- What really drove the retail sales decline; and
- the run-up in industrials.
Block Out the Politics Posted at 12:02 p.m. EDT on Friday, April 12 Wealth. Wealth springs eternal, and it comes in all shapes and sizes. This morning we are seeing a decline in oil, and when I see that I think "wealth." A decline at the gas pump can make up for this payroll tax hike that I keep hearing people talk about. The appreciation of real estate can make up for the payroll tax. The refinancing of mortgages can make up for the payroll tax. The advancements in the stock market can make up for the payroll tax.
I point all of these out because, when Friday saw a 0.4% March decrease in the retail sales number -- the worst decline since last June -- I heard immediately that the culprit was the end of the payroll tax holiday. I think that's nonsense. I actually think the cold weather played a bigger role. Why? Go back to what Manny Chirico, CEO of PVH ( PVH - Get Report), said on "Mad Money" about the company's March numbers. He said the weather played total havoc with them. Remember how retail works: In March you are showing swimwear, clothes that are lighter in fabric -- nothing warm at all. But when it is 20 degrees colder in much of the heavy-consumption portions of the country, that can really hurt -- and I think it did.
That's the reason the retail stocks keep hitting new highs despite the weak aggregate numbers. Plus, the companies that did "Squawk Box" on CNBC Thursday made it very clear that things improved as the month went on, and that the early part of April's looking very good. In fact, the only retailer I heard bemoan the payroll tax increase was Family Dollar ( FDO), which was also the only retailer that truly disappointed in its numbers.
Some Industrials Come Up the Hard Way Posted at 6:52 p.m. EDT on Friday, April 11 It's not like people are talking about a new paradigm. It's not like we are hearing, "It's OK now to pay three times growth rates because rates are so low." You don't hear people say, "Look, China's going to come roaring back, which allows me to pay $110 for United Technologies ( UTX)." I think these stocks are tiptoeing higher, not bursting forth to breakout levels. I spent some time on Honeywell ( HON) and 3M ( MMM) today. Sure, some of it had to do with what I am thinking about their growth rates. But most of it was the way a parent looks at a child who is going off to college: "How did that stock grow up so fast? How did it get so big?" When I traced over Honeywell and 3M, what I found was a peculiar reluctance to go higher, literally the whole way. The path to these prices was littered with downgrades when it comes to 3M. There was always an analyst who said that the valuations were unreasonable, every step of the way. Honeywell? I think there were more people worried about a missed quarter than worried about missing more upside. Every analyst meeting was filled with trepidation, and most earnings notes were about how Honeywell better not miss or it is Katy-bar-the-door. I found no notes of bravado that you would see, typically, at market tops. Instead, throughout the $40s, the $50s and the $60s, analysts were commenting about how rich the stock was compared with the expectations, not about how cheap it was. In truth, it was never cheap, except in hindsight. Yep, it's been an odd run-up here, one that hasn't been embraced. One that analysts have looked askance at. One that they feel bewildered by, particularly if they got off the ship as so many did with 3M at much lower levels or simply lived in fear of a shortfall, as most of the recommending analysts on Honeywell surely did. At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long UTX.