Farrell: What's Different On This Black Friday

Why anyone would want to try and shop the day after Thanksgiving is beyond me. I am still in a food coma on Friday and couldn't brave the crowds even for the bargains that are offered.

The day after Thanksgiving is called Black Friday since that has allegedly been the day that retailers finally pushed into the profit column. In recent years the wise American shopper has waited deep into the shopping season before opening their wallets figuring the bargains would get even better as inventories didn't move. H.L. Mencken, an acerbic journalist of long ago, used to like to take off on an old P.T.Barnum saying and wrote "Nobody ever went broke underestimating the intelligence of the American public." While clever (sort of) it is not true. At the end of the day the American consumer is one smart animal.

This year consumer behavior will be a bit different than in past years. The media, says Jeff Stein of Soleil/Stein Research, has "done a fairly good job of preparing consumers for limited quantities of must-have items." Retailers are entering the season with the leanest inventories in years. There will be fewer bargains as the season progresses. Jeff feels the retailing community has collectively decided to sacrifice potential year-end sales for better margins now. Sales may be "pulled forward" since the intelligent consumer will figure out the better bargains will be had early on and the availability of merchandise later in the shopping season will be questionable.

Jeff feels "functionality, durability and practicality" will be the operative words for the shopper. With debt levels still elevated and credit availability being curtailed the bargain hunter in all of us will come out. In a recent report entitled "Holiday Sales Preview: Clip Coupons and Shop Early" he lists his "Best Bets" to be Collective Brands (PSS: buy rated: recent price $20, target price $25), JoAnn Stores (JAS: buy rated: recent price $33: target $42), TJX Companies (TJX: buy rated: recent price $39: target $45), and Big Lots (BIG: buy rated: recent price $24: target $32.)

Finally! A jobless claims number below 500,000. And a good bit below at that. Wednesday morning saw an announcement that initial unemployment claims fell to 466,000. While still a staggering number if put into a longer term historical context (in the last recession claims peaked at 517,000 and within one month had fallen to 428,000. This recession claims peaked in January at 714,000), it is the breakdown we have been hoping for. One cautionary note - or actually two cautionary notes - it is just one week's data, and trying to seasonally adjust as they do around holidays is very difficult and revisions are always possible. The four week moving average also moved below the 500K mark and is at 497,000. But it's Thanksgiving and while terrible for those out of work, it is a glimmer of hope the job picture is getting better.

Fearing you might have missed the minutes of the last Federal Open Market Committee what with the Holiday rush I thought I would touch on them ever so briefly. Perhaps foretelling what they might do at the end of the first quarter when the purchase of mortgage backed securities by the Fed is scheduled to end, the minutes made note that the ending of the Treasury bond purchase program did not seem to affect that market. Carole Berger of Soleil/Luna Analytics is fearful that without the Fed in the market with a bid for MBS paper mortgage rates will rise.

The Fed minutes revealed that they see overall economic activity continuing to rise and their projection for GDP was raised for the second half of 2009, and 2010 and 2011 output growth was roughly unchanged. They see household spending as a little stronger and unemployment will be in a range of 8.4% to 8.8% by Q4 2011 (Wow - that's a long time out). Perhaps most importantly the Fed feels the dollar's decline has been orderly and reflects unwinding of what was the flight to a safe haven that occurred earlier this year during the worst of the financial crisis. Expect no help from the Fed on the dollar.

_______________________________________

Vincent Farrell, Jr. is chief investment officer at Soleil Securities Group and a regular contributor to CNBC.