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The Grass is Greener in Retail

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With holiday shopping all but over, traders look for value.

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Good morning on what feels like Monday but is thankfully a Friday! As the rest of the world enjoys a well deserved extended respite, the true blue die hard man up to digest the flickering ticks as we edge towards the end of 2008. The following vibes are top of mind as we settle down and dig in:

  • Pepe Depew recently wrote a fantastic Five Things discussing how the social mood shift will bring stark changes to fashion, film/media, food, beverages and consumables. The socioeconomic ramifications are indeed manifesting across the entire societal specter before our very eyes.

  • I was reminded of this when I went to see Valkyrie yesterday and all seven of the previews were about death, destruction, loss, murder, despair or the end of the world.

  • The movie itself? An upside surprise despite my internal tendency to avoid Nazi movies on Christmas and anything with Tom Cruise, in no particular order.





  • So GMAC is now a bank holding company. I "get" the structural need through the lens of derivative dominoes but it's a lot to stomach for those who did the right thing by saving and staying out of debt.

  • Wal-Mart (WMT), Sears (SHLD), Target (TGT) and Home Depot (HD) are green despite widespread front page news that retail sales plummeting and the consumer has been fitted for a toe tag. We spoke about this in August when we wrote about The Other Side of Retail Therapy and that, in my view, was the time to short these stocks.

  • Indeed, if we can learn a lot just by watching, the fact that they're not down may very well mean they're heading higher for a trade.

  • Amazon (AMZN), Google (GOOG), Research in Motion (RIMM), Apple (AAPL) and Baidu (BIDU) all acted dry during Boo's best attempts on Wednesday. Keep an eye on these master betas into year-end as they're the likely vehicles for any last ditch bang-for-the-buck performance anxiety efforts.

  • I realized on Wednesday that Television's JeffMacke® and I tend to tussle on both sides of crude cusps. It happened in the spring when he rode Texas Tea higher and I faded (read: shorted) strength and it's happening again as it spills lower and I'm slowing accumulating exposure for a pure trade. We were both proven right--and, at a point, wrong--it simply came down to timing, as most things in trading--and life--tend to do.

  • I finally broke down, gave in and bought myself Guitar Hero (full band edition) on Wednesday. I would love to say that I bought it for my kids but, heck, I'm not even married. I've yet to decide when I'll actually have time to play this puppy but early indications are that I'll be smiling when I do.

  • Good luck today, Minyans, and remember--it's gonna be might thin out there today. Size your positions accordingly and don't do anything that will require corks on your forks into the weekend.


R.P.

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