Alarming Disconnect: Retail Stocks vs. Jobs Report

After Friday's Non Farm Payrolls shows an increase of 271,000 jobs, almost all economists are expecting a the Federal Reserve to hike interest rates in December. In addition, hourly income jumped a bigger than expected 0.4%. While all this news sounds like the U.S. economy is roaring ahead, there are troubling signals yet unexplained. A major concern should be performance of many major retailers such as Target Corporation (NYSE:TGT), Kohl's Corporation (NYSE:KSS) and Macy's, Inc. (NYSE:M). These are major retailers, generating a majority of their sales in the United States. The reason 'U.S. sales' are stressed here and under performing Wal-Mart Stores, Inc. (NYSE:WMT) was excluded, is because they have a ton of sales outside of the country, thus the currency issue is the major issue hurting them. What is important is the price action of retailers that generate a majority of their sales in the U.S. Target Corporation (NYSE:TGT), Kohl's Corporation (NYSE:KSS) and Macy's, Inc. (NYSE:M) all do that and their stock performance is horrid. Something is very wrong.

One way or another, retail stocks going into Black Friday and Christmas should be the hottest thing, yet they are all near or at 52 week lows. So what gives? What is the disconnect and where is the problem? Something is wrong and most likely we will see something major revealed/occur in the next few weeks. This major event likely will clarify this major divergence.

Gareth Soloway

InTheMoneyStocks