While investors are drinking the Obama Administration's Kool-Aid and popping champagne corks over the slew of optimistic earnings reports and guidance, the economy continues to quietly deteriorate. This morning we were treated to another disappointment: durable goods. Add to that the ongoing weakness in real estate and sub-par retail sales and it's hard to understand the unbridled optimism that has suddenly gripped the markets.
Not that economic statistics are a good barometer of future market prices. Like earnings, they are backward looking and generally have ZERO predictive value. Markets typically turn well before the economy and corporate earnings. So, what's my beef?
The main problem with these economic data is that they are occurring in the middle of a so called "recovery" and one that began more than a year ago. At this stage, we should be seeing growth in employment, sales, economic output and an increase in taking on credit. None of those are happening.
Durable Goods came in well below expectations. The always wrong consensus had them rising about a percent. They declined by a percent.
Housing starts peaked in the 2005-2006 period at above 2 million units. From there, they dropped to about 500,000 at the bottom of the financial meltdown of 2008-2009. Since then, they have merely bounced around the lows. No material recovery in more than a year. We have not experienced the current low levels in decades.
June real retail sales rose at a 3.7% year-to-year pace, down from May’s revised 4.8% and from the first quarter's growth rate of 6.6%.
According to ShadowStats, adjusted for inflation, retail sales in May and June fell at an annualized pace of 7.6%. Compared to the peak in 2008, retail sales are still down 10%. If that pattern continues into the current quarter, a contraction in real third-quarter 2010 GDP would be a good bet.
What makes the economic sluggishness so worrisome is that it comes after the orgy-like expenditures and bailouts from the Obama Administration and near-zero interest rates. The Federal Reserve is pretty much out of bullets. The Obama Administration is out of bullets. Can you imagine how difficult economic conditions might become now that all the stimulative measures have already filtered through?
On Friday, the first estimate of Gross Domestic Product will be reported. Consensus estimates are for a 3.5% advance. That number would seem way too optimistic and sets up the market for a major surprise.
Don't get me wrong. Rising corporate earnings are great. They prove that corporate America can make the necessary adjustments to cope with the very harsh economic conditions. A victory for capitalism. But, if we are about to enter the "second-dip", tomorrow's earnings will come under renewed pressure. So, using this one data point in the absence of context will prove quite misleading and cause investors to make poor decisions.
Marko's Take
Showing posts with label retail sales. Show all posts
Showing posts with label retail sales. Show all posts
Wednesday, July 28, 2010
Saturday, March 13, 2010
Economic Data Strengthens While Fundamentals Weaken!
We are in the midst of what some folks refer to as an "inflection point", a place in time where a significant shift is in the process of occuring. Just like a well-trained illusionist, they divert your attention to where you should NOT be looking in order to pull off their "magic".
As far as the economy goes, a slew of data continues to pour in adding credence to the notion that we are in a building recovery. This data is both misleading and guiding the uninformed to make decisions that will prove costly.
Retail sales, a key barometer of economic activity, showed surprising strength. As reported by the Commerce Department yesterday, they rose last month by 0.3%. Economists, surveyed by Dow Jones Newswires, had forecast a 0.3% decrease in February sales. With the Super Bowl early in the month, electronic store sales soared. (Now, somehow I seem to recall reading somewhere that the weather was lousy and the sales were supposed to be pretty bad! (http://markostake.blogspot.com/2010/03/blame-it-on-weather-when-its-convenient.html)
Retail sales data are an important indicator of consumer spending. Consumer spending makes up 70% of demand in the U.S. economy. The unexpected increase moved Macroeconomic Advisers to push their forecast for first-quarter gross domestic product growth up, by four-tenths to 3.1%.
Excluding the car sector, all other February retail sales rose 0.8%. Economists had forecast a 0.1% increase. Excluding automobiles, sales in January rose 0.5%, revised from a previously estimated 0.6% gain.
Then, of course, we had more "good" news as the unemployment rate fell below 10% despite the fact that, on net, jobs were LOST! (http://markostake.blogspot.com/2010/03/great-news-more-jobs-lost.html)
The brilliant Dr. Williams of Shadow Stats (http://www.shadowstats.com/) has weighed in with his ungarbled data to help set the record straight!
Dr. Williams reports that the heavy public hype of the anticipated large jobs gains ahead completely ignores the impact of census hiring.
Accoring to Williams, the census will have only a very temporary impact on employment and virtually no impact on the economy. While hundreds of thousands of part-time census jobs will boost payroll employment in March through May 2010, they all will be lost in sharp cutbacks in June through September. That, at least, was the pattern of jobs change around the 2000 census, which also was conducted as of April 1st of that year. Details of temporary census jobs patterns seen around the last two census periods are available from The Bureau of Labor Statistics (BLS).
The retail sales report for February 2010 indicated a statistically insignificant, seasonally-adjusted monthly gain of 0.34% and followed a revised 0.15% (previously 0.48%) monthly gain in December. Although the February numbers likely reflected some dampening effect of severe blizzards, the monthly gain was artificially boosted by downward revisions to prior reporting as well as ongoing inflation.
On a year-to-year basis, the February 2010 retail sales were reported up by 3.85% from February 2008, versus a downwardly revised 4.08% (4.71%) annual gain in January. Rising gasoline and food prices — as suggested by increased gasoline station and grocery store revenues — accounted for 58% of the reported monthly gain in February sales!
If we remove the effects of inflation, according to Williams, February 2010 retail sales activity likely will show both monthly and annual gains, although the revised real January number has turned negative month-to-month in revision.
Perhaps this explains why consumer sentiment and among small business owners continues to drop. The supposedly beneficial economic activity isn't translating into anything material as far as middle-America goes, even if the folks at "Government Sachs" continue to reap huge profits ! (http://markostake.blogspot.com/2010/02/government-sachs-how-big-menace-is-it.html) and (http://markostake.blogspot.com/2010/03/government-sachs-under-fire.html)
Are we being unfair to "da boyz club" in Washington, D.C.? If you think so, TAKE ME ON!
Marko's Take
We realize that times are tough and not many folks have much to spare. This is a free site and we intend to keep it that way. There are three fabulous organizations that we support. California Wildlife Center, Carol's Voice and Global Green Forex, whose logos and websites are accessible simply by clicking on them on the right side of this site. We hope you visit them and consider participating!
As far as the economy goes, a slew of data continues to pour in adding credence to the notion that we are in a building recovery. This data is both misleading and guiding the uninformed to make decisions that will prove costly.
Retail sales, a key barometer of economic activity, showed surprising strength. As reported by the Commerce Department yesterday, they rose last month by 0.3%. Economists, surveyed by Dow Jones Newswires, had forecast a 0.3% decrease in February sales. With the Super Bowl early in the month, electronic store sales soared. (Now, somehow I seem to recall reading somewhere that the weather was lousy and the sales were supposed to be pretty bad! (http://markostake.blogspot.com/2010/03/blame-it-on-weather-when-its-convenient.html)
Retail sales data are an important indicator of consumer spending. Consumer spending makes up 70% of demand in the U.S. economy. The unexpected increase moved Macroeconomic Advisers to push their forecast for first-quarter gross domestic product growth up, by four-tenths to 3.1%.
Excluding the car sector, all other February retail sales rose 0.8%. Economists had forecast a 0.1% increase. Excluding automobiles, sales in January rose 0.5%, revised from a previously estimated 0.6% gain.
Then, of course, we had more "good" news as the unemployment rate fell below 10% despite the fact that, on net, jobs were LOST! (http://markostake.blogspot.com/2010/03/great-news-more-jobs-lost.html)
The brilliant Dr. Williams of Shadow Stats (http://www.shadowstats.com/) has weighed in with his ungarbled data to help set the record straight!
Dr. Williams reports that the heavy public hype of the anticipated large jobs gains ahead completely ignores the impact of census hiring.
Accoring to Williams, the census will have only a very temporary impact on employment and virtually no impact on the economy. While hundreds of thousands of part-time census jobs will boost payroll employment in March through May 2010, they all will be lost in sharp cutbacks in June through September. That, at least, was the pattern of jobs change around the 2000 census, which also was conducted as of April 1st of that year. Details of temporary census jobs patterns seen around the last two census periods are available from The Bureau of Labor Statistics (BLS).
The retail sales report for February 2010 indicated a statistically insignificant, seasonally-adjusted monthly gain of 0.34% and followed a revised 0.15% (previously 0.48%) monthly gain in December. Although the February numbers likely reflected some dampening effect of severe blizzards, the monthly gain was artificially boosted by downward revisions to prior reporting as well as ongoing inflation.
On a year-to-year basis, the February 2010 retail sales were reported up by 3.85% from February 2008, versus a downwardly revised 4.08% (4.71%) annual gain in January. Rising gasoline and food prices — as suggested by increased gasoline station and grocery store revenues — accounted for 58% of the reported monthly gain in February sales!
If we remove the effects of inflation, according to Williams, February 2010 retail sales activity likely will show both monthly and annual gains, although the revised real January number has turned negative month-to-month in revision.
Perhaps this explains why consumer sentiment and among small business owners continues to drop. The supposedly beneficial economic activity isn't translating into anything material as far as middle-America goes, even if the folks at "Government Sachs" continue to reap huge profits ! (http://markostake.blogspot.com/2010/02/government-sachs-how-big-menace-is-it.html) and (http://markostake.blogspot.com/2010/03/government-sachs-under-fire.html)
Are we being unfair to "da boyz club" in Washington, D.C.? If you think so, TAKE ME ON!
Marko's Take
We realize that times are tough and not many folks have much to spare. This is a free site and we intend to keep it that way. There are three fabulous organizations that we support. California Wildlife Center, Carol's Voice and Global Green Forex, whose logos and websites are accessible simply by clicking on them on the right side of this site. We hope you visit them and consider participating!
Thursday, March 4, 2010
Blame It On The Weather... When It's Convenient!
Everybody talks about the weather, but no one does anything about it, except use it as an excuse! Yesterday, it was the Obama Administration's own Lawrence Summers citing the weather as a reason for the stubbornly high unemployment (http://markostake.blogspot.com/2010/03/more-unemployment-more-excuses.html)!
This morning, according to a report aired on CNBC, reporter Diana Olick stated that the pending home sales index fell by 7.6% in January to 90.4. The index is based on contracts signed in January. The number came in much lower than expected despite an anticipated surge resulting from the first-time home buyer's credit. The index fell the most in the west - a whopping 13.2%! Hasn't snowed all that much here! Get your excuses together folks!
Retailers, however, despite the crippling weather, did BETTER than expected. I never knew this but shopping is helped by snow, while pending home sales and hiring are hurt by the white stuff. Someone ought to let Wikipedia know about this! Has anyone let Al Gore know about this climatological affect? If not, send him a subsciption to Marko's Take! Seems like global cooling is proving more harmful than global warming (sarcasm intentional!).
According to the Wall Street Journal, many U.S. retailers, especially those geared to teen shoppers, reported improved sales in February, thanks to easy year-ago comparisons and despite winter storms that crippled large swaths of the country(http://online.wsj.com/article/SB10001424052748704187204575101290171056982.html?mod=djemTMB_h).
As retailers reported their monthly figures this morning, the industry appeared on track to report their sixth straight month of rising sales at stores open at least a year, known as same-store sales, with 70% of retailers surpassing Wall Street expectations, according to Thomson Reuters.
The winners say they came into February with lean inventories that minimized markdowns and they also saw some emerging demand. Those with disappointing sales figures are largely BLAMING THE WEATHER, as non-mall retailers appeared to struggle, including BJ's Wholesale Club Inc. and Costco Wholesale Corp., which both reported lower-than-projected quarterly results.
More important, observers said, will be how March shapes up because it is a longer month and will include this year more spending related to Easter, which falls on April 4, earlier than last year.
Nonetheless, February proved to be a healthy month for many retailers. Surprisingly, sales were strong from teen retailer Zumiez Inc., which reported same-store sales growth of 11% in February, compared with Wall Street's projection of 1.2% growth and last year's 13% slide.
Also strong was Limited Brands Inc., which reported a 10% increase in February same-store sales, benefiting from vibrant Valentine's Day-related sales at its Victoria Secret division, where same-store sales rose 10%. Limited's total sales rose to $600.1 million from $547.8 million a year ago.
On the weak side was Destination Maternity Corp., which reported a 9.3% drop in February same-store sales, while apparel and accessory store Stage Stores Inc. saw same-store sales slide 3.9%. Undoubtedly, it was the weather!
Marko's Take NEVER blames the weather! We're here, telling it like it is. Rain, snow, hail, or gloom of night! Hope the weather where you are isn't getting you down!
If you think the "Blame It On The Weather" BS has its merits, TAKE ME ON!
Marko's Take
Our fourth episode on YouTube, which will unravel the mysterious Federal Reserve and take a peek behind the FED curtain, will be posted shortly. You can access it by clicking here: http://www.youtube.com/markostaketv.
This morning, according to a report aired on CNBC, reporter Diana Olick stated that the pending home sales index fell by 7.6% in January to 90.4. The index is based on contracts signed in January. The number came in much lower than expected despite an anticipated surge resulting from the first-time home buyer's credit. The index fell the most in the west - a whopping 13.2%! Hasn't snowed all that much here! Get your excuses together folks!
Retailers, however, despite the crippling weather, did BETTER than expected. I never knew this but shopping is helped by snow, while pending home sales and hiring are hurt by the white stuff. Someone ought to let Wikipedia know about this! Has anyone let Al Gore know about this climatological affect? If not, send him a subsciption to Marko's Take! Seems like global cooling is proving more harmful than global warming (sarcasm intentional!).
According to the Wall Street Journal, many U.S. retailers, especially those geared to teen shoppers, reported improved sales in February, thanks to easy year-ago comparisons and despite winter storms that crippled large swaths of the country(http://online.wsj.com/article/SB10001424052748704187204575101290171056982.html?mod=djemTMB_h).
As retailers reported their monthly figures this morning, the industry appeared on track to report their sixth straight month of rising sales at stores open at least a year, known as same-store sales, with 70% of retailers surpassing Wall Street expectations, according to Thomson Reuters.
The winners say they came into February with lean inventories that minimized markdowns and they also saw some emerging demand. Those with disappointing sales figures are largely BLAMING THE WEATHER, as non-mall retailers appeared to struggle, including BJ's Wholesale Club Inc. and Costco Wholesale Corp., which both reported lower-than-projected quarterly results.
More important, observers said, will be how March shapes up because it is a longer month and will include this year more spending related to Easter, which falls on April 4, earlier than last year.
Nonetheless, February proved to be a healthy month for many retailers. Surprisingly, sales were strong from teen retailer Zumiez Inc., which reported same-store sales growth of 11% in February, compared with Wall Street's projection of 1.2% growth and last year's 13% slide.
Also strong was Limited Brands Inc., which reported a 10% increase in February same-store sales, benefiting from vibrant Valentine's Day-related sales at its Victoria Secret division, where same-store sales rose 10%. Limited's total sales rose to $600.1 million from $547.8 million a year ago.
On the weak side was Destination Maternity Corp., which reported a 9.3% drop in February same-store sales, while apparel and accessory store Stage Stores Inc. saw same-store sales slide 3.9%. Undoubtedly, it was the weather!
Marko's Take NEVER blames the weather! We're here, telling it like it is. Rain, snow, hail, or gloom of night! Hope the weather where you are isn't getting you down!
If you think the "Blame It On The Weather" BS has its merits, TAKE ME ON!
Marko's Take
Our fourth episode on YouTube, which will unravel the mysterious Federal Reserve and take a peek behind the FED curtain, will be posted shortly. You can access it by clicking here: http://www.youtube.com/markostaketv.
Monday, February 22, 2010
Online Sales Remain Strong... But For How Long?
During the incredibly important Christmas and December retail sales periods, the main bright spot was online sales (http://markostake.blogspot.com/2009/12/are-we-in-economic-recovery-or-not.html). According to CNN Money, retail sales rose in January, driven by strength in discount retailers and online merchants, according to a government report Friday.
The Commerce Department said total retail sales edged up 0.5% to $355.8 billion last month, compared with December's revised decline of 0.1%. Economists surveyed by Briefing.com had anticipated that January sales would grow 0.3%.
The year-to-year increase was more impressive. January retail sales jumped 4.7%, compared to the same month in 2009.
"This is decent news considering just how bad the labor market is," said Adam York, an economist at Wells Fargo. "We had gains in most of the categories and the real strength was in general merchandise sales, so it looks like the consumers are just out there shopping again."
"We're looking for fairly modest gains in personal consumption and sales, but consumers are not going to come roaring back," he said. "With the weakness in the labor market, it's going to be difficult to see a sustained growth path in consumption."
However, similar numbers for the U.K, just reported, are bleak.
Data just released shows that, even the strong online sector is now faltering. This data, while from the U.K., augers poorly for the American online sector.
Bad weather in January was a factor in the drop in post-Christmas monthly sales, which saw a decrease of 22%! Bad weather is a typical excuse for bad sales!
Online shopping showed its slowest annual growth in nearly 10 years of the industry's index, with sales last month up just 5% on January 2009 (http://www.guardian.co.uk/business/2010/feb/22/slow-online-sales-growth).
Companies with only an online presence made 2% less money than 12 months before, according to the latest figures. Those with a high street, direct mail or catalogue order busines as well saw sales rise by 10%. The traditional post-Christmas monthly sales drop from December to January was also far worse online than normal, with a 22% decrease.
According to the Financial Times, the annual growth rate of internet shopping has fallen to its lowest level since records began, according to a survey published over the weekend.
A recent survey showed that sales online rose by only 5% in January compared with the same month in 2009. UK consumers spent £4.3billion with internet sites last month, as the rate of monthly growth declined by 22% compared with December's figure.
Given the stubbornly high level of unemployment domestically, it stands to reason that the surprising strong online sales figures from the U.S. will follow those in Great Britain. While our economy has all the "appearances" of a recovery, there is no reason to believe, without a marked improvement in employment, that the bounce in retail and online sales will prove to be much more than temporary.
Care to weigh in? TAKE ME ON!
Marko's Take
Our next segment of "Marko's Take TV" will be up shortly... http://www.youtube.com/markostaketv
We will debuting the first four episodes on February 28th, at 9PM Pacific Time at Dimples, 3413 West Olive Ave, Burbank, CA 91505. Hope to see you there!
Tomorrow, we'll re-visit Gold!
The Commerce Department said total retail sales edged up 0.5% to $355.8 billion last month, compared with December's revised decline of 0.1%. Economists surveyed by Briefing.com had anticipated that January sales would grow 0.3%.
The year-to-year increase was more impressive. January retail sales jumped 4.7%, compared to the same month in 2009.
"This is decent news considering just how bad the labor market is," said Adam York, an economist at Wells Fargo. "We had gains in most of the categories and the real strength was in general merchandise sales, so it looks like the consumers are just out there shopping again."
"We're looking for fairly modest gains in personal consumption and sales, but consumers are not going to come roaring back," he said. "With the weakness in the labor market, it's going to be difficult to see a sustained growth path in consumption."
However, similar numbers for the U.K, just reported, are bleak.
Data just released shows that, even the strong online sector is now faltering. This data, while from the U.K., augers poorly for the American online sector.
Bad weather in January was a factor in the drop in post-Christmas monthly sales, which saw a decrease of 22%! Bad weather is a typical excuse for bad sales!
Online shopping showed its slowest annual growth in nearly 10 years of the industry's index, with sales last month up just 5% on January 2009 (http://www.guardian.co.uk/business/2010/feb/22/slow-online-sales-growth).
Companies with only an online presence made 2% less money than 12 months before, according to the latest figures. Those with a high street, direct mail or catalogue order busines as well saw sales rise by 10%. The traditional post-Christmas monthly sales drop from December to January was also far worse online than normal, with a 22% decrease.
According to the Financial Times, the annual growth rate of internet shopping has fallen to its lowest level since records began, according to a survey published over the weekend.
A recent survey showed that sales online rose by only 5% in January compared with the same month in 2009. UK consumers spent £4.3billion with internet sites last month, as the rate of monthly growth declined by 22% compared with December's figure.
Given the stubbornly high level of unemployment domestically, it stands to reason that the surprising strong online sales figures from the U.S. will follow those in Great Britain. While our economy has all the "appearances" of a recovery, there is no reason to believe, without a marked improvement in employment, that the bounce in retail and online sales will prove to be much more than temporary.
Care to weigh in? TAKE ME ON!
Marko's Take
Our next segment of "Marko's Take TV" will be up shortly... http://www.youtube.com/markostaketv
We will debuting the first four episodes on February 28th, at 9PM Pacific Time at Dimples, 3413 West Olive Ave, Burbank, CA 91505. Hope to see you there!
Tomorrow, we'll re-visit Gold!
Saturday, January 9, 2010
Economic Signs Are Pointing Up!
The economic recovery is very well under way according to a slew of recently released data.
Economist Chris Varvardes of Macromedia Advisors, LLC, estimates the U.S fourth quarter Gross Domestic Product grew at 5.4% annually!
Overall Chistmas sales grew by 3.8%, a vast improvement over last year's numbers which FELL by 3.4%!
Various retailers reported their own stats. TJMaxx led the pack with same store sales rising a whopping 14%, while giants Ross, Nordstrom and Saks came in at 12%, 11% and 9.9% respectively! Only JCPenney and Abercrombie & Fitch both FELL by 3.8% and 19% respectively!
Even John Williams (http://www.shadowstats.com/) reports that some economic facts are improving, albeit from his accurately adjusted factors. He estimates the Payrolls FELL by 500,000 rather than as reported 85,000, but is a vast improvement over prior numbers he has computed.
Marko's Take? Things are looking up!
Thanks for reading.
Marko's Take
Economist Chris Varvardes of Macromedia Advisors, LLC, estimates the U.S fourth quarter Gross Domestic Product grew at 5.4% annually!
Overall Chistmas sales grew by 3.8%, a vast improvement over last year's numbers which FELL by 3.4%!
Various retailers reported their own stats. TJMaxx led the pack with same store sales rising a whopping 14%, while giants Ross, Nordstrom and Saks came in at 12%, 11% and 9.9% respectively! Only JCPenney and Abercrombie & Fitch both FELL by 3.8% and 19% respectively!
Even John Williams (http://www.shadowstats.com/) reports that some economic facts are improving, albeit from his accurately adjusted factors. He estimates the Payrolls FELL by 500,000 rather than as reported 85,000, but is a vast improvement over prior numbers he has computed.
Marko's Take? Things are looking up!
Thanks for reading.
Marko's Take
Wednesday, December 30, 2009
Are We In An Economic Recovery or Not?
Christmas sales are finally in, so we can gauge the nature as to whether a bona fide recovery is indeed taking place. Of course, there is bad news and good news.
The bad news is that the so-called recovery is much weaker than originally reported. Third quarter GDP or Gross Domestic Product was first reported at 3.5%. It has since been revised downward twice to 2.2%.
Of course, the revisions are courtesy of the Bureau of Labor and Statistics, an entity known for "juicing" the real numbers. If you follow Shadowstats.com you get an entirely different picture. According to them, GDP currently is tracking at MINUS 3%!
According to Reuters, online spending ROSE 5% from the beginining of November through December Activity tracked by SpendingPulse, a unit of MasterCard Advisors, showed retail sales ROSE 3.6 % in the period from November 1 through Christmas Eve on December 24.
The Wall St. Journal has weighed in on home sales. The Case-Shiller index of home prices for 20 cities increased a seasonally adjusted 0.4% from September, the fifth consecutive monthly increase. Before the seasonal adjustment, the index was unchanged. Home prices are 7.3% lower than a year ago..
Furthermore, the situation for mortgage redefaults has improved. Some 18.7% of loans modified in the second quarter of 2009 were at least 60 days past due three months later, according to the report, by the Office of Comptroller of the Currency and the Office of Thrift Supervision. That compares with a redefault rate of 30% or more after three months for loans modified in the previous four quarters.
"Net net" it's still impossible to formulate a definitive conclusion. What we do know for now is that some signs of recovery are present. Yet, we still don't know to what extent. As Confuscious once said "I'm confused"!
If you think you know the answer to the question at hand, PLEASE hit me with your best shot. Fire away!
There is a comment section below in case my constant repetition of the existence of such a section somehow escaped you!
Tomorrow we'll return to another "California Crisis Deepens Series"
Marko's Take
The bad news is that the so-called recovery is much weaker than originally reported. Third quarter GDP or Gross Domestic Product was first reported at 3.5%. It has since been revised downward twice to 2.2%.
Of course, the revisions are courtesy of the Bureau of Labor and Statistics, an entity known for "juicing" the real numbers. If you follow Shadowstats.com you get an entirely different picture. According to them, GDP currently is tracking at MINUS 3%!
According to Reuters, online spending ROSE 5% from the beginining of November through December Activity tracked by SpendingPulse, a unit of MasterCard Advisors, showed retail sales ROSE 3.6 % in the period from November 1 through Christmas Eve on December 24.
The Wall St. Journal has weighed in on home sales. The Case-Shiller index of home prices for 20 cities increased a seasonally adjusted 0.4% from September, the fifth consecutive monthly increase. Before the seasonal adjustment, the index was unchanged. Home prices are 7.3% lower than a year ago..
Furthermore, the situation for mortgage redefaults has improved. Some 18.7% of loans modified in the second quarter of 2009 were at least 60 days past due three months later, according to the report, by the Office of Comptroller of the Currency and the Office of Thrift Supervision. That compares with a redefault rate of 30% or more after three months for loans modified in the previous four quarters.
"Net net" it's still impossible to formulate a definitive conclusion. What we do know for now is that some signs of recovery are present. Yet, we still don't know to what extent. As Confuscious once said "I'm confused"!
If you think you know the answer to the question at hand, PLEASE hit me with your best shot. Fire away!
There is a comment section below in case my constant repetition of the existence of such a section somehow escaped you!
Tomorrow we'll return to another "California Crisis Deepens Series"
Marko's Take
Saturday, December 5, 2009
Has A True Economic Recovery Actually Begun?
Right off the bat, I can tell you that I don't know. I've been as skeptical as anyone and said so in prior blogs. However, it appears POSSIBLE that we indeed are in the very early stages of some sort of recovery. But, the evidence remains a mixed bag. In addition, it's WAY too early to speculate as to how strong that recovery might become, if it's started at all.
On the positive side, a website called Shadow Stats (http://www.shadowstats.com/), which calculates various government-reported statistics and adjusts them for a variety of misleading alterations, has shown an actual slight "downtick" in the unemployment rate. Now, one month doesn't make a trend, but it IS the first time they show a drop since late 2007.
There is also the persistent strength in the stock market, which has historically led recoveries by 6 to 12 months. The stock market bottomed 9 months ago.
Another very reliable leading indicator is the money supply, which, thanks to Fed chief Ben Bernanke, has been exploding. Historically, high rates of growth in money supply have led to economic recovery within a period of between 6 to 18 months. All of the emergency stimulus and bailouts, which have caused the growth in money, began within the terminal months of the Bush administration, so they fall within the reliable historical precedent.
In addition, yesterday I became aware of a new program offered by certain banks of mortgage relief - EVEN FOR THE UNEMPLOYED! This was reported in an article by the Sacramento Bee, ironically titled "Mortgage relief program helps relatively few troubled homeowners". An unemployed friend of mine spent two hours talking to Wells Fargo, the holder of his mortgage, and found that this was indeed true. They went over his financial condition meticulously. They couldn't pre-qualify him for any immediate relief, but they are sending him a package requesting certain documents from which they can verify the information and consider the merits of his request.
Now, for the bad news! Retail sales remain DISMAL On "Black Friday", the day after Thanksgiving, one of the two most heavily trafficked shopping days of the year, Sacks reported a 26% DROP in year-over-year sales. Macy's and J.C. Penney also reported greater than estimated slides of about 6%. We don't yet know about Wal-Mart, as it has stopped reporting monthly sales statistics altogether! But, this bad news may be somewhat offset by some good news in online sales, which were UP 11% year-over-year.
According to the FDIC, six more banks were seized on Friday, with combined assets of $13.4 billion. And, as pointed out in recent blogs, the fortunes of states and municipalities continue to deteriorate.
So, the "recovery" theory remains quite speculative as the evidence is a mixed bag. However, I suspect that we will know the answer relatively soon. More evidence will arise after Christmas. Anecdotally, I know that most of my friends have, at most, a "token gift only" intention this holiday season.
Finally, the REALLY bad news is that any recovery is merely more evidence of a precursor to a vastly heightend level of inflation. Without exception, history shows that the "growth effect" of stimulus programs precedes the subsequent "price effect". And, as the "growth effect" tapers off, the "price effect" accelerates.
Therefore, we are sowing the seeds of an even greater crisis which is yet to be experienced.
I hope you found this essay useful, interesting and informative. I appreciate the rapidly growing readership and the questions, which I am delighted to answer.
Marko's Take
On the positive side, a website called Shadow Stats (http://www.shadowstats.com/), which calculates various government-reported statistics and adjusts them for a variety of misleading alterations, has shown an actual slight "downtick" in the unemployment rate. Now, one month doesn't make a trend, but it IS the first time they show a drop since late 2007.
There is also the persistent strength in the stock market, which has historically led recoveries by 6 to 12 months. The stock market bottomed 9 months ago.
Another very reliable leading indicator is the money supply, which, thanks to Fed chief Ben Bernanke, has been exploding. Historically, high rates of growth in money supply have led to economic recovery within a period of between 6 to 18 months. All of the emergency stimulus and bailouts, which have caused the growth in money, began within the terminal months of the Bush administration, so they fall within the reliable historical precedent.
In addition, yesterday I became aware of a new program offered by certain banks of mortgage relief - EVEN FOR THE UNEMPLOYED! This was reported in an article by the Sacramento Bee, ironically titled "Mortgage relief program helps relatively few troubled homeowners". An unemployed friend of mine spent two hours talking to Wells Fargo, the holder of his mortgage, and found that this was indeed true. They went over his financial condition meticulously. They couldn't pre-qualify him for any immediate relief, but they are sending him a package requesting certain documents from which they can verify the information and consider the merits of his request.
Now, for the bad news! Retail sales remain DISMAL On "Black Friday", the day after Thanksgiving, one of the two most heavily trafficked shopping days of the year, Sacks reported a 26% DROP in year-over-year sales. Macy's and J.C. Penney also reported greater than estimated slides of about 6%. We don't yet know about Wal-Mart, as it has stopped reporting monthly sales statistics altogether! But, this bad news may be somewhat offset by some good news in online sales, which were UP 11% year-over-year.
According to the FDIC, six more banks were seized on Friday, with combined assets of $13.4 billion. And, as pointed out in recent blogs, the fortunes of states and municipalities continue to deteriorate.
So, the "recovery" theory remains quite speculative as the evidence is a mixed bag. However, I suspect that we will know the answer relatively soon. More evidence will arise after Christmas. Anecdotally, I know that most of my friends have, at most, a "token gift only" intention this holiday season.
Finally, the REALLY bad news is that any recovery is merely more evidence of a precursor to a vastly heightend level of inflation. Without exception, history shows that the "growth effect" of stimulus programs precedes the subsequent "price effect". And, as the "growth effect" tapers off, the "price effect" accelerates.
Therefore, we are sowing the seeds of an even greater crisis which is yet to be experienced.
I hope you found this essay useful, interesting and informative. I appreciate the rapidly growing readership and the questions, which I am delighted to answer.
Marko's Take
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