Why Consumer Traders Think There Was No Recovery

Stocks in Europe were higher as German and French Q1 GDP were both above expectations, though Portugal had negative growth, while Spain and Italy eked out small gains.

Retail trends: buybacks accelerating, and why the rich are getting richer. Nordstrom reported good numbers, with a strong 6.5 percent same store sales figure.

With reports from Macy's , Kohls and now Nordstrom, there is a couple trends emerging: 1) balance sheets are strong, 2) inventories are in good shape, and 3) there is a big shift to buybacks.

Just look at the buybacks announced: JWN $750 million, KSS north of $1 billion, JCP just completed a $900 million buyback, M talking about a buyback now that they have paid off debt.

Why the buybacks? Because balance sheets, after a disastrous couple years, have been repaired...and increasing buybacks is a sign that confidence is coming back to at least some of the retailers.

Here's the downside: the lever that has driven much of the improvement in profits — cutting expenses — is not there as much as it was in the past couple years. That's why you're seeing more buybacks.

Another retail trend: the rich get richer. Saks (SKS) comparable store sales were 10.2 percent, Nordstrom at 6.5 percent, Macy's (M) at 5 percent, Dillards (DDS) was up 2.0 percent, Kohls (KSS) at 1.3 percent...we are waiting for Wal-Mart's earnings on Tuesday, but their Q4 quarter was down 1.8%...down 1.3 percent in the Q3 (ex-Sam's Club) they report next week.

In other words, they are comping in line with their income. The high end is accelerating, low end is not recovering.

Well, not entirely. The dollar stores are doing all right...Dollar Tree is doing all right.

But still, you get the point. Some of the old consumer traders think that we have never had a recovery with Wal-Mart comping negative...

That's only one of many weird metrics I hear about. ExxonMobil is at peak profits and more people are on food stamps than ever?

Dillard's (DDS) jumps 6 percent after handily beating estimates and reporting a 57 percent spike in Q1 earnings. The strength came as comps rose 2 percent and margins expanded — even as inventories grew 4 percent.


1) Electronic exchange firm BATS Global Markets announced it is filing for an IPO. Over recent years, the firm has eaten into the equity trading market share of the previously-dominant traditional exchanges including NYSE Euronext .

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