Where is the Discretionary Spending Going?

The Commerce Department just released inventory numbers for th nations retailers, higher by 0.2%. Couple that with a sales drop of 5.9% and you have an inventory to sales ratio at new record highs.

Look at this madness.

For the life of me, I can’t figure out where the money is going. Gasoline prices are down. Everything is cheap and made in China. Have we reached a point of ‘peak junk’? Is everyone so loaded with stuff that we don’t really have a desire to buy more of it?

Or is there a demographic shift taking place, with a less materialistic snapchat generation more fixated on taking selfies than actually looking good in them?

Why aren’t humans buying clothes anymore?

Is it because we’ve spent all of our disposable income on 90k cars and $1,700 per mo healthcare plans?

The Dow is higher by 170. Even AAPL is trying to rally here. The engine of the market, oil, is revving higher by 2%, so everything is good.

But if everything is good, why does the ark float?

I’ll try to answer it myself. We’re stuck in a weird world where yields for western economies are plunging, due to central bank over planning, but is also providing succor for equities–who benefit from QE.

Under natural circumstances, stocks go up during periods of economic expansion. When the economy expands, yields rise and bonds decrease in value. During periods of contraction, asset allocators swap out of stocks and into bonds to reduce market exposure, eliminating non systematic risk, or greatly reducing it.

But this shit is bizarre. I’m long TLT, so I don’t mind it going higher. But it was supposed to be a hedge against a bad market, not play along with a good one.

Stamps.com crushed earnings last night and the stock gapped higher by 16% this morning, until giving it all back and more.

The stock was trading north of $100 today and is now down. Who the fuck is buying all of these online stamps? I don’t get the allure.

The bigger story here, of course, is the share reversal. I’ve always loathed to be involved with situations like this. Make no mistake, STMP might very well bounce a little here, as dejected shareholders get replaced with savage predetorial vulture type traders. Nonetheless, this is a stark reminder of how cruel the market can be, especially when you’re playing at the earnings roulette table.

A massive rally is underway. Traders and investors alike have thrusted themselves into large vats of hot, liquified cheese–and been bathing in their own cheesy splendor for the better part of the last 45 minutes.

Gains to be enjoyed are most readily found in the commodity sectors. Everyone loves them. The Chinese aren’t buying any. But we love them, nonetheless.

The price of iron ore was down 6% last night, off by 22% over the past two weeks. On that news, iron ore stocks are sharply higher today.

Apple is down again and biotech stocks are lower. Today’s rally, although impressive on the surface, is incredibly cheesy, if I might say so myself. Moreover, it is milquetoast!

Thanks to the Congresional investigations on drug pricing chicanery, we are entreated to see Bill Ackman’s emails to Valeant. Reading through them, one can only surmise Bill to be chewing on his fingernails during the trading day, watching the shares of VRX, along with his reputation, circle down the toilet bowl.

Here are two of my favs.

Shares have been ‘death spiraling’ lower, as Ackman feared. The catastrophe that once loomed is here. This is destiny manifested. The end.

A man with “political motives” thought it made sense to stab a bunch of fellow straphangers in a train station near Munich. According to reports, one person has been killed and at least 3 others injured.

Naturally, this is only news because of the nationality of the suspect, one who invoked religion before committing his heinous crimes. He’s been apprehended and will now resort to a fun filled life behind bars for the rest of his life–god willing.

Every other news story is ‘worst since 2009,’ yet the official numbers out of the government propaganda arms suggests we’re booming. What sort of Orwellian nonsense is going on here? How could all the actual, individual, data be bad, yet government GDP and payrolls keep showing zero signs of wear?

In the latest string of bad events to hit the economy, Sotheyby’s just presided over an embarrassing impressionist and modern art auction, where revenues came in well below estimates and 61% below last year. Moreover, 21 out of 62 works of art went unsold. It was crickets all day long at the famed auction house.

Sotheby’s sold $144.5 million of Impressionist and modern art, its worst showing at an evening sale in the category in New York since the 2009 recession and the latest evidence of a cooling auction market.

The auction capped a wild day that began with Sotheby’s reporting a larger-than-expected loss in the first quarter. The company’s shares fell as much as 8.5 percent before rebounding to a 6 percent gain on news that an unidentified investor may boost its stake to 10 percent.

Monday’s sale fell short of the presale target range of $164.8 million to $235.8 million and marked a 61 percent drop from a year earlier as 21 of the 62 lots went unsold. One bright spot was the the top lot — Auguste Rodin’s marble “L’Eternel Printemps,” which sold for $20.4 million including buyer’s premium, handily outperforming the presale estimate. A day earlier at Christie’s and Phillips, those auction houses also did a fraction of business compared with last May.

The high-end art market “appears to be going through a correction,” Taposh Bari, an analyst at Goldman Sachs Group Inc., said in a note last month.

Derain, Picasso

The biggest casualty at Sotheby’s was Andre Derain’s painting of a red sailboat, estimated at $15 million to $20 million. It didn’t get a single bid in the Upper East Side salesroom. Works by Pablo Picasso, Paul Gauguin and Pierre-Auguste Renoir also flopped.

Shares of BID have been under pressure for me more than a year now.

The big surge in iron ore prices is over. Prices have collapsed by more than 22% over the past two weeks. Tonight alone, prices are down by 6%.

In an otherwise sanguine Asian trade this evening, mining related stocks are getting the business, with many of the Australian based miners feeling the brunt of the sell off.

The reason for the sell off, allegedly, has to do with Chinese crackdown on speculation. They’re doing for iron what they did for Macau. My opinion is empirically simpler: the iron ore short squeeze has ended and now the unwind begins to equilibrium.

But, short term, he might take a brief stab at it, if not for the sake of ‘rank speculation.’

Once again, Gartman delves into conspiracy theories regarding the end of crude and how some mystical technology is going to render crude worthless. He even cites the new energy kingpin in The House of Saud as saying crude might be worth zero in the future. Really? I find it hard to believe he’d say that. That’s truly an outlandish statement, well deserving of at least 150 lashes upon the gibbet. What is he an energy minister for Saudi Arabia or propaganda minister for China’s strategic crude reserves?

Maybe both.

Nevertheless, Gartman weighs in on the pin action in crude.

Note: See how he’s always holding his hands up like that to form a pyramid? Illuminati confirmed.

I don’t even know where to begin with this one. Cramer goes off the deep end again with his Fibonacci horseshit, something that is actively ‘studied’ by one of his TheStreet.com employees. He cites her ‘homework’ and determines the market might be running up against some ‘natural numbers’, that coincide with pinecones, suggestive of a market devoid of steam.

Lastly, towards the end of his video, he proclaims the market is fresh out of cash, making it indelibly hard for stocks to climb in such an arduous and oppressive environment.

So much for the new bull run just beginning.