Brown Shoots

Friday's retail sales report had something for everyone, the bears and the bulls though you wouldn't know it from listening to the media who acted like it was a sign of unbelievable strength. First it should be an incredible month considering the tax rebates hitting the mail unlike last year in February and a special tax credit to middle to lower income Americans that is adding an additional $30 billion to consumer pockets from the taxpayers I was not aware of.

If your looking month to month ten of the 13 major categories showed gains. For instance electronics was up 3.7%. BUT, electronics was down 1.6% year over year. Remember what February 2009 was like? Talk about the easiest softball comparison. Also, January was revised down massively. This set an easy low base for the headline numbers to look amazing. If you adjust for the revision downward retail sales were actually down .1%.

Looking at the raw data (not seasonally adjusted), this February was the third worst February going back to 1998.

Anyway, the bulls will claim victory and the bears will say wait a minute. In general it looked pretty weak to me especially considering the consumer is getting tons of money through various tax avenues. This is alreayd ebbing.

S&P has just squeaked over 1050 before pulling back. The DJIA still hasn't confirmed the Dow Transports which has to be very nerve wracking for bulls. Finally, the really cyclical stock markets are not confirming the recent rally in the U.S. markets. Those would include China, South Korea, Japan etc.

Maybe they will but I still contend the economic numbers have turned over. To use the popular 2009 phrase, there are brown shoots everywhere.