Rebel Traders – Analysis Without The Hype

What is Santa likely to be carrying on his sleigh this year? Once again utilizing Google’s search statistics we can track interest in certain products by looking at how often certain terms are searched for using Google.

The search statistics are provided by Google’s Insight service, data is narrowed down to the United States region only. Data is through December 13 2009.

I will check these search statistics again next week to see if there is any improvement or further deterioration.

(click any image for larger view)

New Cars

Toys

Womens Clothing

Mens Clothing

iPhone

DVD Player

iPod

Xbox 360

Nintendo Wii

Flat Screen TV

Observations from this data:

1. New cars have fallen off the cliff after the initial cash for clunker surge.

2. Toys are not being sought at the same rate as last year.

3. Women are always looking for clothes.

4. Men only get new clothes at Christmas.

5. Interest in iPhones has declined.

6. DVD players also weaker.

7. Weaker interest in iPods as well.

8. Video game consoles also showing some weakness in interest.

9. Flat screen TV’s doing fairly well.

A couple more items of interest:

Coupons

Shoppers looking for ‘coupons’ at a new high.

And lastly we take a peek inside the bedroom to see how the economy is impacting the ‘whoopee’ time.

Adult Sex Toys

Looks like less whoopee as a fairly steady downtrend has been in place throughout the recession. What states are still standing firm (no pun intended) with adult sex toy inquiries? The following list are the top 10 demographic regions (states) looking for adult sex toys:

1. Mississippi

2. Florida

3. Pennsylvania

4. Kentucky

5. Arkansas

6. Louisiana

7. Texas

8. Maine

9. Nevada

10. Idaho

Are there any major golf tournaments in those states? Just wondering.

This mornings monthly report released by the U.S. Census Bureau stated that the advance (estimate) retail sales figures for the month of November were up 1.3% (total) and up 1.2% (ex auto).

Big news right? How can we know when this months report is using a new sample.

Special Notice - The advance estimates in this report are the first estimates from a new sample. The new sample for the Advance Monthly Retail Trade Survey is selected about once every two and a half years. For further information on the sample revision, see our website at http://www.census.gov/retail.

How convenient of them to start using the ‘new’ sampling system on the report just before Christmas.

Instead of keeping things on an even keel we get hit with new sampling data. How does this correlate with the same period year over year? The report leaves more questions than answers.

I’ll let you know what I hear back from the Census Bureau with my long list of questions regarding this ‘new sample’ I sent to them earlier today.

Advance Retail Sales Released December 11

How is it that the Government figures are so much better than the independent research?

Consumers’ self-reported spending on discretionary items among middle- and lower-income Americans (those making less than $90,000 a year) was down 20% in November from the depressed spending levels of a year ago. As expected, this percentage decline from November 2008 is more modest than the year-over-year declines of earlier in the year as year-ago comparables have become easier to match. Although average daily spending among this group was technically at its high for 2009 last month, it continues to reflect a “new normal” spending pattern, staying within a tight $4 spending range that has persisted during the past four months. (source: Gallup)

We know that last years holiday shopping data was terrible after all the numbers were in. Now we get word that the retail foundation is predicting that this year will be even worse than last year.

(US) National Retail Federation (NRF): US consumers plan to spend 3.2% less on holiday shopping this year than a year ago (sales in 2008 declined by 3.4%). [This is 3.2% below last years decline of of 3.4%.. Back to back declines]

- This is the first time that consumer plans to spend less for the holidays since 2002.
- NRF said consumers remain concerned with the economy and unemployment.
- NRF said “American’s are not ready to declare an end to the recession”
- 2/3 of American’s said the economy will impact their holiday plans.
- 70.1% of holiday shoppers plan to shop at discount retailers and 55.8% plan to shop at dept stores.
- The poll included 8,431 respondents.

**Note: On 10/5, the National Retail Federation predicted that holiday retail sales would decline by 1% – USA Today
- If US holiday spending falls this year, it would be the first back-to-back decline since 1992 when the NRF started keeping records. (source: new wires)

Pre Market S&P 500 Futures charts:

Retail sales data came in ‘worse than expected’ (too bad they don’t count ‘my’ expectations).

MARCH ADVANCE RETAIL SALES: -1.1% V 0.3%E; LESS AUTOS: -0.9% V 0.0%E

Redbook Retail Sales w/w Apr 11th: 0.9% y/y; 1.9% MTD v Mar

MARCH PRODUCER PRICE INDEX M/M: -1.2% V 0.0%E; PPI EX FOOD&ENERGY M/M: 0.0% V 0.1%E- PPI YoY: -3.5% v -2.2%e
- PPI Ex Food & Energy YoY: 3.8% v 4.0%e

Spansion ((SPSN), a manufacturer of flash memory devices filed for Chapter 11 bankruptcy protection today.

The company, which is headquartered in Sunnyvale, California makes memory devices used in numerous consumer electronic devices. From the company web site:

Spansion is the largest company exclusively focused on Flash memory solutions. Flash memory can be found in nearly every electronic device- in cell phones, cars, printers, networking equipment, set-top boxes, high-definition TVs, games and other consumer electronics. As people continue to demand more multimedia content in their homes, at work and on the go, and as electronic products become increasingly complex, the amount of Flash memory in electronic devices will continue to grow.

With a primary focus on the integrated Flash memory market, our solutions are incorporated into electronic products from Original Equipment Manufacturers (OEMs), including the top ten handset, consumer electronics and automotive OEMs around the world.[...]

Spansion, publicly traded on NASDAQ [SPSN], was previously a joint venture of AMD and Fujitsu and draws upon a rich history of technological innovation and market leadership that dates back to the early days of the Flash memory market. Spansion has approximately 8,900 employees around the globe focused on enabling our customers to innovate more quickly, more efficiently and more broadly.

The Associated Press reports that the company chose to file for bankruptcy as it tries to deal with $625 Million worth of debt. The company is exploring a possible sale or merger. The announced bankruptcy comes just one week after they announced a workforce reduction of 3,000 employees.

Spansion says the decline in the global economy has resulted in lower demand for it’s products as manufacturers of consumer electronic products have scaled back production.

Shares of Spansion were trading near the $20 dollar per share range just one year ago, on Friday shares traded at just $0.05 per share.

Sphere: Related Content

January consumer confidence data released by the ‘Conference Board’ sets a new all time low going all the way back to 1967. Consumer confidence is forward looking data as it reflects the sentiment of consumers about their own personal income and employment situation, and this reflects directly on consumer spending.

JANUARY CONSUMER CONFIDENCE: 37.7 (another record low)

Consumers’ short-term outlook remains quite pessimistic. Those expecting business conditions to worsen over the next six months decreased slightly to 31.1 percent from 32.9 percent, while those anticipating conditions to improve remained relatively unchanged at 13.3 percent in January, compared to 13.4 percent in December.[...]

The Consumer Confidence Surveyâ„¢ is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world’s largest custom research company. The cutoff date for January’s preliminary results was January 21st.

REPORTS NOV-DEC SSS -35% Y/Y, CUTS FY08 GUIDANCE
- Sales declined most significantly in Tiffanys U.S. stores and to a lesser degree in Asia-Pacific and Europe.
- Notes that net earnings will decline in Q4.
- Cuts FY08 EPS to $2.25-2.30 v $2.40e ($2.30-2.50 prior), R $2.85B v $2.94Be.
- CEO: “Deteriorating global economic conditions were clearly reflected in cautious spending by Tiffany customers across the entire range of jewelry categories and price points. We believe these conditions will continue well into 2009.”

The Government retail sales figures for December are out…

DECEMBER ADVANCE RETAIL SALES: -2.7% V -1.2%E; LESS AUTOS: -3.1% V -1.4%E
- Prior Advance Retail Sales revised from -1.8% to -2.1%
- Prior Less Autos revised from -1.6% to -2.5%

Williams-Sonoma (WSM) – December Same Store Sales -22.6%

Urban Outfitters (URBN) – +3%

Big 5 Sporting Goods (BGFV) -8.6%

Sears (SHLD) -7.3% (guides q4 higher) ?? I think they will miss that one.

Stage Stores (SSI) -4.9%

Wet Seal (WTSLA) -12.5%

Ultra Salon (ULTA) -5.8%

New York & Company (NWY) sees Q4 sales -10% (closing up to 50 stores, cutting workforce 12%)

Limited (LTD) -10.0% (guides lower)

The Buckle (BKE) +13.5% (wow, what are they selling?)

Pacific Sunwear (PSUN) -10.0% (cuts guidance)

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The first of many retaillers predicted to go under or file bankruptcy…

NEW YORK -(Dow Jones)- Goody’s Family Clothing Inc. (GDYS) is liquidating operations, becoming the first high-profile retailer to go under in a new year that is expected to see many more going-out-of-business announcements.

The moderately-priced chain was unable to restructure terms with its creditors and is in the process of seeking bids to liquidate substantially all of its inventory and other assets, said Cathy Hershcopf, bankruptcy attorney at law firm Cooley Godward Kronish LLP.[...]

[...]As recently as early November, White (company CEO) told the Knoxville News Sentinel that Goody’s expected to turn a profit by the end of the year.

“It’s huge. We’ve been very busy,” White told the newspaper, which is based in Goody’s home town of Knoxville, Tenn.[...]

[...]Goody’s has about 9,000 employees and operates 282 small department stores in about 20 states, mainly in strip malls in the Southeastern and Midwestern U.S.[...]

Well it did not take long before we got our first ’snapshot’ of the 2008 holiday retail sales figures.

‘Spending Pulse’, the research division of MasterCard released data this Christmas Day that is not giving any retailer anything to ‘ho ho ho’ about.

[...]Despite a flurry of last-minute shoppers lured by the deep discounts, total retail sales, excluding automobiles, fell over the year-earlier period by 5.5% in November and 8% in December through Christmas Eve, according to MasterCard Inc.’s SpendingPulse unit.[...]

[...]“This will go down as the one of the worst holiday sales seasons on record,” said Mary Delk, a director in the retail practice at consulting firm Deloitte LLP. “Retailers went from ‘Ho-ho’ to ‘Uh-oh’ to ‘Oh-no.‘”[...]

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Commentary & Charts…

Existing home sales data this morning showed an 8.6% drop from the previous month. This was the largest monthly drop yet. And with the issuance of any economic data there is always many different interpretations of the data. Some say that with the recently falling mortgage rates it will quickly turn the housing market around. Some say the ‘bottom is in’, and some say it shows that sales are getting even worse.

The problem I see with the theory of ‘the bottom is in’ is that it needs banks to lend at the pace they were before the housing market collapsed. And banks are not lending like they used to, and are likely not too for a very long time to come (hopefully never, for that is what contributed to this disaster in the first place).

The attempt by the Government to ’stabilize’ housing prices by trying to lower mortgage rates will be a short lived spike in the housing market as I see it. They are simply trying to keep blowing air into the already collapsing housing bubble. The only way the housing market will stabilize is to allow them to decline to their historical averages, without intervention. I have said on numerous occasions, the system needs to flush itself out.

The reason I see any spike in the housing market being short lived is that it requires people to have jobs in order to obtain mortgages. I foresee the unemployment situation worsening at an even faster pace in early 2009. Following the holiday retail shopping season I expect to see a large number of retail sector job losses, and bankruptcy filings among retail companies. And then as the economy continues to worsen it will impact State and Local Governments at an escalating pace which will begin the next wave of job cuts. A vicious cycle it is. Attempts to ‘prop up’ the housing market will fail.

I don’t see any ‘easy’ way out of the housing market collapse except to let natural price discovery processes be allowed to dictate the markets stabilization over time.

Charts…

On the S&P 500 E-Mini futures (hourly chart) we are clearly under the up trend that began with the November lows. But, we are still sandwiched in between a lot of support and resistance levels in the short term. The break of the trend line (beginning point 11/21/08) is giving the bulls some fear that the lows of November may come back again sooner than expected.

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