Online Retail is Up - Is Amazon Now A Short?

Amazon has skyrocketed due to clear indications that online will be the big retail win this season. Fedex reported a huge upside surprise in earnings, driven mostly by international shipments - but also by small packages, meaning online retail. Yet this chart shows irrational exuberance in Amazon.  The author has been bashing Amazon for months, to his chagrin so far, but the chart shows how ridiculous the price has become.

This might be best played at the end of the Santa Rally, which typically peaks in early January after the holiday sales season, particularly after the bargain days post Xmas. (Recall I have been saying that retail will be late and discount-driven this year.) 

Compounding the pending risks to Amazon are a surprising and disappointing report today that consumer credit is down again. How can retail sustain when consumers lack buying power? There even was a recent story of a surprising amount of cash used at retail (I lost track of the link). Stretching in the rainy day fund to keep the kids happy? 

The other risk is a downside surprise in unemployment in January, which will be reported in early February. Seasonal adjustments made the 10.2% blip, and also made the 10% drop that has so spooked markets the last few days. These adjustments now flip the other way after the temp worker retail sales season ends. Underneath the unemployment rate is unemployment reality. This chart from the Big Picture shows that ALL of the increase have been in government-related sectors. the private sector is still in the dumpster.

 

Comments

[Hockthefarm]

Yelnick:

Dent today is saying that the Dow is a buy at 10,200 for a 5 to 10 % run. Also figures that gold will go to new highs.

So your timing may be right on.

Hock

[Hockthefarm]

Comments from Andy Xie.

Over the years this guy has been pretty good imo:

http://tinyurl.com/y9qvp8u

Hock

[TC]

A family member of mine drives a truck for FDX.
He has seen a tremendous increase in parcels being shipped by Amazon. The same can be said of Apple iPhones. However, one cannot simply assume that FDX is making a ton of money off these parcels... they may have cut themselves an aggressive deal with Fred Smith.