A HUGE SURPRISE IN DECEMBER’S RETAIL SALES

Initial data indicate retail sales fell by 1.2% in December from the previous month, the most since 2009.  Most had expected an increase.  What is even more confusing there was a pullback in a measure based largely on internet sales, which had been expected to the retailing industry’s saving grace this holiday season.

The report showed non store retailers—which include online stores—fell 3.9% month on month, the most since November 2008.  They rose just 3.1% on an unadjusted year over year basis even as Amazon saw its net sales in North America grow about 18% in the fourth quarter.

Most are suspecting the data is misleading and there was an undercounting problem in internet sales, a flaw perhaps the result of the government shutdown.

If this data is accurate, the anticipated growth rate for fourth quarter GDP will be revised lower.  Before today’s data consensus had projected a 3.4% increase.

Equities were quietly volatile on the data.

Oil however continued to rise on belief that Saudi Arabia and Russia will indeed cut production more than anticipated, an environment amplified by the turmoil in Venezuela and perhaps Iran  [Iranian saber rattling is at a two decade  high]

Speaking of two decades, Cisco, the must own stock of 2000 that was going to rule the Internet finally reached December 2000’s level according to CNBC.   For those who don’t recall, Cisco was then priced at level that extrapolated its 35% annual growth rate into perpetuity.  It did not occur and shares plunged over 85% in a two year period.

If the retail sales data is as poor as suggested, the result of disappointing growth in Internet sales, will Amazon follow a similar path as that of Cisco?

Wow!  That would be a surprise.  All must remember things are never different.  There are just different people.  Approximately 65% of the 1987 Dow Jones members have since entered into bankruptcy or some forced reorganization.    Who remembers Dow member Woolworth, NYSE symbol Z?  And then there is Sears.

Last night the foreign markets were mixed.  London was up 0.44%,  Paris up 1.35%  and Frankfurt up 1.29%.  China was down 1.37%, Japan down 1.13%  and Hang Sang down 1.87%.

The Dow should open nervously flat as the outlook for trade ended the week on a positive note.   Oil is higher on the growing perception that production cuts will be long lasting.The 10-year is off 2/32 to yield 2.67%.

 

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