Retail stocks are in rally mode despite forecasts that a large number of stock chains could file for bankruptcy this year and more than 70,000 individual stores could close.
The move up may be due to a sense of relief that an economic stimulus package could help the economy later this year. The idea that retail would benefit from this in the near future is far-fetched. Unemployment, which often lags consumer confidence and GDP, could still move to 10% later this year.
Over the last five days, shares of Macy’s (M) are up 20%.
Nordstom’s ((JWM) is up nearly as much. Sears (SHLD) stock is higher by 12% over the same period.
There may be a number of ways to forecast retail sales, but employment has to be at the top of the list, and it is going to get much worse.
Douglas A. McIntyre
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