This column originally appeared on Real Money Pro on March 13.
Let's parse through it.
With a gain of +1.1% (driven importantly by a 5% gain in gas station sales), retail sales were twice the expected forecast.Excluding autos and gas, the gain was +0.4%. In terms of composition, autos, building materials, clothing and food/beverages were better. Sales were lower in department stores, sporting goods, electronics, furniture and restaurants/bars. Yesterday on Real Money Pro, I highlighted the gain in household net worths that could buoy the consumer over the near term. Though the retail print was a pleasant surprise for investors, I remain of the view that the stock market has more than discounted the news and is ignoring the ongoing risks to global economic and to U.S. corporate profits and margin growth. The forward-looking refinancing applications (-5.2%) and mortgage applications data have begun to fall as the 30-year fixed mortgage rate rises to the highest level since late last summer. It is important not to lose sight that refinancing cash flow is an important component of household cash flow, which assists spending. Though household net worths have risen and February retail sales were better than forecast, with slowing cash flows from refis, slowing tax refunds, higher payroll tax rates, rising gasoline prices and cuts in government spending, the American consumer faces numerous headwinds. The strength in retail could aid the U.S. dollar, which, as discussed in "The Big Picture," could impede corporate profits growth.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV