The Coming Rally Will Be Monumental

+1

Jobs.

Wow. You guys are aware that people with money and jobs, who fear losing that money and those jobs, are not exactly corporations or retailers best friends, right?

While debt builds, confidence wanes, unemployment rises, the housing market continues to fall in price and sales volume and when lending is severely constrained (and likely to remain so), you want to bet on rising corporate earnings?

Good luck on that.

Tax exempt muni bonds are looking interesting to me at this point.

 

Everything pointing to a huge up day tommorow --i d say +800 or so tommorow on dow

 

Why? I thought we would rally into the close today. Why? I don't know I just thought we would and then I gave up 80% of my month....

 

Don't let facts get in the way of your simplified investment thesis that just because the markets have gotten hammered, they must rebound, or even, that they can't fall further.

Here's an article not just reporting on a significant and alarming drop in retail sales, but questioning how many retailers will even survive this episode of fundamental weakness:

Retailers’ Sales Fall Sharply at Both High End and Low

New York Times
By STEPHANIE ROSENBLOOM
Published: October 8, 2008

Sales at some of the nation’s best-known retailers fell by double digits in September, highlighting the rapid deterioration of the economy and raising fresh questions about how many of those chains can survive.

Retail analysts and executives said they had not seen such a rapid slowdown in consumer spending since the nation’s last deep recession, in the early 1980s. Retail executives, though braced for bad news, were stunned at the magnitude of the drop-offs reported on Wednesday. Retailers high and low — like Nordstrom, J. C. Penney and Kohl’s — lowered their earnings projections.

September sales for stores open at least a year, known as same-store sales, a barometer of retail health, plunged 14.8 percent at Stein Mart, an off-price department store. That chain, like many others, was already in trouble a year ago, but the drop-off last September was only 9.1 percent.

Sales at Dillard’s dropped 12 percent, compared with a 7 percent decline last year. J. C. Penney’s same-store sales fell 12.4 percent, compared with a decline of 3.7 percent for the period a year ago. Sales at Kohl’s decreased 5.5 percent, compared with a 3.2 percent decrease last year.

At Bon-Ton Stores, same-store sales decreased 4.6 percent, and they declined 3 percent at Target.

The sales results laid to rest any lingering notion that the nation’s luxury retailers might be impervious to the downturn. Same-store sales in the specialty retail segment of Neiman Marcus, which includes Neiman Marcus Stores and Bergdorf Goodman, tumbled 15.8 percent. Saks’s same-store sales sank 10.9 percent and Nordstrom’s were down 9.6 percent.

Blake W. Nordstrom, president of Nordstrom, said the deteriorating consumer environment led to “a weakening sales trend that was greater than our earlier expectations.”

Specialty retail sales figures, too, were soft. At Zumiez, same-store sales were down 9 percent compared with a 13.9 percent increase in the year-earlier period. Same-store sales at Wet Seal were down 7.5 percent. Sales at American Eagle Outfitters and Limited Brands decreased 6 percent. At Pacific Sunwear, sales were down 5 percent, while Children’s Place fared slightly better. Its sales were flat compared with a 2 percent decrease last year. The exception in this category was Aeropostale, which reported a 5 percent increase in same-store sales compared with a 1 percent increase in the year-earlier period.

Dean Hillier, a partner and a retail specialist with A. T. Kearney, a management consultant, said the Christmas shopping season “could quite frankly be one of the worst we’ve seen in 25 years.”

It might be a holiday of movie tickets and board games, he said, not of big-screen televisions and vacations. “This is the cocooning that we saw in the ’80s, for goodness sakes, that we’re seeing coming back,” he said.

Sales drops of 5 or 10 percent might not sound like the end of the world. But because store chains have fixed costs, declines that large can devastate their profits and discourage banks from offering the financing necessary to run such a seasonal business. Most of the chains will report their third-quarter profits in October and November.

Some analysts are expecting a fresh wave of bankruptcies among store chains after the holidays. Already, famous names like the Sharper Image and CompUSA have gone out of business. Share prices of most leading retailers, which have been declining for many months, fell by 2 to 5 percent on Wednesday.

Shares of Circuit City Stores, the struggling electronics chain, fell 18 percent, to 41 cents a share, down from $9.02 a year ago. That chain said on Sept. 29 that same-store sales for three months ending in August fell 13.3 percent.

In general, the weakest categories in Wednesday’s report were nonessentials like housewares, furniture, electronics, jewelry and women’s apparel. To the extent stores showed any strength, it was in must-have categories like food and children’s clothing.

“Even the über-wealthy are slowing down,” said Bill Dreher, an analyst with Deutsche Bank Securities. “It’s going to be a discount-store Christmas.”

Indeed, warehouse stores, where affordable groceries can be bought in bulk, continue to be the bright spots in the retailing firmament. Costco’s same-store sales in the United States were up 6 percent (not including increased prices for gasoline sales) compared with the same period a year ago. Same-store sales at BJ’s Wholesale Club increased 5.6 percent, not including sales of gasoline. Sales at Wal-Mart Stores were up 2.4 percent excluding fuel sales, though Wal-Mart noted that sales of discretionary items were soft.

Wallets snapped shut in the last month as consumers faced a plunging stock market and were made even more skittish by headlines about rising unemployment, declining home prices and bank failures.

Consumer trips to stores, already down in August, declined further as the financial crisis unfolded in the beginning of September, according to ShopperTrak, a research firm. Its traffic index fell 9.2 percent between Aug. 31 and Sept. 20, then dropped a bit further in the following week as the financial news worsened.

Many chains were hit last month with hurricanes that forced them to close stores. Neiman Marcus, Dillard’s, Wal-Mart and Stein Mart all noted the impact of hurricanes Gustav, Hanna and Ike on their monthly results.

“Our business in September was significantly below our expectations,” said Linda M. Farthing, president and chief executive of Stein Mart. “In an already difficult environment, our stores in the path of the hurricanes saw their sales plummet, and following Hurricane Ike, the situation was exacerbated by post-storm gas shortages in many of our core Southeast markets such as Nashville, Charlotte and Atlanta.”

Whether retailers point a finger at the economy or the hurricanes, the sales figures do not bode well, even though many retailers have cut inventory and staff.

“I think we’re at the point where it’s beginning to have repercussions for the holiday,” said John D. Morris, an analyst with Wachovia. “The lesson retailers have learned is that they need to get promotional fast to wake the customer up out of his or her trance.”

 

This isn't news. The markets have been telegraphing this being down 25% in the last two weeks.

 

It's had one effect: no buying pressure by shorts. Market stops selling for a bit and there's no profit-taking by shorts to give it a push up, so it doesn't go up...

 

ByLo, we are off 35%+ from the highs, I think a retail slow down is priced in, hell we all knew there was going to be a retail slow down back in the spring when the excrement started to hit the fan, wasn't that the wholepoint of the worthless stimulus package? What the market has been discounting the past few weeks is far more than a recession and I think it has gone too far too fast given the intervention that has and will soon take place.

 

No one buying now?
I am still waiting for buy setup.

 

The market has had a crash equivalent to 87!

 

Do all three. Buy deep OTM index calls, a nice bike and heirloom seeds!