT was up 1.29%), which amazes me to no end (considering how much oil spiked up today).