I have been emailing back and forth with Stephanie Link and Jim Cramer and have read their comments on the guidance. They have convinced me, and I agree that GM should be bought.
I am buying at $39.50 in premarket trading now.
At the time of original publication, Kass was long GM.
Parsing the Data
Retail sales in December were better than forecast, but if we include the November downward revisions, the two months taken together are about in line.
Sales ex-autos and gasoline were higher by +0.6% vs. the estimate of up +0.3%, but November was revised down to a gain of +0.3% vs. the original print of up +0.6%.
The core measure of sales, which also takes out building materials, rose +0.7% vs. the estimate of up +0.3%, but last month was revised down -0.3%.
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Within the report, sales of electronics fell in both November and December and were very mixed at department stores. Online retailing, of course, took more share with a +1.4% increase after rising +1.6% in November. Clothing stores saw a sales gain of +1.8% after dropping -0.5% in November.
Bottom line: Because the December beat was offset by the November miss, fourth-quarter GDP estimates should not change on this number. We know from many retailers that have spoken that the holiday was extremely competitive and challenging.
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Most important, today's retail data signals that Friday's December jobs report likely exaggerated the weakness in the jobs market.
Tactically, I am considering going back -- yesterday I bought and sold ProShares UltraShort 20+ Year Treasury (TBT) -- and taking a small TBT long rental to hedge my interest rate risk in my closed-end municipal bond fund exposure, but I have not yet done anything.