The L. A. Times is reporting that L.A. and Long Beach ports see 1.6% gain in cargo traffic.
The gains are modest and volumes are far below peak years, but what I found most interesting was the end of the article:
John Husing, an Inland Empire economist who tracks the effect of international trade on one of the nation's biggest warehouse and distribution networks in San Bernardino and Riverside counties, has a home that overlooks San Timoteo Canyon, one of the state's most important historic transportation routes.
Stagecoaches used San Timoteo Canyon to get in and out of Southern California, Husing said. It was also the route used by the old Southern Pacific rail line. Now, the line is owned by Union Pacific.
During the worst months of the recession, Husing said, "there were hardly any freight trains. This month, the number seems to have tripled."
Husing said it was a sign that retailers were finally rebuilding their product inventories after letting them drop to very low levels in late 2009.
"We are beginning to see a definite pickup," he said. "These are some of the signals you always see when the U.S. is beginning to come out of a recession."
The parts of the economy farthest from the credit cycle, such as medical, tech and basic clothing, were always fated to rebound first.
Copyright (C) Long Lake LLC 2010
Showing posts with label retail sales. Show all posts
Showing posts with label retail sales. Show all posts
Tuesday, February 16, 2010
Friday, December 11, 2009
Per Capita Real Retail Sales Continue to Be Horrible Compared with Several Years Ago
U. S. Retail sales were reported up in November from October, though substantially down from a year ago. More to the point, consider the accompanying graph from Calculated Risk. Click on it for greater detail.
It doesn't matter whether you consider gasoline or not. Basically, total retail sales are unchanged from 4 years ago. Since these numbers are NOT adjusted for price increases, here is the DoctoRx analysis.
It doesn't matter whether you consider gasoline or not. Basically, total retail sales are unchanged from 4 years ago. Since these numbers are NOT adjusted for price increases, here is the DoctoRx analysis.
Assume 4% population growth and 11% aggregate price increases have occurred in 4 years. So to keep pace with a growing number of people and mere price changes, retail sales should have risen 15%. Add a probably more realistic inflation adjustment and you have an even larger shortfall today from trend.
In addition, everyone can think for themselves on quality, but how many people believe that the quality of what you bought 4 years ago has increased in the intervening time frame?
The bottom line is that compared with 4 years ago, per capita real retail sales are down at least 15%. This is despite 2 formal stimulus programs and innumerable accommodations to the credit industry.
The future could be better or worse than the recent or more distant past, but all the recent money-printing has to go somewhere. I suspect that the Federal deficit more or less equals private corporate and other company profits, so that we have been going through a Depression of significant magnitude, but that stock prices were never allowed to fall to bargain levels as they did in the Great D.
It takes a brave investor to avoid jumping into the stock market when the headlines scream growth. This doesn't mean that the brave investor is wrong, but color me skeptical that what's going on now is other than a tired, uncreative financial system doing what it knows how to do but has forgotten how to truly innovate.
Extend the cycle and pretend there's real growth rather than serial debt bubbles, one piled on top of another.
Copyright (C) Long Lake LLC 2009
Thursday, August 13, 2009
Cash for Clunkers Conks Non-Auto Retail Sales
From Marketwatch:
U.S. stock market hears weak consumer pulse in retail data
July report an indication 'cash for clunkers' program dented non-vehicle sales
NEW YORK (MarketWatch) -- The stock market's enthusiasm over the government's "cash for clunkers" program waned Thursday in the face of data suggesting consumers exchanged old cars for newer models at the expense of other retail spending.
Investors were taken aback by the Commerce Department's report that U.S. retail sales fell 0.1% in July, as opposed to expectations sales would gain 0.8%. Excluding autos, retail sales declined 0.6% versus an expected gain of 0.1%. . .
Given that stock prices rose once again, it's not quite accurate to say that investors were taken aback. Of course, it's unclear how many buyers of stock these days are investors versus traders.
In any case, "cash for clunkers" is idiotic, cumbersome to administer, unfair to previous buyers of fuel-efficient vehicles, and misses the "green" mark. Simply raise the gas tax and be done with it.
Copyright (C) Long Lake LLC 2009
U.S. stock market hears weak consumer pulse in retail data
July report an indication 'cash for clunkers' program dented non-vehicle sales
NEW YORK (MarketWatch) -- The stock market's enthusiasm over the government's "cash for clunkers" program waned Thursday in the face of data suggesting consumers exchanged old cars for newer models at the expense of other retail spending.
Investors were taken aback by the Commerce Department's report that U.S. retail sales fell 0.1% in July, as opposed to expectations sales would gain 0.8%. Excluding autos, retail sales declined 0.6% versus an expected gain of 0.1%. . .
Given that stock prices rose once again, it's not quite accurate to say that investors were taken aback. Of course, it's unclear how many buyers of stock these days are investors versus traders.
In any case, "cash for clunkers" is idiotic, cumbersome to administer, unfair to previous buyers of fuel-efficient vehicles, and misses the "green" mark. Simply raise the gas tax and be done with it.
Copyright (C) Long Lake LLC 2009
Thursday, August 6, 2009
Cash for Clunkers Clashes with the Real World as Non-Auto Retail Sales Disappoint
From yesterday's New York Times:
“There obviously is a real pent-up demand in America,” said Ray LaHood, the transportation secretary. “People love to buy cars, and we’ve given them the incentive to do that. I think the last thing that any politician wants to do is cut off the opportunity for somebody who’s going to be able to get a rebate from the government to buy a new automobile.”
LaHood also said:
LaHood said Wednesday that in just a brief time, "the government has proved we can get money out the door and sell almost 160,000 cars."
Aren't you thrilled the Federal Government can sell cars?
Meanwhile, beyond the obvious downside that throwing money it has to borrow or print into the hands of consumers is a fool's errand, the AP reports: Sluggish July sales show tight-fisted US consumers:
"The consumer is stressed and depressed," said Ken Perkins, president of retail consulting firm Retail Metrics. "Back-to-school shopping season is going to be very late."
It may not be just late (I assume he means 'delayed'); some sales will be 'deferred'.
The AP article continues:
Frank Badillo, senior economist at consulting group TNS Retail Forward, and other analysts have also noted that the uptick in car buying spurred by the government's "cash for clunkers" program might siphon sales from other categories like clothing and home furnishings in coming months. That could hurt back-to-school shopping as consumers shift available cash to car payments.
There you have it. In physics, and economics, you can't get something for nothing. You can't both print money or borrow it. You can't be a stretched consumer and suddenly take a bargain on a new car and buy that extra pair of jeans. Thus we see the extraordinary sales declines that just one year ago, and at any time in the past, say, 45 years, would have been seen as impossible (from the same AP article):
As club operator Costco Wholesale Inc. reported Thursday that its same-store sales dropped 7 percent in July, pressured by lower gas prices and the stronger dollar, the retailer said some of its strongest categories were food, including deli, candy and frozen food.
Target Corp., which has been stumbling because of its reliance on nonessentials like trendy jeans, posted a 6.5 percent drop, worse than the 5.8 percent decline analysts had expected.
TJX's 4 percent gain beat Wall Street's expectations for a 3.1 percent increase. It also raised its second-quarter profit outlook.
“There obviously is a real pent-up demand in America,” said Ray LaHood, the transportation secretary. “People love to buy cars, and we’ve given them the incentive to do that. I think the last thing that any politician wants to do is cut off the opportunity for somebody who’s going to be able to get a rebate from the government to buy a new automobile.”
LaHood also said:
LaHood said Wednesday that in just a brief time, "the government has proved we can get money out the door and sell almost 160,000 cars."
Aren't you thrilled the Federal Government can sell cars?
Meanwhile, beyond the obvious downside that throwing money it has to borrow or print into the hands of consumers is a fool's errand, the AP reports: Sluggish July sales show tight-fisted US consumers:
"The consumer is stressed and depressed," said Ken Perkins, president of retail consulting firm Retail Metrics. "Back-to-school shopping season is going to be very late."
It may not be just late (I assume he means 'delayed'); some sales will be 'deferred'.
The AP article continues:
Frank Badillo, senior economist at consulting group TNS Retail Forward, and other analysts have also noted that the uptick in car buying spurred by the government's "cash for clunkers" program might siphon sales from other categories like clothing and home furnishings in coming months. That could hurt back-to-school shopping as consumers shift available cash to car payments.
There you have it. In physics, and economics, you can't get something for nothing. You can't both print money or borrow it. You can't be a stretched consumer and suddenly take a bargain on a new car and buy that extra pair of jeans. Thus we see the extraordinary sales declines that just one year ago, and at any time in the past, say, 45 years, would have been seen as impossible (from the same AP article):
As club operator Costco Wholesale Inc. reported Thursday that its same-store sales dropped 7 percent in July, pressured by lower gas prices and the stronger dollar, the retailer said some of its strongest categories were food, including deli, candy and frozen food.
Candy? This nation is addicted to cheap credit and cheap sugar. Continuing with the AP article:
Target Corp., which has been stumbling because of its reliance on nonessentials like trendy jeans, posted a 6.5 percent drop, worse than the 5.8 percent decline analysts had expected.
TJX's 4 percent gain beat Wall Street's expectations for a 3.1 percent increase. It also raised its second-quarter profit outlook.
(FYI TJX is a deep discounter. This continues to demonstrate that consumers continued to trade down from Target to TJX and Ross Stores.)
Among department stores, Macy's reported a 10.7 percent drop in same-store sales, worse than the 9.1 percent drop that was expected. J.C. Penney's 12.3 percent same-store sales decrease was a bit steeper than the 11.4 percent decline that analysts had expected. But Penney raised its earnings outlook.
Comment: My wife was in a Macy's this week and noted a dank smell in the store and poorly kept-up changing rooms. Nonetheless a sign on the door said it was hiring. Re Penney's, there is only one way to raise profits in the face of declining sales: cut costs. That means pressure on its vendors and further onerous terms on its employees. And it appears that with teen unemployment at very high levels, parents have been pulling the plug on spending on clothing for their offspring:
Among teen retailers, Abercrombie & Fitch posted a 28 percent same-store sales decline, worse than the 26.9 percent drop that analysts expected. Wet Seal reported a 12.1 percent drop, worse than the 10 percent decline that analysts expected.
This blog post starts with truly idiotic statements out of the mouth of the Sec'y of Transportation and ends with unspun facts. More and more this economy resembles that of the 1930s. The debt deflation that went on then is underway. The "paradox of thrift" has taken hold at the corporate level, as company after company such as Penney's enhances its own profits by firing employees or reducing their hours/benefits -- thus harming someone else's consumer.
To date the U. S. is following the Japanese script a number of years out of phase: a manic financial bubble, imprudent financial companies turned into zombies by bailouts, frugal consumers, and a "bubble" in Government debt as the Government provides business for the financial companies by letting them sell and then trade large quantities of the debt at inflated prices. Remember that per David Rosenberg, for about 80% of the past 20 years, Japan has been out of recession.
Copyright (C) Long Lake LLC 2009
Monday, August 3, 2009
Where We Are Today
Here are 3 charts from Calculated Risk today. (For some reason, only the retail sales chart is enlarging on my computer when I click on it. Your browser may handle them differently.)
These charts help demonstrate why I believe:
a) the U. S. has been in a depression;
a) the U. S. has been in a depression;
b) the depression is ending;
c) most financial assets are overvalued.
From the top down:
Retail sales were off about 13% from the peak to the trough. Given population growth, this would likely equate to a 15% drop-off. Nothing since WW II even comes close to the extent and duration of this. This is what was seen in an old-fashioned depression. No one would have believed it even a year ago.
Retail sales were off about 13% from the peak to the trough. Given population growth, this would likely equate to a 15% drop-off. Nothing since WW II even comes close to the extent and duration of this. This is what was seen in an old-fashioned depression. No one would have believed it even a year ago.
The import-export chart also shows an unprecedented, sustained decline. The powers-that-be are seeing to it that this recovers. But this sort of event in peacetime was supposed to simply be impossible.
Finally, despite all the array of programs that support the housing market, including unthinkable sums simply to prop up Fannie Mae and Freddie Mac, just look at how many new housing units were constructed decades ago vs. now. They can't go below zero.
In addition, other measures of internal trade and inventories within the U.S. accounting for a large percent of GDP has shown unbelievable, 20% year on year declines. This is not within the realm of normal peacetime recessionary behavior, especially when one looks at the duration of this downturn along with its extent.
According to David Rosenberg of Gluskin Sheff in Canada, the Federal Government currently accounts for fully 20% of personal income. So numbers of homes built will increase, numbers of cars sold will increase, and medical and military spending will increase, etc.: the depression will end in that numbers will turn upward.
But that is almost irrelevant. Let's say retail sales went from 100 to 85 in 18 months, and go up an amazing 10% in the next 18 months. They would now be at 93, 3 years after having been at 100. Any mainstream economist looking at a base of 100 would have predicted 110-120 3 years later.
Perhaps 10 years later, retail sales will have had a sustained boom, for reasons unpredicted. Great! Let the prices of retail stocks reflect the booming dividends paid to the owners of the companies. Unfortunately, past history suggests that the managers of the companies will arrogate to themselves a disproportionate share of the profits and the owners (shareholders) will get screwed out of the returns they deserve. And, numerous IPOs of retailers will be rushed to market at overvalued prices. That's the drill- as with tech in the 1990s.
Meanwhile, the only good thing that can be said for prices of bonds of municipalities and corporations is that they are relatively cheap compared to Treasuries. But only the Treasury has essentially infinite borrowing power and can tell the Fed to print more money. And Treasury debt is noncallable, unlike muni debt and some corporate debt. On an absolute basis, non-Treasury debt is no bargain given the Scylla of inflation and Charybdis of debt default.
Gold is gradually rising in price and until India, the world's marginal and price-sensitive consumer of gold, starts buying gold, this rise in gold price is from investors/speculators. But where were these buyers 2-5 years ago?
Cash is safe but yields next to nothing.
In summary, JPMorgan Sachs has investors just where it wants them. There are no sound investment choices beyond cash. Current reality can change and they can get in front of almost any trend, and where they don't, you and I will save them from any errors via our elected and appointed officials. (But their stocks are no safe haven, as they share the wealth internally through huge salaries and bonuses but not through dividends.)
Financially, there simply is no trend and no undervalued asset class based on fundamental, technical and political analysis. This is the opposite of 1981-3, where if an investor simply bet on Volcker sticking to his guns, there were many ways to buy into the disinflation theme and make both a high current return and capital gains with safety. It's a shame, but so it goes. At some point, there will be a trend wherein the fundamentals and technicals, and return to the investor on the investment, will be aligned. Even then, I'm prepared to be more suspicious than in the past given the depradations by Big Finance upon retail investors over the past decade.
Copyright (C) Long Lake LLC 2009
Wednesday, July 15, 2009
More on Retailing
From David Rosenberg's AM comments today (Breakfast with Dave, Gluskin Sheff):
As for July, we are hearing that auto sales are soft and we see from the Redbook survey that chain store sales are down 5.7% YoY so far in July and -1.7% versus the June average — coming in well below plan. Moreover, here is what the Redbook had to say about the retail landscape so far this month:
“Department stores reported that customers were not responding to fashion and seasonal initiatives, most evidently in the key merchandise category of women’s ready-to-wear. The focus in July, as in the latter part of June, is on clearing seasonal stock. Sales performance was driven by discounting”. Maybe we’re missing something, but we fail to see from this assessment of the 70% chunk of GDP called the consumer would warrant an overweighting in equities over fixed-income in the asset mix. Oh yes, bond yields are low, but for a very good reason (maybe because nominal GDP growth is negative).
We should add here that the IBD/TIPP Economic Optimism Index, which was one of the early “green shoots” to surface back in the winter, dropped to 46.1 in July from 50.8 in June and augurs for a poor back-to-school retail sales season. We highlighted this yesterday — early surveys suggest that we could see a record 4-8% YoY decline this year.
DoctoRx here. Repeating Redbook: "Sales performance was driven by discounting." And per the first paragraph above, July sales are miserable and worse than June. So much for the BLS claiming that apparel prices have been rising. BLS is wrong: weighted for actual sales mix, they have been falling, and probably falling hard.
This comports with what my contacts in the business community are saying, which is that business turned down in the past 6 weeks.
This is not to say that things won't turn up again, but one wonders about the quality of an upturn if it is due to Government transfer payments or one-offs such as repaving roadway (which may or may not have needed repaving).
Maybe it's time for Americans to turn more European, meaning work less hard. At the least, it would be good if the Government and the financial players were not so aggressive about the abstraction known as the "economy". Just maybe the country would net be better off with more rest and leisure time, less debt, smaller homes, less gasoline burned, and less food consumed. For sure, Mother Earth would appreciate it!
Copyright (C) Long Lake LLC 2009
As for July, we are hearing that auto sales are soft and we see from the Redbook survey that chain store sales are down 5.7% YoY so far in July and -1.7% versus the June average — coming in well below plan. Moreover, here is what the Redbook had to say about the retail landscape so far this month:
“Department stores reported that customers were not responding to fashion and seasonal initiatives, most evidently in the key merchandise category of women’s ready-to-wear. The focus in July, as in the latter part of June, is on clearing seasonal stock. Sales performance was driven by discounting”. Maybe we’re missing something, but we fail to see from this assessment of the 70% chunk of GDP called the consumer would warrant an overweighting in equities over fixed-income in the asset mix. Oh yes, bond yields are low, but for a very good reason (maybe because nominal GDP growth is negative).
We should add here that the IBD/TIPP Economic Optimism Index, which was one of the early “green shoots” to surface back in the winter, dropped to 46.1 in July from 50.8 in June and augurs for a poor back-to-school retail sales season. We highlighted this yesterday — early surveys suggest that we could see a record 4-8% YoY decline this year.
DoctoRx here. Repeating Redbook: "Sales performance was driven by discounting." And per the first paragraph above, July sales are miserable and worse than June. So much for the BLS claiming that apparel prices have been rising. BLS is wrong: weighted for actual sales mix, they have been falling, and probably falling hard.
This comports with what my contacts in the business community are saying, which is that business turned down in the past 6 weeks.
This is not to say that things won't turn up again, but one wonders about the quality of an upturn if it is due to Government transfer payments or one-offs such as repaving roadway (which may or may not have needed repaving).
Maybe it's time for Americans to turn more European, meaning work less hard. At the least, it would be good if the Government and the financial players were not so aggressive about the abstraction known as the "economy". Just maybe the country would net be better off with more rest and leisure time, less debt, smaller homes, less gasoline burned, and less food consumed. For sure, Mother Earth would appreciate it!
Copyright (C) Long Lake LLC 2009
Tuesday, June 30, 2009
Gallup Finds June Retail Sales Lower than May's; So Far, No "Stimulus"
The Associated Press is out with a report titled Summer looks like a washout for some retailers.
While we need to avoid hindsight bias which would make us accentuate the negative because of the recent past, and thus we may look past the intro comments, some observations buried deep in the article are disquieting:
As consumers get ready to celebrate July Fourth, many merchants already have dismissed summer as a washout.
Macy's flagship store has racks of summer tops, swimwear and dresses marked down as much as 50 percent, while luxury retailer Bergdorf Goodman is slashing prices on designer goods by as much as 70 percent. Meanwhile, piles of clothing as well as barbecue grills, tents and gardening tools are bypassing stores and heading straight to liquidators as merchants try to conserve their cash. . .
Friday's government economic reports weren't comforting to merchants, showing that households used most of their government stimulus payments to boost savings to the highest level in more than 15 years in May, instead of splurging at the mall.
"There was a lot of hope with the surge in confidence," said Dennis Jacobe, Gallup's chief economist. He added that consumers were convinced that the second half would be better but he noted, "you can live on that hope for only so long."
According to a Gallup Poll survey of 1,000 consumers taken June 15-21, confidence has faltered as stocks have stumbled and gas prices have risen. He added that he's seen a deterioration in June sales from May.
Michael P. Niemira, chief economist at the International Council of Shopping Centers, estimated that June's same-stores sales have so far registered a 6 percent drop, worse than the projected 5 percent decline and May's 4.6 percent decrease. The figures exclude results from Wal-Mart, which no longer releases monthly numbers. Same-store sales, or sales at stores open at least a year, are considered a key measure of retailers' health.
Niemira says he isn't reducing his forecast yet because he believes the true test will come when the weather warms up.
Could the Obama tax cut/transfer payments be producing the same minimal economic effects as did the 2008 tax cut?
It would appear that the Feds have borrowed a lot of money for it to have almost completely ended up in the bank. This is a clever form of bank recapitalization, but not what the alleged purpose of the tax cuts and increased transfer payments was.
As stated here before, the economy needed a rest after a period of frenzied activity that we have learned was goosed by record amounts of leverage (borrowed money). Economic activity will return at its own pace as real human needs and desires are satisfied. Government "stimulus" has once again proven useless.
Copyright (C) Long Lake LLC 2009
While we need to avoid hindsight bias which would make us accentuate the negative because of the recent past, and thus we may look past the intro comments, some observations buried deep in the article are disquieting:
As consumers get ready to celebrate July Fourth, many merchants already have dismissed summer as a washout.
Macy's flagship store has racks of summer tops, swimwear and dresses marked down as much as 50 percent, while luxury retailer Bergdorf Goodman is slashing prices on designer goods by as much as 70 percent. Meanwhile, piles of clothing as well as barbecue grills, tents and gardening tools are bypassing stores and heading straight to liquidators as merchants try to conserve their cash. . .
Friday's government economic reports weren't comforting to merchants, showing that households used most of their government stimulus payments to boost savings to the highest level in more than 15 years in May, instead of splurging at the mall.
"There was a lot of hope with the surge in confidence," said Dennis Jacobe, Gallup's chief economist. He added that consumers were convinced that the second half would be better but he noted, "you can live on that hope for only so long."
According to a Gallup Poll survey of 1,000 consumers taken June 15-21, confidence has faltered as stocks have stumbled and gas prices have risen. He added that he's seen a deterioration in June sales from May.
Michael P. Niemira, chief economist at the International Council of Shopping Centers, estimated that June's same-stores sales have so far registered a 6 percent drop, worse than the projected 5 percent decline and May's 4.6 percent decrease. The figures exclude results from Wal-Mart, which no longer releases monthly numbers. Same-store sales, or sales at stores open at least a year, are considered a key measure of retailers' health.
Niemira says he isn't reducing his forecast yet because he believes the true test will come when the weather warms up.
Could the Obama tax cut/transfer payments be producing the same minimal economic effects as did the 2008 tax cut?
It would appear that the Feds have borrowed a lot of money for it to have almost completely ended up in the bank. This is a clever form of bank recapitalization, but not what the alleged purpose of the tax cuts and increased transfer payments was.
As stated here before, the economy needed a rest after a period of frenzied activity that we have learned was goosed by record amounts of leverage (borrowed money). Economic activity will return at its own pace as real human needs and desires are satisfied. Government "stimulus" has once again proven useless.
Copyright (C) Long Lake LLC 2009
Friday, February 13, 2009
Friday Afternoon Wrap
CR reports that: S&P heads to first quarter ever of negative earnings.
(MarketWatch) - As Wall Street tracks Washington's moves to help the beleaguered banking sector and pass more economic stimulus, nearly 400 of the S&P's 500 companies have weighed in and reported a collective loss -- even excluding financials.
That's not all:
This is the worst, after the sixth quarter of negative growth, it will be the first quarter ever of negative earnings," said Howard Silverblatt, senior index analyst, at Standard & Poor's.
A sixth quarter of negative growth ties the prior record set when Harry Truman was president, and ran from the first quarter of 1951 to the second quarter of 1952.
"And next quarter we're expected a new record of seven quarters of negative growth," Silverblatt said.
As of the close of business Thursday, Silverblatt calculates S&P earnings-per-share, on a reported basis, at a loss of $10.44 for the quarter. If financials were taken out of the equation, that EPS deficit would drop to $2.35.
Comment: When profits vanish, the emphasis placed here on tangible book value becomes paramount. More specifically, cash in the bank and high-grade financial instruments are safer from an investor's standpoint than the book value of plant and equipment. After all, there's no law that a stock cannot sell for prolonged periods of time below tangible book value. In fact, many companies have sold for less than the value of their net working capital, with patents, trademarks, and physical assets net of debt thrown in. Under the "We are Japan" hypothesis, there could be many more years of a grinding down of stock prices before a secular bull market occurs, kickback rallies notwithstanding.
Additionally, the Economic Cycle Research Institute finds that:
Business Cycle Recovery Remains Elusive
Reuters February 13, 2009
(Reuters): A measure of U.S. future economic growth slipped further along with its annualized growth rate in the latest week, indicating a hazy reading of economic recovery, a research group said on Friday.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 106.1 for the week ending Feb. 6, from a revised 106.6 in the previous week.
The index's annualized growth rate fell to minus 24.8 percent from a revised minus 24.5 percent, hitting its four-week low since Jan. 9 when it read negative 25.2 percent.
"With WLI growth falling once again, a business cycle recovery remains elusive," said Lakshman Achuthan, the Managing Director at ECRI.
The index fell to a nine-week low, the lowest reading since Dec. 5, 2008, when it was 105.7.
Comment: The ECRI has a marvelous track record. On an absolute basis, the WLI is about at a 1995 level. The Dow Jones was then much lower than today. In addition, a technical analysis of the WLI going back to 1974 shows that for the first time, a recovery in the economy/bull market in stocks both pushed to a new high in the WLI (in 2007) and then dropped to a low that was below the prior cycle's low (in 2001).
In addition, the Commerce Department reported an unprecedented 9% year on year drop in retail sales yesterday. With some or many money center banks feared to be insolvent, more and more factual news items keep piling up that have not happened since the early 1930s.
In any case, Monday is President's Day. Both America's George the First and Honest Abe faced tougher times than do we.
Copyright (C) Long Lake LLC 2009
(MarketWatch) - As Wall Street tracks Washington's moves to help the beleaguered banking sector and pass more economic stimulus, nearly 400 of the S&P's 500 companies have weighed in and reported a collective loss -- even excluding financials.
That's not all:
This is the worst, after the sixth quarter of negative growth, it will be the first quarter ever of negative earnings," said Howard Silverblatt, senior index analyst, at Standard & Poor's.
A sixth quarter of negative growth ties the prior record set when Harry Truman was president, and ran from the first quarter of 1951 to the second quarter of 1952.
"And next quarter we're expected a new record of seven quarters of negative growth," Silverblatt said.
As of the close of business Thursday, Silverblatt calculates S&P earnings-per-share, on a reported basis, at a loss of $10.44 for the quarter. If financials were taken out of the equation, that EPS deficit would drop to $2.35.
Comment: When profits vanish, the emphasis placed here on tangible book value becomes paramount. More specifically, cash in the bank and high-grade financial instruments are safer from an investor's standpoint than the book value of plant and equipment. After all, there's no law that a stock cannot sell for prolonged periods of time below tangible book value. In fact, many companies have sold for less than the value of their net working capital, with patents, trademarks, and physical assets net of debt thrown in. Under the "We are Japan" hypothesis, there could be many more years of a grinding down of stock prices before a secular bull market occurs, kickback rallies notwithstanding.
Additionally, the Economic Cycle Research Institute finds that:
Business Cycle Recovery Remains Elusive
Reuters February 13, 2009
(Reuters): A measure of U.S. future economic growth slipped further along with its annualized growth rate in the latest week, indicating a hazy reading of economic recovery, a research group said on Friday.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 106.1 for the week ending Feb. 6, from a revised 106.6 in the previous week.
The index's annualized growth rate fell to minus 24.8 percent from a revised minus 24.5 percent, hitting its four-week low since Jan. 9 when it read negative 25.2 percent.
"With WLI growth falling once again, a business cycle recovery remains elusive," said Lakshman Achuthan, the Managing Director at ECRI.
The index fell to a nine-week low, the lowest reading since Dec. 5, 2008, when it was 105.7.
Comment: The ECRI has a marvelous track record. On an absolute basis, the WLI is about at a 1995 level. The Dow Jones was then much lower than today. In addition, a technical analysis of the WLI going back to 1974 shows that for the first time, a recovery in the economy/bull market in stocks both pushed to a new high in the WLI (in 2007) and then dropped to a low that was below the prior cycle's low (in 2001).
In addition, the Commerce Department reported an unprecedented 9% year on year drop in retail sales yesterday. With some or many money center banks feared to be insolvent, more and more factual news items keep piling up that have not happened since the early 1930s.
In any case, Monday is President's Day. Both America's George the First and Honest Abe faced tougher times than do we.
Copyright (C) Long Lake LLC 2009
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