Thursday, June 11, 2009

Retail sales jump because of gas prices again...

I find it comical that investors ignore some data and seize on other data. Everyone and her cousin should know that gas prices have surged sharply in the last 6 weeks and since the government's retail sales data is inclusive of price changes, when prices go up so does the government's estimate of retail sales. Excluding gasoline retail sales were still up slightly in May (0.2%) but much of that gain was driven by people seeking deals on GM/Chrysler vehicles as the carmakers work through bankruptcy. I think has pulled forward demand for autos that might have normally existed in the 2010, but we won't know about that for another year.

The markets have broken through a technical barrier here and if they can sustain these gains it could mean higher prices ahead, but I remain very skeptical as business activity is showing very few signs of life.

Also, the puppet masters at the government's labor department continue to play games with the unemployment data. The estimate for this week's initial claims was 615k so the number comes in conveniently enough at a better than expected 601k. This is like your doctor looking at your blood pressure reading of 165/120 and say "well, it's better than I expected". You're still on death's door, but hey, it's better than expected!!

Also, the Labor department quietly revised what had been a decline of 15,000 people on the continuing claims rolls to an INCREASE of 8,000 people. A net increase of 23,000 people more than offsetting the "better than expected" data on initial claims, but it doesn't matter to the market today.

Facts be damned, unicorns and leprechauns have replaced the bulls and bears on Wall Street.

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