Quite remarkable... as some stocks rally to reach pre Lehman Brothers levels, the broadest retail / consumer discretionary ETF - SPDR S&P Retail ETF (XRT) is now approaching all time highs.
(3 year chart - click to enlarge)
(4 month chart - click to enlarge)
This is a great ETF to track because unlike most retailing ETFs which are dominated by a few huge names such as Walmart (WMT) this one has broad exposure to many names with nothing dominating the ETF.
|Company name||% Net assets|
|Gamestop Corporation A||1.79%|
|Jos A. Bank Clothiers||1.78%|
|Monro Muffler/Brake, Inc.||1.69%|
|Ann Taylor Stores Corporation||1.68%|
|Best Buy Co., Inc.||1.66%|
|Abercrombie & Fitch Company A||1.66%|
|Percentage of holdings 17.07%|
I would submit, this is the other side of the strategic default stimulus sweeping the nation, especially as consumer credit has contracted for 12 of the last 13 months.
When the blog started in 2007, I posted blog post after blog post how the US consumer - 70% of whom live paycheck to paycheck regardless of income level - would be dead in the water without his house ATM (which was driving the US economy for 3-4 years) and how any consumer discretionary stock must be shorted - restaurants, retailers, Harley Davidson, Whole Food Markets, casinos, cruise operators, et al. I tried to summarize many posts in [Apr 14, 2008: Stuff I've Been Negative on Since Fall 2007]
Even as the S&P 500 went to all time highs in fall 2007, and I looked like a raving madman. I nailed that call once the [all knowing] market came to its senses (unfortunately the tracking system I used at the time would not allow for shorting of individual stocks so it was a victory in spirit more than performance).
However I am not so happy on the other side. I completely whiffed on using my own analysis on the benefits of strategic default on the way back up. (certainly driving mortgage rates down and allowing many homeowners to refinance into 5% mortgages also helps) Amazingly, these retail stocks are - in aggregate - back to where they were 3 years ago.. the old house ATM of mid decade has been replaced by the (a) new house ATM [Apr 13, 2010: One Out of Ten US US Mortgages is now Delinquent .... Which is Great for Consumer Spending] and (b) the government ATM [Jun 5, 2009: 1 in 6 Dollars of Income Now Via Government; Highest Since 1929] Last week's disclosure that 47% of Americans received enough tax credits that they had to pay zero federal taxes (as the country chokes on debt) shows the Jun 2009 story is probably already obsolete... surely we have surpassed 1929 levels of government subsidy.
The nanny state nirvana has been achieved.
Summary: Buy stocks, especially of the consumer related kind as the Fed and government are providing direct and indirect subsidies of all types to make sure the terrorists have not won and our consumption lifestyle is not threatened (i.e. shop til you drop)