Bad News Bears is coming for U.S. Retailers

Consumer confidence just hit a two-year low, the numbers came out yesterday. Why should you care? Economists monitor confidence since consumer spending accounts for two-thirds of U.S. economic activity. The market and stocks keep going, the DOW is pushing back to 14,000 but you just have to ask -- how long until a pullback?

The Present Situation Index, which measures how shoppers feel now about the economy, declined to 121.7 from 130.1 in August. The Expectations Index, which measures shoppers' outlook over the next six months, fell to 85.2 from 89.2. Yesterday's reports on confidence and housing is Bad News Bears my friends. It's going to hit the retailers, who are already bracing for a challenging holiday season. Merchants have seen spending slow all year amid falling home prices and higher gas and food bills. In a time of the looming Credit Crunch and Foreclosures U.S.A, guys like Target (TGT), Best Buy (BBY), Wal-Mart (WMT), Costco (COST) and everyone else is going to feel the pinch. Back to the Bad News Bears, the 1976 version, not the crap remake a few years back by that guy Angelina Jolie dumped. Pretend Amanda Whurlitzer is a Retailer, and Buttermaker is Ben Bernake from the Federal Reserve Bank. Cue the lights, and action...

Amanda Whurlitzer: Look, Buttermaker, you're not my father and I'll not move an inch to play baseball for you any more. So why don't you get back into that sardine can of yours and go, go vacuum the bottom of the Pacific Ocean? I've got business to take care of. You're blocking my customers with your car.

Enjoy the run my friends, but please cash out some of your stocks, reduce your positions because the worst is coming. Japan's new Prime Minister Yasuo Fukuda said today that the US economy has not yet shown a significant impact from the lingering subprime mortgage crisis but that the issue poses a risk to growth and will be closely watched. His words were: 'A significant impact of the subprime issue has not shown up in the (US) real economy but it is expected to gradually effect the economy.' But what does he know right, he's in Japan? Come on Masters and the rest of America, wake up and smell the share dropping Starbucks (SBUX) coffee, a correction is coming. Yes the Fed will probably keep cutting rates, but that takes at least 9 months to impact Americans.

Just consider a few stocks that may come down if the market tanks:

Apple (AAPL) shares trading at $153. I know everyone thinks they will take over the world, but come on, $153?

Amazon.com (AMZN) at $93. It's an online merchant, let's be serious. Think you could talk your parents into pouring their nest eggs into AMZN shares, hell to the No. Overstock.com (OSTK) is at $28, that's almost $27 more than I would pay for that crap company.

Online travel guys: Expedia (EXPE) at $28 and Priceline.com (PCLN) at $89 -- both won't stay at those prices once the market turns ugly.

Friends, I'm not telling you to go out and short all these stocks, just take some loot off the table and sure, short a few of them. I'm picking on Tech but when the market poops it's pants, people aren't going to be throwing money at technology. We know everyone buys what they really need: Booze (BUD, TAP, BF.B, STZ) and Cigarettes (MO, BTI, RAI, CG) and everything else they have to have (KFT, CL, PEP, PG).

So give you kids beers just like Matthau did, because even if you're winning now, you're going to be losing cash fast if you don't prepare yourself in the coming months. And take it from Tanner Boyle:

Tanner Boyle: Those Yankees are real turds.

Article written by: Ted Gottsegen
Article posted on: September 26th, 2007

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