When people start pinching on pasta and pizza, you know there's a problem.
California Pizza Kitchentraded down almost 9 percent yesterday after revising its earnings guidance. The company now sees a 7 percent decline in same-store sales in the second quarter.
Ralcorp announced the acquisition of American Italian Pasta, but not before management suspended guidance, a move that contributed to an 8 percent drop in its shares.
Is the American consumer suddenly carb-conscience? Hardly. I believe the American consumer is cost-conscience, and if I am right, my "Call-to-Action" will be spot on: be very cautious when it comes to retail stocks.
These observations of consumer behavior are pivotal.
With the notable exception of i-products, we are seeing a clear pattern when it comes to spending. A couple of weeks back, Dean Foods warned us about the softening consumer. Owners of Ralcorp could have seen the writing on the wall—no milk, no cereal.
If people don't want to spend money on milk and pizza, why would we ever expect them to buy large screen TVs? Best Buy's poor results last week more or less confirmed that.
The saying that even bad pizza tastes pretty good doesn't apply here. As earnings season nears, consider today's warnings sure signs the consumer may have had his fill.
"The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.
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