Andrei Tratseuski's  Instablog

Andrei Tratseuski
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Andrei Tratseuski currently works as a Currency Analyst at Forex Club LLC. Andrei was a key speaker at 2011 New York and Dallas Trader's Expo, his work appeared in variety of publication both online and print. Recently Andrei's commentary appeared on WABC Radio, Nasdaq.com, MarketWatch,... More
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  • Retails Sales, the economy in the numbers 0 comments
    Jul 13, 2010 1:48 PM | about stocks: ADE, BEO, BEP-RETIRED, SPXL, CNY, DJ, ERO, EWA, EWC, EZU, FEZ, FXB, FXC, FXE, FXF, FXY, GBB, GLD, GRE, IFNA, IWB, JYF, JYN, NFP, SPY, SPY, UDN, USD, UUP, VCR, XLY, YCL, YCS

    Consumer represents roughly 70 percent of the United States economy. For the following reason tomorrow's Retail Sales will be pivotal for the United States Dollar and the sentiment about the economy. Forecasts predict for advance retail sales to slip by 0.2 percent from the previous month. Meanwhile, retail sales excluding autos to remain flat. With the economy in trouble once more, in eyes of substantial proportion of investors and economists, reassuring the markets that the consumer is spending will be detrimental.


     

    The tale about the retail sales is mixed. First off, the Federal Reserve reported that the consumer borrowed less in May. Less lending states that U.S. Residents are saving more and paying down debt. The following is of course negative for the economy as corporations loose out on sales and have to keep costly inventory. Conference Board Consumer Confidence shows exactly the same picture. CB Consumer Confidence slipped from 62.7 in May to 52.9 in June. However, after we ran a correlation study for Advance Retail Sales and CB Consumer Confidence we found that there is negative correlation of 63.62% during this year. The following states that a complete opposite happens between the reading of CB Consumer Confidence and Advance retail sales at least 2 out of 3 times.


     

    Now let's take a look for the figures which suggest that the retail sales might print higher than anticipated. ABC Consumer Confidence aggregate for a month of June rose to -43 from May aggregate of -45.4. Another positive step is a rise in U. of Michigan Consumer Confidence which rose to 76 from 73.6. Keep in mind that there is no direct correlation between either ABC Consumer Confidence, U. of Michigan Sentiment, and Advance Retail Sales. However, if we look at the figures introduced by ICSC which counts the sales of all business we find that it rose to 3 from 2.6. Advance retail sales and ICSC Index have a correlation of over 70%. The following figures suggest that the advance sales might print to the upside.

    However, the most important gauge to look at while assessing retail sales is the sales by particular brand name stores. We compiled a data of same store sales for variety of leading brands. In our list we seen a jump in same store sales in 10 out of 11 brands. Kruger, second largest store in terms of sales after Wal-Mart, has reported a jump in sales of between 2 to 3 percent for the last quarter. Target, third largest brand store, seen month over month same store sales rise by 1.7%, while Walgreens jumped by 2 %. The only downside of the list comes from Rite Aid which seen a drop of 2.5%. Nonetheless, compiled list shows a positive trend for the retailers. Weighting all of the aforementioned leading indicators, we can anticipate a reading which will surpass the expectations. Nonetheless, it is hard to assess the figures as consumer continue to tighten their wallets and economic figure continue to slip after the withdrawal of government stimulus from many markets.



    Disclosure: No Positions
    Stocks: ADE, BEO, BEP-RETIRED, SPXL, CNY, DJ, ERO, EWA, EWC, EZU, FEZ, FXB, FXC, FXE, FXF, FXY, GBB, GLD, GRE, IFNA, IWB, JYF, JYN, NFP, SPY, SPY, UDN, USD, UUP, VCR, XLY, YCL, YCS
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