As people trickle back to the office after the holiday weekend, another NRF survey polling shoppers online reports that more than half of adults plan to shop at work.
Will these figures lift the stockmarket next week? Will there be an end-of-the-year rally to get more of the insiders' stocks sold? I hope so, because I'd love to be able to buy some inverse market proshares at lower prices.
Americans have been buying staggering quantities of goods from overseas using money lent by foreigners. For years, this dynamic has made for increasingly lopsided terms of trade: Last year, American imports outstripped exports by $764 billion, with foreigners stepping in to cover the difference.
Economists have long intoned that somehow, some day, the United States will be forced to settle up and stop depending upon the largess of foreigners. The basic laws of economics say imbalances are eventually balanced. Some have warned of a worst-case scenario where the foreigners holding American debt get spooked that the value of the dollar is about to plummet and dump the currency in a self-fulfilling prophesy.
This could be a banner year, consumer credit is still really loose. I think there will be a lag as consumers realize that they cant go back to the heloc to pay off this years cc binge. We could see this hit cc payment around feb.
Also, shopping calms the nerves of many consumers. They will tap out cc's and get new ones to feel good rather than confront thier financial problems.
As far as the stock market, it is getting harder to pump up, the last fed cut did not work, we will see what happens with this news and the next fed meeting.
I am dumping my Jan puts in case we get another pop up, if we do fine, I will short it again.
From the holiday spending good news is bad news Dept.: ANY INCREASES IN RETAIL SPENDING OVER THE POST-THANKSGIVING HOLIDAY IS ANOTHER NAIL IN THE COFFIN OF MORE DEBT-DRUNKEN U.S. CONSUMERS FALLING FURTHER BEHIND IN THEIR MORTGAGE, CREDIT CARD, AND AUTO LOAN PAYMENTS AND PUSHING THE US ECONOMY INTO AN EVEN DEEPER RECESSION STRAIGHT AHEAD....IMO
Looking for the FRB stats on credit around the end of the first week of December for November...if it is anything at all like September stats consumers are already tapped out.
It is based on a telephone survey of 2395 adults. From that, they extrapolate the behavior of 226 million adult Americans.
People self-report how much they spent. I went shopping today, I can't tell you exactly how much I spent. Included in these figures is the money people PLANNED to spend on Sunday (survey done Saturday).
10% of the shoppers did their "holiday shopping" in a grocery store.
Realize that the National Retail Federation is the cheerleader for holiday shopping, much as the National Association of Realtors is the cheerleader for housing. It's always the best time to do your holiday shopping, just like it's always a great time to buy a house.
Do people read or do people read ? That survey tells you people spent LESS, 3.5% LESS than last year - tack on inflation by crudely adding it on and are we are talking of a 3.5% + 3.5% inflation = 7% DECLINE in real spending, based on that survey.
The rest of the stuff, 4.8% more shoppers, 14.8% up on 2005 is usual "lipstick on a pig" crap that an industry organization has to do - kinda like those NAR headlines.
Not sure we make any inferences from traffic patterns this year as open hours from this year to last year are not an apples to apples comparison. Many stores fiddled with their hours - opening earlier, staying open later, etc.
I live two blocks from a high-end shopping district -- many specialty stores, few chain outlets. This weekend, even the rich are looking for bargains: flocking to a high-end dealer in artisan-made jewelry for their 30-60 percent-off retirement sale. Lexi as far as the eye could see. Otherwise -- not so many in the shops as in the past. A lot of people on the street; but not so many carrying shopping bags.
Compared to last year, about 5% of customers are further along their holiday shopping.
>
About what percent of your total holiday shopping have you completed thus far?
2007 2006
10% or less 43.4% 49.2%
25% 16.9% 12.9%
50% 16.1% 12.7%
75% 15.4% 16.6%
100% 8.2% 8.6%
"That survey tells you people spent LESS, 3.5% LESS than last year - tack on inflation by crudely adding it on and are we are talking of a 3.5% + 3.5% inflation = 7% DECLINE in real spending, based on that survey."
Take whatever deflator you want and that is YoY negative in real terms...
Stir in a dollop of conjecture on how much demand was pulled forward to generate that traffic increase, throw in some confidence intervals on the estimated parameters and things remain clear as mud!
Did my shopping today at BJ's, Target and Circuit City. At BJ's, for the first time ever, I rolled right up to the register without a wait. Same thing at Target, whose crowd seemed like a typical Sunday. At Circuit City, two different salespeople in the auto audio asked if they could help us (!). I remarked on the lack of traffic to the salesman. He said Friday and Saturday had been busier, but not as busy as in past years.
More people came to the stores. So, I guess we moved more units, right? Let's here how we sold more stuff than last year. Anyone? Bueller? Are you telling me all we did is move less units but we charged more for them?
Today I had to go to home depot to wrap up an apartment I'm redoing. I've easily spent $30K at Home Depot in the last 5 years on my apartment buildings so I'm often in there 3 times a week. I was expecting some mad rush on a Sunday (normally i like to hit HD and Lowes on weekdays to avoid the 9 to 5'ers). It was empty. On to the brand new Lowes. Empty. Target. Normal.
This time in 2005 gas was 2.11 a gallon. Now its more like 3.11.
What Allen says. Someday this Elmo is going to tickle us.
Saturday night at Target was Pretty Darn Quiet, and the people we saw were buying essentials (well, household goods at least) and not gifts. Typical Sat night at the Targ.
Meme to watch this holiday season:
"Everyone already has an HDTV, so consumer spend is down a bit."
That said, much as I would like (bitter renter style) to believe we will see strong signs of consumer-recession this holiday season, it seems highly unlikely. The lag b/w the housing issues and current spend is simply too large, and too many people at the high end haven't even begun to feel any pain yet.
I expect that we will see a strong second half of the holiday buying season, maybe down 1-3% max. After xmas will be very strong as people look for "bargains" to satisfy their guilt.
Credit card offers in my mailbox increased this month, I imagine they did for many. Plenty of debt to fuel another holiday season and prolong the inevitable.
I don't trust the #s until everything is said and done. It could be Americans are more tired this year, tired of shopping, putting off their shopping until later, discouraged by the 4 a.m. opening signs that they know they'll never get to in time, suspicious of the "great sale" slogans, etc. I know what I plan to purchase for Christmas presents, and I'm in no rush to beat a million people out there at 4 a.m. Forget it. I also don't relish competing for 10 items in stock at great prices, bait and switch tactics, etc.
Maybe, just maybe, Americans are tired of consumerism and materialism and plan to spend their Christmas singing with the Who's this year, holding hands in a big circle around their Christmas feasts, and not worrying about all the "stuff."
Don't forget travel. Not to make too many excuses for the data, but more people traveled this year for Turkey Day , which isn't especially conducive to traditional retail buying, but it consistent with lots of looking.
Maybe, just maybe, Americans are tired of consumerism and materialism and plan to spend their Christmas singing with the Who's this year, holding hands in a big circle around their Christmas feasts, and not worrying about all the "stuff."
Not so sure on the 'surge' story for travel - watched a clip on MSNBC this morning, 5 minute wait to clear security at that time/terminal - keen to see load numbers and passenger mile stats for the airlines.
The only money I spent since Thursday was on over-roasted coffee. Yesterday the spousal unit shopped for some decorations for her garden club's holiday party and some clothes at Talbot's and that's about it.
I am unlike most observers, as I fully expect blow out sales this holiday. For a consumer led recession to happen, the consumer has to know they have to stop spending. Joe six pack still has access to all kinds of credit lines, and that $4000 plasma TV financed over 10 years is not that much on a per month basis. The sad thing is when you finance everything right down to your gas and groceries, you are commiting all your income now and all increases later on to servicing escalating debt. The consumer is priced to perfection in this way. While it is a dumb way to go through life, it does support high levels of consumption!
Strictly anecdotal, of course: I went to the local Walmart with my daughter on Friday at 10am just for a look-see. I was very surprised to see the parking lot only 2/3 full (about like on most any holiday weekend), only half the shoppers had a few gift type things in their carts, the rest had stuff like bottled water and humidifiers. There was a large stack of those HDTV's that they supposedly had on sale still available.
This is a depressed area (upstate central NY) but this was the skimpiest Black Friday crowd I've seen there in years. We are certainly limiting our spending, and most of those I know express the same. A lot of people I chat with were really turned off by the Christmas stuff out in mid-October and what they see as excessive commercialism.
The key metric is how much stuff stores are selling at full price. If consumers are hunting for bargains and loss leaders, the stores aren't making money, and the manufacturers probably won't make money either.
Early sales are a related metric. When people buy presents early, they tend to continue buying presents throughout the season (even when they say that they're done). Early purchasers also tend to pay full price more. The longer stock sits in the stores, the more retailers get nervous and start discounting.
went to good friend's house on Friday night. he had a new flat panel plasma TV or whatever.
He was simply accompanying a friend who was going to get that TV. But he said "well when I got there it was 2 years of interest free payments... 2 years!!! I had to get it"
I posted in the "Merrill's Rosenberg: Recession" thread rather late in the game - reposting here as it fits in with this topic a little better.
There was an article in a local paper today about YOY changes in sales tax revenue which represents 40% of the local budget. This is for Nassau County - arguably one of the wealthier in the nation and land of conspicuous consumption.
Anyway - through month end Sept the increase is only .9% over last year.
Last year $USD was approx 85. Now it's approx 75 -- 12% less.
Sales would have to be UP over 13% just to be even with last year in value of FRNs spent.
According to this, value of sales are down 15% from last year.
But, sales are up 14.8% from 2005? In 2005 $USD was approx 92. USD is worth about 18.5% less than in Nov/2005. So, for 2007 sales to even equal 2005 sales in value, they would have to be up almost 23%!
Actually, sales (in FRN value) are DOWN from 2005.
"Will these figures lift the stockmarket next week? Will there be an end-of-the-year rally to get more of the insiders' stocks sold?"
Interesting postulation but factually incorrect. There is a site called insiderscore.com. They collect all the insider transaction data and filter it in an attempt to separate real insider buying and selling from options related purchases and sales and other effects. they produce a market indicator which is a compilation of insider 'attitudes' as reflected by their purchases and sales. at the moment, corporate insiders are about as bullish as they were at the july/august lows, which were some of the most bullish readings over the past few years.
I'm with ploeg.
I think people went out and bought the bargains. I suspect that those items listed at full retail price did very poorly. I'm of the impression that buying this year is very targeted towards heavily discounted items plus buying the same number of items that are less expensive - i.e. buying the $20 toy rather than the $30 toy.
One should remember that Thanksgiving came as early as possible this year. That means there are 5 full weekends between Thanksgiving and Christmas, followed by Christmas Eve on a Monday (therefore effectively a holiday). This is a calendar that is as helpful to holiday season sales as it's possible to be. One day's sales, one weekend's sales, aren't going to be as determinant as in years with a more compressed holiday season.
here's my take on traffic at the stores this weekend. i live in northern NJ. from fri through sun the walmart near me was pretty packed. not no parking spaces packed but i'd say a good 70% full. note i live near many lower income towns so this doesn't surprise me. also fairly crowded were TJ Maxx, Marshalls and Home Goods. Target had the usual traffic and both Home Depot and Lowes actually seemed to have less traffic then usual. The Barnes and Noble parking lot was fairly full but I didn't see much buying. All in all it seems at least in my neck of the woods the discount chains are seeing more foot traffic, home improvement less and everything else about the same meaning overall traffic for black friday weekend is down.
speaking of sales tax, if you're in the market for a flat panel check out amazon.com they seem to have the best prices around plus many are free shipping and no sales tax. i bought a 40" at costco 2 months ago and they have a 3 month return policy and already the one i bought is $150 cheaper. i'll wait a few more weeks right up until christmas when i expect the bargains to pick up then return the one i got and order from amazon.com. probably save $300-$350 in all.
Waiting until the end for the bulk of Christmas shopping myself, we will all see some better numbers very soon and my gut is that there are going to be some VERY sweaty retailers out there and the folks who bought this weekend bought at the top so to speak...
in regards to the flat screen, i paid $1699 + 7% sales tax (or $1819) on october 1st. amazon had the same set for $1500 + free shipping and no sales tax on black friday. today it just dropped $50 to $1450 for a total savings of $369 if i bought today. i'll wait some more.
A Californian hedge fund has made more than 1,000 per cent return this year by betting against US subprime home loans, making it one of the worlds best-performing funds of all time.
Lahde Capital, set up in Santa Monica last year by Andrew Lahde, last week passed the 1,000 per cent mark, after fees, following the latest leg of the credit market turmoil. The fall in the value of subprime-linked securities has boosted a group of funds which spotted the problems in advance.
The decision to use derivatives to short, or bet against, low-quality US home loans taken by a select group of hedge funds last year appears to have become the most profitable single trade of all time, making well over $20bn in total so far this year. John Paulsons New York-based Paulson & Co, the biggest of the group with $28bn under management, is said by investors to have made $12bn profit from the trade already.
However, Mr Lahde, whose fund is one of the smallest specialists shorting subprime, has now begun to return money to investors, telling them in a letter: The risk/return characteristics are far less attractive than in the past.
In his letter, Mr Lahde said he expected the collapse in value of subprime mortgage-linked securities to be repeated for bonds backed by commercial property loans in a deep recession which he also predicts.
Our entire banking system is a complete disaster, he wrote. In my opinion, nearly every major bank would be insolvent if they marked their assets to market. He also said he would be putting some of his own profits into gold and other precious metals.
On Tuesday, 11/27 FDIC's Quarterly Banking Profile for 3Q is expected to be made public.
Economist - Bank Capital Tightening the Safety Belt: Premium content | Economist.com
By 4 a.m. yesterday, Kinsella had rung up nearly $2,000 in Christmas presents and winter clothes, including a $79 black leather jacket at Guess that she estimated would cost more than $250 in Ireland.
"The bargains for us are so great," said Kinsella, who paid $1,000 for a flight and hotel but expects to save even more on purchases here.
We've infected the world.
It started as rioting. But right from the beginning you knew this was different. Because it was happening in small villages, market towns. And then it wasn't on the TV any more. It was in the street outside. It was coming in through your windows. It was a virus. An infection. - Selena, 28 Days Later, 2002
It all makes sense. They're executing code red. Step 1: Kill the infected. Step 2: Containment. If containment fails, then Step 3: Extermination. - Scarlet, 28 Weeks Later, 2007
It started with the death of the subprime. We better hope "containment" succeeds, because the next step looks pretty bad.
Whew. Just reviewed Roubini's 11/25 post and it is truly foreboding. "Soon enough even some medium size banks that are rotten and sharply exposed to mortgages may experience runs, even if these banks may - unlike the former non-bank financial institutions - have access to the Fed lender of last resort support. Since financial disintermediation and securitization has brought much of financial intermediation outside of the banking system we now face the mess of possible runs against a wide range of financial institutions that do not have access to the central banks' lender of last resort support." Time for more J&B... RGE - Liquidity and Credit Crunch in Financial Markets is Back to Summer Peaks, Only Much Worse and More Dangerous
Shopping...I have spent 20+ years working in and around consumer products and retailing. I always go shopping on this weekend. Not to buy but to watch.
I am very surprised and the volume and the optimism.
I often sit outside mall doors counting patrons and shopping bags. I never am interested in the price-point, or items, or volume. I simply count people and shopping bags.
This year, on several visits to several locations, the count was the same - for every 5 shoppers there were three shopping bags.
These are the same counts I have seen over the last few years. Shoppers are not shy. They are buying.
This - I will completely admit - flies in face of what I was expecting.
This completely flies in the face of what I was expecting (same as 1980ish) where there were one shopping bag for every five people.
Who the heck is going to go to the mall at 4AM and not buy something? The whole thing is nuts and this is what we use as the ultimate yardstick of the consumer?
Also, given the incredible debt situation people are in, why would we expect it to change all of a sudden when some banks have problems? If your house is in foreclosure and all looks bad, why not charge it all up now before declaring bk?
Barely - I didn't shop (drank some and ate even more and worked on the home some, etc.)... BUT my son & his girl friend are both wage slaves at Mall of America... they work at different stores and even in completely different sectors. I talked to them last night and they said folks were buying at least as much as last year - it was a zoo.
This could be a premature reading, that biz could slow over the next couple weeks, but it hasn't happened yet.
Oh the other thing they said was folks were NOT only bargain hunting. From what they said it was a pretty typical start to the holiday season.
NIKKEI up a little over 1% and dolla hanging around 108. What's with the Japanese?
Are they pinning their hopes on O-Joe's crack bull market analysis? Naaa, they simply take their cue from the previos US session. Japan's export economy has some grim reality to come to grips with...
I just put up a chart showing our overleveraged society if anyone is interested.
Tangible assets, financial assets, and liabilities are all well above their individual inflation adjusted exponential long-term averages (rather unprecedented). I also argue that the market activity lately is compatible with all three of them reverting to the mean (falling home prices relative to the CPI, falling stock prices relative to the CPI, and a credit crunch).
How many of those shoppers lining up at 4 AM are actually Ebay sellers? If they are thinking they are getting 50% discounts, they may as well try to sell it on Ebay for some profit. Otherwise the whole scene looks quite irrational.
I am not sure how all that is calculated. Kentucky windage comes to mind.
However, I had to go to Best Buy yesterday to replace a hard disk gone bad Thursday.
Store was empty and so was parking lot and checkout.
Why I asked myself?
This was a relatively new store, not too far from other Best Buys.
So I am not sure how all that and cannibalization is baked into the equation. And then, even within Best Buy, and the hundreds of identical other retial outlets located a few miles from each other, if sales are up a couple percent but their overhead is way up via more stores, how does that compute.
Finally, I succumbed to a new IPOD--I cannot recall when Apple discounted IPOD. But Best Buy was offering a $20 gift cards, and Frys was offering a free charger withthe IPOD.
So someone is taking a 10% hit on the new IPOD.
And I have to get to Target--just to see if any more than 6 of the 30 check out lanes are in use.
crispy&cole, the friend that I've quoted a few times in the ABX threads is invested in the Lahde hedge fund (and the commercial fund too). I mentioned earlier that he took a little money off the table (what's 1000% between friends?). It started out as a small position for him - about 5% of his investments, and it become a pretty large position! - a nice problem to have.
Due to an unfrotunately timed move I was in all the local malls in the SFV and Simi/Conejo valley areas on Saturday and Sunday.
Plenty of parking, malls were not crowded at all and of the people there few were carrying bags. So unless everyone just did their buying on Friday I would say locally in my area the selling weekend was a bust.
Based on recent sales tax receipts it is difficult to imagine a reversal in public sentiment that would lead to positive End-of-Year retail sales. One fly in the ointment is possibly sales-tax-free internet purchases.
October 2007 Sales Tax Revenue Reports
(compared with October 2006)
Raw/Adjusted for Inflation (2.5%)and state population change
STATE
California down 9.1% / down 12.4%
Georgia down 9.9%/ down 14.9%
Texas up 3.1%/ down 1.9%
Florida down 5.3%/ down 9.6%
Illinois - down 0.5%/ down 3.5%
Arizona - up 3.2%/ down 2.8%
Massachusetts down 0.3%/ down 2.9%
Just to play devil's advocate, could some of this be because Thanksgiving is so EARLY this year? With Christmas almost five weeks away, people just don't feel the NEED to purchase yet.
again, completely anecdotal, but i saw something this weekend i've never seen in 5 years in San Francisco...a 3/4 full container ship steaming into port. I spend a lot of time on the water and biking/hiking near the bay, and these ships are always stacked as high as their bridge visibility will allow. the one i saw Friday multiple stacks container free down to the deck line. seems like this single observation jibes with other's container count reports.
Here's more anecdotal shopping evidence. My wife and I ventured out on Sunday to do grocery and drugstore shopping. The stores share a parking lot with a small mall, and we were sort of dreading the expected hordes of people.
The parking lot was not all that full. It was busier than normal, but not "weekend after Thanksgiving" busy. We decided to stop by Fry's and Barnes and Noble while we were out. The local Fry's is always a madhouse, but on Sunday it was actually less busy than I've seen it in the past... I only had to wait behind one person in line. Barnes and Noble wasn't too busy at all. About right for a typical brisk weekend day... not a holiday shopping rush.
As for purchases, I bought a book for myself at B&N, and my wife browsed calendars for gifts, which she will buy online instead of at the brick and mortar store.
This is in a relatively affluent neighborhood in coastal LA county.
As people trickle back to the office after the holiday weekend, another NRF survey polling shoppers online reports that more than half of adults plan to shop at work.
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
Everyone of those in that group need to be fired.
Will these figures lift the stockmarket next week? Will there be an end-of-the-year rally to get more of the insiders' stocks sold? I hope so, because I'd love to be able to buy some inverse market proshares at lower prices.
My bad. I went into Target and bought a half gallon of milk and a pack of gum.
Americans have been buying staggering quantities of goods from overseas using money lent by foreigners. For years, this dynamic has made for increasingly lopsided terms of trade: Last year, American imports outstripped exports by $764 billion, with foreigners stepping in to cover the difference.
Trying to Guess What Happens Next
GO FIGURE; Trying to Guess What Happens Next - NY Times
Economists have long intoned that somehow, some day, the United States will be forced to settle up and stop depending upon the largess of foreigners. The basic laws of economics say imbalances are eventually balanced. Some have warned of a worst-case scenario where the foreigners holding American debt get spooked that the value of the dollar is about to plummet and dump the currency in a self-fulfilling prophesy.
Is NRF expecting the 4.8% who shopped early this year to do more lifting in Dec? IMO, most of those 4.8% are done shopping for this season.
This could be a banner year, consumer credit is still really loose. I think there will be a lag as consumers realize that they cant go back to the heloc to pay off this years cc binge. We could see this hit cc payment around feb.
Also, shopping calms the nerves of many consumers. They will tap out cc's and get new ones to feel good rather than confront thier financial problems.
As far as the stock market, it is getting harder to pump up, the last fed cut did not work, we will see what happens with this news and the next fed meeting.
I am dumping my Jan puts in case we get another pop up, if we do fine, I will short it again.
From the holiday spending good news is bad news Dept.: ANY INCREASES IN RETAIL SPENDING OVER THE POST-THANKSGIVING HOLIDAY IS ANOTHER NAIL IN THE COFFIN OF MORE DEBT-DRUNKEN U.S. CONSUMERS FALLING FURTHER BEHIND IN THEIR MORTGAGE, CREDIT CARD, AND AUTO LOAN PAYMENTS AND PUSHING THE US ECONOMY INTO AN EVEN DEEPER RECESSION STRAIGHT AHEAD....IMO
CR,
Does 4.8% represent increase in foot traffic or increase in purchase?
Looking for the FRB stats on credit around the end of the first week of December for November...if it is anything at all like September stats consumers are already tapped out.
Again, the RE downturn and credit confusion fail to follow thru to the general economy. No recession.
O-Joe
Optimistic Joe sorry fella....your post rings hollow...
A few things to keep in mind about this report:
It is based on a telephone survey of 2395 adults. From that, they extrapolate the behavior of 226 million adult Americans.
People self-report how much they spent. I went shopping today, I can't tell you exactly how much I spent. Included in these figures is the money people PLANNED to spend on Sunday (survey done Saturday).
10% of the shoppers did their "holiday shopping" in a grocery store.
Realize that the National Retail Federation is the cheerleader for holiday shopping, much as the National Association of Realtors is the cheerleader for housing. It's always the best time to do your holiday shopping, just like it's always a great time to buy a house.
In both cases, caveat emptor.
Do people read or do people read ? That survey tells you people spent LESS, 3.5% LESS than last year - tack on inflation by crudely adding it on and are we are talking of a 3.5% + 3.5% inflation = 7% DECLINE in real spending, based on that survey.
The rest of the stuff, 4.8% more shoppers, 14.8% up on 2005 is usual "lipstick on a pig" crap that an industry organization has to do - kinda like those NAR headlines.
-K
Math skillz are mad!
Thanks K
Not sure we make any inferences from traffic patterns this year as open hours from this year to last year are not an apples to apples comparison. Many stores fiddled with their hours - opening earlier, staying open later, etc.
Sales are down from last year, but they still managed to work the phrase "incredibly strong" into their report?
NRF, I'd like you to meet my good friend, NAR.
I live two blocks from a high-end shopping district -- many specialty stores, few chain outlets. This weekend, even the rich are looking for bargains: flocking to a high-end dealer in artisan-made jewelry for their 30-60 percent-off retirement sale. Lexi as far as the eye could see. Otherwise -- not so many in the shops as in the past. A lot of people on the street; but not so many carrying shopping bags.
Compared to last year, about 5% of customers are further along their holiday shopping.
About what percent of your total holiday shopping have you completed thus far?
2007 2006
10% or less 43.4% 49.2%
25% 16.9% 12.9%
50% 16.1% 12.7%
75% 15.4% 16.6%
100% 8.2% 8.6%
http://www.nrf.com/modules.php?name=Documents&op=viewlive&sp_id=772
"Many stores fiddled with their hours - opening earlier, staying open later, etc."
Forgot to mention, for this reason, of course traffic was significantly higher this year...
"That survey tells you people spent LESS, 3.5% LESS than last year - tack on inflation by crudely adding it on and are we are talking of a 3.5% + 3.5% inflation = 7% DECLINE in real spending, based on that survey."
Bears repeating.
(No pun intended).
Bloomy got it right with their headline:
U.S. Consumers Spent Average of 3.5% Less on Shopping (Update4) - Bloomberg.com
Check this calc out all, let me see where my error(s) may be:
104.8% traffic * 96.5% spend = 101.1% YoY Black Friday (nominal)
Take whatever deflator you want and that is YoY negative in real terms...
Stir in a dollop of conjecture on how much demand was pulled forward to generate that traffic increase, throw in some confidence intervals on the estimated parameters and things remain clear as mud!
I went by Kohl's this morning at 9 and again past 10- parking lot was about on third filled at best- not impressive.
Did my shopping today at BJ's, Target and Circuit City. At BJ's, for the first time ever, I rolled right up to the register without a wait. Same thing at Target, whose crowd seemed like a typical Sunday. At Circuit City, two different salespeople in the auto audio asked if they could help us (!). I remarked on the lack of traffic to the salesman. He said Friday and Saturday had been busier, but not as busy as in past years.
Went to get my hair cut at the mall this afternoon. Should have brought my shovel it was dead as a door nail.
More people came to the stores. So, I guess we moved more units, right? Let's here how we sold more stuff than last year. Anyone? Bueller? Are you telling me all we did is move less units but we charged more for them?
Today I had to go to home depot to wrap up an apartment I'm redoing. I've easily spent $30K at Home Depot in the last 5 years on my apartment buildings so I'm often in there 3 times a week. I was expecting some mad rush on a Sunday (normally i like to hit HD and Lowes on weekdays to avoid the 9 to 5'ers). It was empty. On to the brand new Lowes. Empty. Target. Normal.
This time in 2005 gas was 2.11 a gallon. Now its more like 3.11.
What Allen says. Someday this Elmo is going to tickle us.
Saturday night at Target was Pretty Darn Quiet, and the people we saw were buying essentials (well, household goods at least) and not gifts. Typical Sat night at the Targ.
Meme to watch this holiday season:
"Everyone already has an HDTV, so consumer spend is down a bit."
That said, much as I would like (bitter renter style) to believe we will see strong signs of consumer-recession this holiday season, it seems highly unlikely. The lag b/w the housing issues and current spend is simply too large, and too many people at the high end haven't even begun to feel any pain yet.
I expect that we will see a strong second half of the holiday buying season, maybe down 1-3% max. After xmas will be very strong as people look for "bargains" to satisfy their guilt.
Credit card offers in my mailbox increased this month, I imagine they did for many. Plenty of debt to fuel another holiday season and prolong the inevitable.
The remaining sales for the rest of the year are virtually the same for 2007 versus 2006....
2007 2006
90 X 43.4=3906 90 X 49.2=4428
75 X 16.9 =1267 75 x 12.9=967
50 x 16.1=805 50 x 12.7=635
25 x 15.4=385 25 x 16.6=415
0 0
Remaining sales for 2007
6363 versus 6445
That's about 1% difference.
I don't trust the #s until everything is said and done. It could be Americans are more tired this year, tired of shopping, putting off their shopping until later, discouraged by the 4 a.m. opening signs that they know they'll never get to in time, suspicious of the "great sale" slogans, etc. I know what I plan to purchase for Christmas presents, and I'm in no rush to beat a million people out there at 4 a.m. Forget it. I also don't relish competing for 10 items in stock at great prices, bait and switch tactics, etc.
Maybe, just maybe, Americans are tired of consumerism and materialism and plan to spend their Christmas singing with the Who's this year, holding hands in a big circle around their Christmas feasts, and not worrying about all the "stuff."
It could happen.
Don't forget travel. Not to make too many excuses for the data, but more people traveled this year for Turkey Day , which isn't especially conducive to traditional retail buying, but it consistent with lots of looking.
I don't trust the #s until everything is said and done.
Then you are more trusting than me...
Outside Said:
Maybe, just maybe, Americans are tired of consumerism and materialism and plan to spend their Christmas singing with the Who's this year, holding hands in a big circle around their Christmas feasts, and not worrying about all the "stuff."
So you're thinking total economic collapse?
So you're thinking total economic collapse?
LOL! Queue up a little REM, End of the World...
So you're thinking total economic collapse?
Well, maybe if our hearts grow 3 sizes that day, we won't notice.
oak,
Not so sure on the 'surge' story for travel - watched a clip on MSNBC this morning, 5 minute wait to clear security at that time/terminal - keen to see load numbers and passenger mile stats for the airlines.
The only money I spent since Thursday was on over-roasted coffee. Yesterday the spousal unit shopped for some decorations for her garden club's holiday party and some clothes at Talbot's and that's about it.
energyecon,
When will we hear the miles traveled data I am curious about that?
On a more serious note, wait till the #s come in on CyberMonday. It could be consumers will buy more online than in trudging thru stores this year.
I am unlike most observers, as I fully expect blow out sales this holiday. For a consumer led recession to happen, the consumer has to know they have to stop spending. Joe six pack still has access to all kinds of credit lines, and that $4000 plasma TV financed over 10 years is not that much on a per month basis. The sad thing is when you finance everything right down to your gas and groceries, you are commiting all your income now and all increases later on to servicing escalating debt. The consumer is priced to perfection in this way. While it is a dumb way to go through life, it does support high levels of consumption!
Strictly anecdotal, of course: I went to the local Walmart with my daughter on Friday at 10am just for a look-see. I was very surprised to see the parking lot only 2/3 full (about like on most any holiday weekend), only half the shoppers had a few gift type things in their carts, the rest had stuff like bottled water and humidifiers. There was a large stack of those HDTV's that they supposedly had on sale still available.
This is a depressed area (upstate central NY) but this was the skimpiest Black Friday crowd I've seen there in years. We are certainly limiting our spending, and most of those I know express the same. A lot of people I chat with were really turned off by the Christmas stuff out in mid-October and what they see as excessive commercialism.
The key metric is how much stuff stores are selling at full price. If consumers are hunting for bargains and loss leaders, the stores aren't making money, and the manufacturers probably won't make money either.
Early sales are a related metric. When people buy presents early, they tend to continue buying presents throughout the season (even when they say that they're done). Early purchasers also tend to pay full price more. The longer stock sits in the stores, the more retailers get nervous and start discounting.
JJL:
I agree... there is still a lot of credit...
went to good friend's house on Friday night. he had a new flat panel plasma TV or whatever.
He was simply accompanying a friend who was going to get that TV. But he said "well when I got there it was 2 years of interest free payments... 2 years!!! I had to get it"
score one more victory for credit.
I posted in the "Merrill's Rosenberg: Recession" thread rather late in the game - reposting here as it fits in with this topic a little better.
There was an article in a local paper today about YOY changes in sales tax revenue which represents 40% of the local budget. This is for Nassau County - arguably one of the wealthier in the nation and land of conspicuous consumption.
Anyway - through month end Sept the increase is only .9% over last year.
For your reading pleasure
Story on sales tax revenue shortfalls
sk, it's even worse, no?
Last year $USD was approx 85. Now it's approx 75 -- 12% less.
Sales would have to be UP over 13% just to be even with last year in value of FRNs spent.
According to this, value of sales are down 15% from last year.
But, sales are up 14.8% from 2005? In 2005 $USD was approx 92. USD is worth about 18.5% less than in Nov/2005. So, for 2007 sales to even equal 2005 sales in value, they would have to be up almost 23%!
Actually, sales (in FRN value) are DOWN from 2005.
Chart:
$USD - SharpCharts Workbench : StockCharts.com
Best regards,
"Will these figures lift the stockmarket next week? Will there be an end-of-the-year rally to get more of the insiders' stocks sold?"
Interesting postulation but factually incorrect. There is a site called insiderscore.com. They collect all the insider transaction data and filter it in an attempt to separate real insider buying and selling from options related purchases and sales and other effects. they produce a market indicator which is a compilation of insider 'attitudes' as reflected by their purchases and sales. at the moment, corporate insiders are about as bullish as they were at the july/august lows, which were some of the most bullish readings over the past few years.
david_in_Ct
They were THAT bullish in July/August? Reminds me of a line in "A Random Walk Down Wall Street."
"I'd have been a wealthy man, but I knew too many vice-presidents."
"bottled water"
Almost as big a scam as no doc loans, People in this country are so unbelievably stupid I just can't help but laugh.
I'm with ploeg.
I think people went out and bought the bargains. I suspect that those items listed at full retail price did very poorly. I'm of the impression that buying this year is very targeted towards heavily discounted items plus buying the same number of items that are less expensive - i.e. buying the $20 toy rather than the $30 toy.
We'll find out soon enough....
One should remember that Thanksgiving came as early as possible this year. That means there are 5 full weekends between Thanksgiving and Christmas, followed by Christmas Eve on a Monday (therefore effectively a holiday). This is a calendar that is as helpful to holiday season sales as it's possible to be. One day's sales, one weekend's sales, aren't going to be as determinant as in years with a more compressed holiday season.
here's my take on traffic at the stores this weekend. i live in northern NJ. from fri through sun the walmart near me was pretty packed. not no parking spaces packed but i'd say a good 70% full. note i live near many lower income towns so this doesn't surprise me. also fairly crowded were TJ Maxx, Marshalls and Home Goods. Target had the usual traffic and both Home Depot and Lowes actually seemed to have less traffic then usual. The Barnes and Noble parking lot was fairly full but I didn't see much buying. All in all it seems at least in my neck of the woods the discount chains are seeing more foot traffic, home improvement less and everything else about the same meaning overall traffic for black friday weekend is down.
Off topic but...
Welcome to the dollar carry trade:
- Bloomberg.com
speaking of sales tax, if you're in the market for a flat panel check out amazon.com they seem to have the best prices around plus many are free shipping and no sales tax. i bought a 40" at costco 2 months ago and they have a 3 month return policy and already the one i bought is $150 cheaper. i'll wait a few more weeks right up until christmas when i expect the bargains to pick up then return the one i got and order from amazon.com. probably save $300-$350 in all.
Richard,
Waiting until the end for the bulk of Christmas shopping myself, we will all see some better numbers very soon and my gut is that there are going to be some VERY sweaty retailers out there and the folks who bought this weekend bought at the top so to speak...
in regards to the flat screen, i paid $1699 + 7% sales tax (or $1819) on october 1st. amazon had the same set for $1500 + free shipping and no sales tax on black friday. today it just dropped $50 to $1450 for a total savings of $369 if i bought today. i'll wait some more.
A Californian hedge fund has made more than 1,000 per cent return this year by betting against US subprime home loans, making it one of the worlds best-performing funds of all time.
Lahde Capital, set up in Santa Monica last year by Andrew Lahde, last week passed the 1,000 per cent mark, after fees, following the latest leg of the credit market turmoil. The fall in the value of subprime-linked securities has boosted a group of funds which spotted the problems in advance.
The decision to use derivatives to short, or bet against, low-quality US home loans taken by a select group of hedge funds last year appears to have become the most profitable single trade of all time, making well over $20bn in total so far this year. John Paulsons New York-based Paulson & Co, the biggest of the group with $28bn under management, is said by investors to have made $12bn profit from the trade already.
However, Mr Lahde, whose fund is one of the smallest specialists shorting subprime, has now begun to return money to investors, telling them in a letter: The risk/return characteristics are far less attractive than in the past.
In his letter, Mr Lahde said he expected the collapse in value of subprime mortgage-linked securities to be repeated for bonds backed by commercial property loans in a deep recession which he also predicts.
Our entire banking system is a complete disaster, he wrote. In my opinion, nearly every major bank would be insolvent if they marked their assets to market. He also said he would be putting some of his own profits into gold and other precious metals.
FT.com / Financials - 1000% hedge fund wins subprime bet
Okay which one of you is MR. Lahde!
I wonder who was on the other side of that trade? Goldman???
$100 Tonight?
7% decline by 12/08?
http://www.simmonsco-intl.com/files/BIOS%20Bermuda%20Talk.pdf
On Tuesday, 11/27 FDIC's Quarterly Banking Profile for 3Q is expected to be made public.
Economist - Bank Capital Tightening the Safety Belt:
Premium content | Economist.com
"bottled water"
Almost as big a scam as no doc loans, People in this country are so unbelievably stupid I just can't help but laugh.
Anonymous
How much more stupid must pepole in Germay be as we do not only never drink from the tap, but also heavily carbonated bottled water.
O-Joe
International Herald Tribune - With dollar low, U.S. is one big outlet
With dollar low, U.S. is one big outlet - The New York Times
FFDIC,
By 4 a.m. yesterday, Kinsella had rung up nearly $2,000 in Christmas presents and winter clothes, including a $79 black leather jacket at Guess that she estimated would cost more than $250 in Ireland.
"The bargains for us are so great," said Kinsella, who paid $1,000 for a flight and hotel but expects to save even more on purchases here.
We've infected the world.
It started as rioting. But right from the beginning you knew this was different. Because it was happening in small villages, market towns. And then it wasn't on the TV any more. It was in the street outside. It was coming in through your windows. It was a virus. An infection. - Selena, 28 Days Later, 2002
It all makes sense. They're executing code red. Step 1: Kill the infected. Step 2: Containment. If containment fails, then Step 3: Extermination. - Scarlet, 28 Weeks Later, 2007
It started with the death of the subprime. We better hope "containment" succeeds, because the next step looks pretty bad.
"Oh, crap!!" - Ben, $28 Trillion Later, 2008
"The bargains for us are so great," said Kinsella, who paid $1,000 for a flight and hotel but expects to save even more on purchases here.
Why don't they just fly to China and cut out the middleman?
Today's NATIONAL RETAIL FEDERATION (NRF) BS = Yesterday's NATIONAL ASSOCIATION OF HOMEBUILDERS (NAHB) BS........Don't believe the BOGUS propaganda.
Game is over, dudes. IMO
Whew. Just reviewed Roubini's 11/25 post and it is truly foreboding. "Soon enough even some medium size banks that are rotten and sharply exposed to mortgages may experience runs, even if these banks may - unlike the former non-bank financial institutions - have access to the Fed lender of last resort support. Since financial disintermediation and securitization has brought much of financial intermediation outside of the banking system we now face the mess of possible runs against a wide range of financial institutions that do not have access to the central banks' lender of last resort support." Time for more J&B...
RGE - Liquidity and Credit Crunch in Financial Markets is Back to Summer Peaks, Only Much Worse and More Dangerous
Interesting take on why decoupling will not happen.
U.S. Patents Show Asian Decoupling Will Be Slow: Andy Mukherjee - Bloomberg.com
Japan and futures up on retail sales from the weekend. I guess 3.5% down looks good to some people.
Shopping...I have spent 20+ years working in and around consumer products and retailing. I always go shopping on this weekend. Not to buy but to watch.
I am very surprised and the volume and the optimism.
I often sit outside mall doors counting patrons and shopping bags. I never am interested in the price-point, or items, or volume. I simply count people and shopping bags.
This year, on several visits to several locations, the count was the same - for every 5 shoppers there were three shopping bags.
These are the same counts I have seen over the last few years. Shoppers are not shy. They are buying.
This - I will completely admit - flies in face of what I was expecting.
This completely flies in the face of what I was expecting (same as 1980ish) where there were one shopping bag for every five people.
Who the heck is going to go to the mall at 4AM and not buy something? The whole thing is nuts and this is what we use as the ultimate yardstick of the consumer?
Also, given the incredible debt situation people are in, why would we expect it to change all of a sudden when some banks have problems? If your house is in foreclosure and all looks bad, why not charge it all up now before declaring bk?
Barely - I didn't shop (drank some and ate even more and worked on the home some, etc.)... BUT my son & his girl friend are both wage slaves at Mall of America... they work at different stores and even in completely different sectors. I talked to them last night and they said folks were buying at least as much as last year - it was a zoo.
This could be a premature reading, that biz could slow over the next couple weeks, but it hasn't happened yet.
Oh the other thing they said was folks were NOT only bargain hunting. From what they said it was a pretty typical start to the holiday season.
Not science but confirms your 'sampling'.
NIKKEI up a little over 1% and dolla hanging around 108. What's with the Japanese?
Are they pinning their hopes on O-Joe's crack bull market analysis? Naaa, they simply take their cue from the previos US session. Japan's export economy has some grim reality to come to grips with...
I just put up a chart showing our overleveraged society if anyone is interested.
Tangible assets, financial assets, and liabilities are all well above their individual inflation adjusted exponential long-term averages (rather unprecedented). I also argue that the market activity lately is compatible with all three of them reverting to the mean (falling home prices relative to the CPI, falling stock prices relative to the CPI, and a credit crunch).
"How much more stupid must people in Germany be as we do not only never drink from the tap, but also heavily carbonated bottled water."
They aren't anymore stupid but at least a country full of drunks have a reason for being that way. Fixed your spelling too:-)
\t"bottled water"
Almost as big a scam as no doc loans, People in this country are so unbelievably stupid I just can't help but laugh.
Sometimes it doesn't hurt to have a case from Costco kicking around. From about a year ago...
CBC News - British Columbia - Greater Vancouver boil-water advisory lifted
How many of those shoppers lining up at 4 AM are actually Ebay sellers? If they are thinking they are getting 50% discounts, they may as well try to sell it on Ebay for some profit. Otherwise the whole scene looks quite irrational.
We need more < a href=_http://uk.youtube.com/watch?v=jCIp7eo4MvY>eBay song
I just saw an advertisement for an electric martini shaker...
can Armageddon be far behind?
Nice round-up of BBC graphics on sub-prime:
BBC NEWS | Business | The US sub-prime crisis in graphics
I hope all those rich Irish carpenters who are supposedly bailing out the nyc condo market take a good long look at this page.
On retail store sales and traffic:
I am not sure how all that is calculated. Kentucky windage comes to mind.
However, I had to go to Best Buy yesterday to replace a hard disk gone bad Thursday.
Store was empty and so was parking lot and checkout.
Why I asked myself?
This was a relatively new store, not too far from other Best Buys.
So I am not sure how all that and cannibalization is baked into the equation. And then, even within Best Buy, and the hundreds of identical other retial outlets located a few miles from each other, if sales are up a couple percent but their overhead is way up via more stores, how does that compute.
Finally, I succumbed to a new IPOD--I cannot recall when Apple discounted IPOD. But Best Buy was offering a $20 gift cards, and Frys was offering a free charger withthe IPOD.
So someone is taking a 10% hit on the new IPOD.
And I have to get to Target--just to see if any more than 6 of the 30 check out lanes are in use.
tranches of love,
I just saw an advertisement for an electric martini shaker...
can Armageddon be far behind?
Armageddon strikes when that electric martini shaker is bundled with the following.
12V Wind Up - Crank Cell Phone & Device Charger
Justin,
That's a "nice" collection of charts.
crispy&cole, the friend that I've quoted a few times in the ABX threads is invested in the Lahde hedge fund (and the commercial fund too). I mentioned earlier that he took a little money off the table (what's 1000% between friends?). It started out as a small position for him - about 5% of his investments, and it become a pretty large position! - a nice problem to have.
Best to all.
Due to an unfrotunately timed move I was in all the local malls in the SFV and Simi/Conejo valley areas on Saturday and Sunday.
Plenty of parking, malls were not crowded at all and of the people there few were carrying bags. So unless everyone just did their buying on Friday I would say locally in my area the selling weekend was a bust.
Asian markets may be up big, because China just announced they are throwing big money into Japanese market.
it became a pretty large position
Heh. Less than 35%? I'd hate to think that the rest of his portfolio actually made money when he hit that homerun!
stares at vanguard CA tax exempt money market
I'm such a weenie.
Cheers,
prat
prat: I don't if mine is any better; Ginnie Mae based money market fund....
don't know if
Based on recent sales tax receipts it is difficult to imagine a reversal in public sentiment that would lead to positive End-of-Year retail sales. One fly in the ointment is possibly sales-tax-free internet purchases.
October 2007 Sales Tax Revenue Reports
(compared with October 2006)
Raw/Adjusted for Inflation (2.5%)and state population change
STATE
California down 9.1% / down 12.4%
Georgia down 9.9%/ down 14.9%
Texas up 3.1%/ down 1.9%
Florida down 5.3%/ down 9.6%
Illinois - down 0.5%/ down 3.5%
Arizona - up 3.2%/ down 2.8%
Massachusetts down 0.3%/ down 2.9%
Only one in 12 consumers (8.2%) has finished their holiday shopping.
I finished all of mine many, many years ago.
Just to play devil's advocate, could some of this be because Thanksgiving is so EARLY this year? With Christmas almost five weeks away, people just don't feel the NEED to purchase yet.
again, completely anecdotal, but i saw something this weekend i've never seen in 5 years in San Francisco...a 3/4 full container ship steaming into port. I spend a lot of time on the water and biking/hiking near the bay, and these ships are always stacked as high as their bridge visibility will allow. the one i saw Friday multiple stacks container free down to the deck line. seems like this single observation jibes with other's container count reports.
Bad Christmas seasons have been predicted for 7 years without one happening.
Here's more anecdotal shopping evidence. My wife and I ventured out on Sunday to do grocery and drugstore shopping. The stores share a parking lot with a small mall, and we were sort of dreading the expected hordes of people.
The parking lot was not all that full. It was busier than normal, but not "weekend after Thanksgiving" busy. We decided to stop by Fry's and Barnes and Noble while we were out. The local Fry's is always a madhouse, but on Sunday it was actually less busy than I've seen it in the past... I only had to wait behind one person in line. Barnes and Noble wasn't too busy at all. About right for a typical brisk weekend day... not a holiday shopping rush.
As for purchases, I bought a book for myself at B&N, and my wife browsed calendars for gifts, which she will buy online instead of at the brick and mortar store.
This is in a relatively affluent neighborhood in coastal LA county.
OT
Has today's close in the stock market portend the Dow Theory sell signal?
Thanks