Monday, March 29, 2010

Consumer & Retail $TAP $ADM

Consumer & Retail

Consumer stocks weak with Retail underperforming the tape and one of the few SP sub-sectors trading down. Weakness today being attributed to 1) lack of upcoming catalysts until we get closer to March SSS, 2) light volumes, 3) high expectations heading into comps and a negative catalyst expected in April (which will look light due to Easter shift), 4) the spike in crude (+3%) and the 5) lower reading on personal income (flat vs. St. +0.1%). Net net, no great single explanation for the weakness today.

Within retail, DG outperforming ahead of earnings tomorrow, TLB +8% after extending its exchange offer by three days as it tries to garner the minimum number of warrants to complete its merger with BPW (DJ) and FL +1.2% after a positive mention in Barron's this weekend. Underperformers today include RSH (gives back some of its recent rally after Barron's was cautious on a potential take-out) and GPS (cautious sell-side comments).

In the Staples side, underperformers include TAP (dn 2%), LO (dn 0.5% vs. peers +1%) and K (undperferforming Food space but has rallied back to the flat-line) on sell-side downgrades while ADM outperforms on an upgrade. SFD shares rallied last in trading on Friday and opened higher this morning on a USDA Hog report but sold-off through the morning and is now back to the flat-line.

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