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Pros Say: Expect Cash-Raising Selloff Before a Bull

CNBC.com
Friday, 28 Nov 2008 | 1:58 PM ET

The market news on Black Friday is all about retail — so unsurprisingly, the news today is pretty bleak, as shoppers look to stretch tight budgets and thinner wallets. Retail chain CEOs who spoke to CNBC emphasized the positive, but industry analysts are already predicting a "red" Christmas. And investment strategists see a big cash-raising selloff in the works.

Top Analyst: Red-Is-The-New-Black Friday

Dana Telsey, chief research officer of Telsey Advisory Group, said there's little doubt this will be a bad Yuletide, possibly showing the first year-over-year decline in retail sales growth since records were first kept. But she pinpointed winners among the discounters and off-pricers, including Walmart , Dollar Tree , TJX , and Ross Stores .

Retail Forecast: Perfect Storm

More grim prognostication came from Britt Beemer of America's Research Group, who quoted research showing 44 percent of parents planning to cut back on giving gifts to each other in order to maintain their gift-giving to their kids, 23 percent of consumers saying their credit limits have been cut back by banks and credit companies, and retailers saying there is no "must-have" item this season — not even from Apple .

No Bull Market 'til Interbank Spreads Improve

Stifel Nicolaus market strategist Kevin Caron said he interprets recent market advances as short-covering rallies. He said 50 to 80 percent of the money his firm normally allots to equities has been in cash all year. When the inventory of homes starts to fall, and interbank spreads begin to improve, the worst will finally be over. (Check Credit Spreads/Libor here.)

(Contd.)
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Raise Cash For Market's Retail Flu

Richard Steinberg of Steinberg Global Asset Management said the market fundamentals are going to be difficult for the foreseeable future. Frugality will be in this season, and investors will be "playing get-even-itis." People who dipped a toe in when prices plunged are now going to be looking to raise cash.

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