Media Appearance: Bloomberg TV (07/13/07)


I’m off to Bloomberg TV from 10:40am or so. We will be discussing all of the recent Retail Data, and its impact on the Markets and the Fed. If you are not near a TV, you can stream it here:

We will be discussing the June Retail Sales Data, which were released earlier today — and it stunk up the joint. Some Details via Rex Nutting at Marketwatch:

-Auto sales fell 2.9% in June after a 1.1% gain in May. Excluding auto
sales, retail sales fell 0.4%, compared with expectations of a gain of

-Excluding autos and gasoline, sales fell 0.3%, the biggest decline in three years;

-Demand for other durable goods was also very weak, showing the impact
of the housing slowdown. Sales of furniture fell 3%, the biggest drop
in four years. Sales of electronics and appliances fell 1.4%. Sales of
building materials fell 2.3%;

-Sales of nondurable goods were mixed. Sales at clothing stores fell 1.4%, but sales at most other kinds of stores rose;

-Sales at general merchandise stores rose 0.3%, despite being held back by a 1% drop in department store sales;

-Sales at health and personal care stores rose 1.2%;

-Sales at food and beverage stores rose 0.4%. Sales at restaurants and bars rose 0.1%;

-Sales at nonstore retailers, such as catalogs and online stores, rose 1.2%;

-Sales at sporting goods, music, books and hobby stores rose 0.4%.

This was no surprise after The International Council of Shopping
Centers (ICSC) reported that June 2007 sales decelerated from last year
— they expect increases of ~1.5% versus 3% in June 2006.

Note the difference between Food sellers and  everyone else: The USDA
says milk prices increased 68% y/y in June. The DoE has gasoline prices
+28% y/y. Wal-Mart Press Release noted “As in the past four months of this fiscal
year, grocery sales continued to be stronger than general merchandise
during the June five-week period at the Wal-Mart Stores segment.”


Some specific company info worth observing:

-Costco slightly beat estimates by 0.1%, +6% with 5.9% expected

-Target, one the nation’ largest retailers, reported the expected 3.3% gain

-JC Penney reported a DECLINE of 1.5% but it was smaller than the expected decline of 3.1%

-Macy’s reported a decline more than the expected 1.7%

-Kohl’s reported a decline of -4.9%, which is much larger than the expected -2.3%

-GAP, one of the largest US clothing retailers, reported a decline of 5% (4.1% was expected)

-Ann Taylor reported an 8.4% decline; 5% was expected

-Limited Brands reported a 3% decline’ -3.1% was expected

-ANF reported a gain of 2% on aggressive discounting of lightweight items; a decline of 2.8% was expected

Should be fun . . .


Advance Monthly Sales for Retail and Food Services
Census Dept., June 2007

Retail sales fall 0.9%, largest drop since 2005
Tepid demand for durable goods and falling gas prices sink sales in June
Rex Nutting
MarketWatch, 9:16 AM ET Jul 13, 2007

U.S. Retail Sales Fell More Than Forecast in June
Shobhana Chandra
Bloomberg, July 13 2007

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What's been said:

Discussions found on the web:
  1. zell commented on Jul 13

    Hang in there Barry. This is blind buying. Heads I win tails you lose stuff. The $ is down; oil and food are up. The core CPI tells you where to be by what is excluded: food and energy.

  2. econ101 commented on Jul 13

    yeah, but does retail really matter anymore. the report is tepid at best and the market goes up monster. something else is going on that moves the markets and its not retail, housing, sub prime or debt downgrades.

    these things just dont matter.

  3. SPECTRE of Deflation commented on Jul 13

    Barry, will the FED nonsense concerning “core” inflation ever be discussed and repudiated? This reminds me of the same sort of stonewalling we have had on subprime and the CDO debacle. In this case the FED replaces the Ratings Agencies as the ostrich with it’s collective head in the sand.

    I’m to the point where I have to tape my head with duct tape to keep it from exploding every time a FED Official opens his or her mouth. The emperor hath no cloths!

  4. Winston Munn commented on Jul 13

    Richard Daughty (The Mogambo Guru) had this explantion for the market’s seemingly irrational behavior.

    Quote: “Gary Dorsch of Global Money Trends writes, ‘At the moment, Paulson’s grand strategy is to offset losses in the US housing sector with big gains in the stock market, to prevent the US economy from sliding into recession”, while the Federal Reserve provides the financing, in that “The Bernanke Fed is preventing borrowing rates from rising at a time of explosive loan demand for US corporate mergers and takeovers, by rapidly increasing the US money supply.”

    This economy is simply bubblicious!

  5. Fred commented on Jul 13

    The bubble is in bubble talk.

    ’nuff already.

  6. peachin commented on Jul 13

    I guess we’ll be looking back at this time and of course, say “of course” what were we thinking – we live on food, energy and water(and housing and debt)and whatever we think about food and energy – water – just examine what is happening to the supply from the Colorado River….back to “Of Course” we can’t blame this on Greenspan – so Why was the FRB playing along with Wall Street. So, why is this market sky rocketing – enormous shorts? – what happens when (and forget the demand by the shorts)
    when the real holders begin to sell out – and then tell the shorts “I want my stock back!” Of Course – we have a “bright” President and a smart active honest congress…..take me home!

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