Now People Are Worried About Retail Stocks?

By: TraderMark Friday, October 10, 2008 8:13 PM

Symbols: BKE, CACH, CMG, CROX, HOG, JCP, LVS, MGM, ODP, RES, SKS, WFMI, WMT, WYNN

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(Apr 2: The Underemployment Rate is Rising) It is bad out there in the bottom 60% and it's creeping up to the formerly immune 20-40 percentile as well. So now it "matters" because that starts cutting into the bottom part of CNBC's audience. It is the perfect storm and I will utter the most dangerous words a financial commentator can ever utter - it *IS* different this time. Or at least it's certainly not like it's been in a long time...

People were asking me for individual names for shorts - I continue to stress the same themes I've stated since last summer - anything consumer related or based on American conspicuous consumption - it will all go. I was looking at a chart of Whole Foods (WFMI) and that's a perfect candidate - its held up "ok" because it relies on the upper middle class who can afford to pay $7.00 for organic milk. Well, when economics start to hit, people are going to have to stop being so "healthy" and buy what they can afford. That's just reality. Hence this looks like the prototypical short. As is Harley Davidson (HOG) (Jan 25: I Can't Believe this Pig...err HOG was up Today) (Sep 7: More Retail Tells? Harley Davidson and Office Depot), as is just about every restaurant in America (Sep 19: Tough Times Ahead? Restaurants) - even magical Chipotle Mexican Grill (CMG), as if just about every retailer in America ex-Walmart (WMT), etc. These stocks bounce every time the bulls pass their... well bull... that the consumer will be back any moment now and just "trust us" because in 6 months they'll be back in the malls spending like mad. Just. Plain. Wrong. These are going to be shorts for a long time.

Next to go on the food chain will be entertainment - think casinos - Wynn (WYNN), Las Vegas Sands (LVS), MGM (MGM) - it is all going to suffer (Nov 1: A Top in Casino Names? Wynn and Las Vegas Sands) - that's an "extra" you don't "need".

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