Wednesday, November 20, 2013

Holiday Sales Expected To Be Dismal This Year

Gallup released a poll last week that showed consumers expect to spend 10% less this year than they did last year.  In fact, it will be only second time year over year holiday spending per person declines in the last 10 years.  The other time being 2008.

I have written an analysis of what I expect for the upcoming holiday season in terms of spending and I believe it may actually be worse than even bearish analysts expect.  You can read my article here:  Expect Disappointing Holiday Sales This Year

Obamacare is going to put a huge dent in per capita real disposable income going forward and, as we've seen even by the Government's own data - the actual number of people with jobs as percentage of the population has hit a low not seen the late 1970's.  Recall that back then two-wage earning households were not as common as they are today.

I hate to say it, but it really is "worse than you think."


  1. I agree it is worse than anyone will admit. Is there a possibility that gold and silver(more so gold) are being suppressed in order for the Chinese to acquire more gold ? The wealthy are buying art and jewels , hard assets. I wonder when gold will participate. Maybe after the Comex and LBMA are finally empty of inventory.

  2. Off the topic, what do you think of Jim Rogers? In my opinion, he is a professional liar. I just saw his interview on SilverDoctors. He claims that India is the biggest buyer of gold and Indian citizens could turn into the biggest seller if the Indian officials persuaded them to. But we know that China is the biggest buyer and Indian citizens are fighting the government through rampant smuggling.

    1. I was told by someone who is well-connected to the establishment insiders that Rogers gets it but he also likes being part "The Club." The club of insiders who are connected to the real powers that run things. The fact that he comes out and tells the truth about the stock market is pretty forward for him. I've known since 2001 that he doesn't tell the truth about gold.

    2. Interesting to hear your thoughts on Mr. Rogers. That was the impression I got listening to him as well. While he's obviously an astute investor, listening to him I couldn't help but get the sense that he wasn't showing all his cards.

  3. Mish Fined 8,000 Euros for Quoting French Blog

    A few days ago I learned, via a French blog, that I was fined 8,000 euros for quoting a French blogger. I would have known earlier, but the letter notifying me of the fine was sent in French.

    In an earlier express letter packet, I could make out a few of the words, in particular noting a summons to appear before a tribunal in France. Needless to say, I did not go.

    Let's backtrack to my blog post that started it all.


  4. Wal-Mart Asks its Low-Wage Workers to Donate Food to its Low-Wage Workers.

    "The storage containers are attractively displayed at the Wal-Mart on Atlantic Boulevard in Canton. The bins are lined up in alternating colors of purple and orange. Some sit on tables covered with golden yellow tablecloths. Others peer out from under the tables.

    This isn’t a merchandise display. It’s a food drive – not for the community, but for needy workers.

    “Please Donate Food Items Here, so Associates in Need Can Enjoy Thanksgiving Dinner,” read signs affixed to the tablecloths."

    ["worse than you think" - that's a very correct summary of things, Dave. Keep up the good work!]

  5. thoroughly enjoyed your article over at seeking alpha. You know, i'm over here on south broadway in Platte Park and the construction has just been ripping. as you might have noticed there is a veritable frenzy of construction at the Gate's site and across the street not to speak of all the scrape specs going up here.. how do you interpret that?

    1. Typical overbuilding at the top. A lot of those buildings were planned after the rental inventory shortage hit. They're coming onstream just in time for the market to crash again. Let's see how quickly those new bldgs at Gates get leased out. There's several just like them near completion all over central Denver.

      Go drive on Downing between Alameda and Louisiana. I do it everyday. There's like 9 homes on the market and a couple "for rent" signs. Same deal all over both sides of Wash Park and most other Denver 'hoods. Speaking of Platte Park, check out Downing between I-25 all the way to Illif. Many for sale signs and an increasing amount of "for rent" signs.

      Just wait until the mass lump of explosing rate home equity ARM debt begins resetting and fixed for amortization starting in January. We'll really start to see "for sale" and "bank owned" signs start to pop up.

    2. I'm near Washington and Kentucky, just west of Wash Park. We got a flier in the mail Tuesday from an area realtor about homes that sold in our area, listing the price. Most of them were small bungelows that went from a range of $350-550k. The owners of the house I'm renting (with several roommates) wants something like $700k. It's pretty ridiculous. I would love to stay in the area, but it's insane.

      I drove down S Broadway the other night for the first time in months, and was floored by the structures yardfarmer mentioned.

      Judging by your last paragraph, Dave, you seem to be indicating a potentially strong decline. My understanding is that Denver wasn't hit particularly hard during the last bust. With all the recent building, and run-up in prices, do you have a target in mind for how much prices come down? And since you seem very knowledgeable about the Denver market, do you have links to data I could mine? Thanks!

      BTW, love your analysis; the right amount of sarcasm and cynicism while maintaining an inquisitive and realistic perspective.

    3. Thanks for the feedback. I'm judging Denver base on what I observe. Denver wasn't hit as hard most of the big bubble areas of the country but it took a blow. This next downleg probably won't be as kind.

      There had been a rental shortage up until about a year ago. I was looking for a house to rent (March 2013) and waited until the last minute to resign my apt lease as I couldn't find a suitable house. Now, if you look in craigslist, there lots of houses to rent. Apartments also became tight. But there's been an unbelievable amount of inventory that has come on line and will come on line soon.

      As for homes, drive on Clarkson from Mississippi to Alameda and tell me what you see: a plethora of "for sale" signs. My old block betw Tenn and Kty has 3. It didnt have any in 2008. If you drive in and out of the other streets as head toward the park, you'll see the same thing, although Clarkson seems to have the most right now. Then drive along part on Downing from Lousiana to Alameda. I believe I counted 9 "for sale" signs and 2 or 3 "for rent signs. In March there were very few "for sale" and none for rent.

      Go down to Cherry Creek North. On the corner of Columbine and 2nd there's an 80,000 sq ft moster of commercial and residential going up. I think it's Phil Anschutz's son who is developing it. I know for a fact that before this bldg broke ground, the commercial vacancy rate in CCN was between 25-30%. Does the market really need another 80k sq feet? You tell me.

      Then drive from north to south down to Belleview on Downing and Logan. You'll see a lot for sale and coming soon signs. The supply is coming.

      When the home equity paper reset to fixed and amortization schedules kick in starting in January, we'll see a lot more signs pop up.

  6. I have a small online retail store and my sales have fallen of a cliff. My sales are down 70 - 80 percent compared to what they were this summer. Here it is November 20th and my sales are the worse they have ever been.

    1. If you don't mind disclosing, what type of product(s) do you sell?

      The reason I ask is that there are several independent businessmen I've chatted with recently and they all say the same thing: the consumer is out of money.

    2. I sell shoes and athletic apparel. I'm luckier than most out there. I have no personal debt and all of my business inventory is paid for.

  7. India likely to face gold shortage of 135 tons during H2 FY14: HDFC Sec

    MUMBAI (Scrap Monster): The latest research report published by HDFC Securities- one of the leading financial service providers, has predicted immense gold supply constraints in India during the second half of the current fiscal year. According to the report, gold availability may continue to suffer with no signs of easing of gold import norms in the near future.

    According to the report, the 20-30% lower sales witnessed during current festive season was primarily due to a combination of slowdown in discretionary spends and higher gold premiums. The strict restrictions on gold imports had taken gold premiums in the country to record high during the festive season. Further, restriction on import of gold coins has also impacted investment demand. As a result, overall gold demand is likely to be muted on a YoY basis.

    The HDFC Securities Institutional Research estimates the gold demand to touch 415 tons during H2 FY14, assuming 20% year-on-year decline from FY13. The report pegs the total gold supply at 280 tons-150 tons from official gold imports, 120 tons from supply of recycled gold and 10 tons from others. This implies a shortage of 135 tons, which will have to be met through unofficial sources.

  8. The rise of money trading has made our economy all mud and no brick Trillions of dollars change hands every day in the foreign exchange markets. Yet this vast industry profits from peaks and troughs – it has no interest in a stable economy

    According to the economist Bernard Lietaer, author of The Future of Money, as recently as 1975 roughly 80% of foreign exchange transactions involved the real trading of a product or a service. The remaining 20% were speculative; bets made on the value of currencies going up or down – buy it before it rises, dump it before it drops. By the late 90s that ratio had changed dramatically. In 1997 the percentage of foreign exchange which involved transactions in the real economy was only 2.5%.

    Today, the picture is even starker. According to the Global Policy Forum, in 2011 only 0.6% of foreign exchange could be traced to genuine international trade in goods and services. Of the rest, a minimum of 80% was directly attributable to exchange rate speculation. The ratio of mud to brick has reversed entirely.

    Let me now give you an idea of the size of the wall. An estimated $5.3tn changes hands every day in the foreign exchange markets. That is an entire year's worth of the European Union's GDP, gambled every three days. More than 40% of these trades happen in the UK. On a daily basis, the financial institutions of the City of London make speculative currency trades worth nearly as much as the entire nation's GDP for a whole year.

    Some of the foreign exchange sub-markets (like the $2tn spot market) are controlled by fewer than 100 individuals, working for a dozen large banks. Add into this mix the fact that regulatory authorities last week launched investigations into at least 15 global banks for alleged manipulation of these vast markets and the need to reconsider and redesign this warped system becomes even more urgent.

    The US motion recognised that the volume of speculative trades "not only threatens national currency devaluation and financial crises, but disrupts the ability of nations to establish equitable and just economic policies". It threatens sovereignty.

    It was a clear warning, which unfortunately went unheeded.

  9. Fed Minutes Reveal a Dangerous Power Grab by New York Fed

    Just when it seemed one could no longer be shocked by the corruption, hubris and lack of accountability in the American financial system, along comes yesterday’s release of the Federal Reserve’s minutes for the October 29-30 meeting of its Federal Open Market Committee (FOMC).

    While mainstream media focuses on what the minutes revealed about when the Fed might begin to reduce its monthly $85 billion in bond purchases, receiving scant attention is a brazen power grab boldly stated on page two of the eleven pages of minutes.

    Back on October 31, wire services reported that the temporary dollar and foreign currency swap lines that had been put in place between central banks on a temporary basis during the financial crisis had been turned into standing arrangements.

    The Associated Press explained the action as follows: “Six of the world’s leading central banks, including the U.S. Federal Reserve, say they will provide each other with ready supplies of their currencies on a standing basis, extending arrangements set up to steady the global financial system during post-2007 turbulence.”

    In other words, without public deliberations, an action that was adopted as a temporary, emergency operation, now had become a permanent part of world finance – on the basis of minutes and details yet to be seen by Congress or the general public.

  10. Dave, This is off the subject of your post but do you think that the price action in gold for the last several months is less manipulation from some enitity outside the market (ie central bank, govt etc) but is from algo related trading. I have been watching gold for 12 years now and I cannot ever remember a time that gold reacted to economic releases as it has since the summer.

    Today for example it move on sharply on Philly Fed for goodness sake! It looks to me that there is a large trading fund that is pushing it around not for reasons that many think in the gold market, but just because they can. So it appears that the gold price is now hostage not to central banks manipulating it for policy or other reasons, but we have some algo trading. What are your thoughts?

    1. 80% manipulation by the Fed/Govt and 20% algos.

    2. If the manipulation were to stop, gold would shoot over $2000 more quickly than Obama can run from the KKK. The Govt knows this and that's why the manipulation has been stronger than any of us have seen it in the last 13 years.

    3. Thanks appreciate the response

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