Green Shoots? Not Retail Sales or Unemployment Claims
Two weeks ago, I noted that the Great Recession was over, but we still had to deal with the ongoing “ordinary” recession.
Today’s data confirms that view.
Initial Claims were much weaker than the green shoots crowd expected; Continuing Claims are falling as exhaustees drop off the rolls of Unemployment Insurance (see chart below). And the 90% of the labor pool that does have jobs have seen no gains in income for over a decade now. In Real Inflation adjusted terms, these consumers are worse off — much worse off the lower you go down the pay scale — then they were 10 years ago.
No job, no Unemployment insurance, no money — what might that do to spending?
Take a wild guess.
Despite the government “Cash for Clunkers” billion dollar giveaway, Retail Sales still fell. Consensus was expected to be 0.8%, and instead we saw a negative 0.1%. Ex-Autos it Retail Sales fell 0.6%. (see chart below)
Consumers continue to save versus spend. As a group, they are shell shocked from the twin asset collapses (Housing and Equity). Keep in mind that typical middle class family has much more of their net worth tied up in their home than in their stock portfolios/401ks.
Those folks looking for a fast 2001 snapback in Retail Sales are going to be sorely disappointed.
>
Long Term Unemployed Continues to Rise
click for larger chart
chart courtesy of Calculated Risk
Retail Sales Remain Punk
click for larger chart
chart courtesy of Calculated Risk
>
Previously:
The Great Recession is Over! Long Live the Ordinary Recession… (July 31st, 2009) http://www.ritholtz.com/blog/2009/07/great-recession-over-long-live-ordinary-recession/
Sources:
ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES July 2009
The U.S. Census Bureau, August 13, 2009
http://www.census.gov/retail/marts/www/marts_current.pdf
UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT
EMPLOYMENT AND TRAINING ADMINISTRATION
U.S. Department of Labor, August 13, 2009
http://www.workforcesecurity.doleta.gov/press/2009/081309.asp
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August 13th, 2009 at 9:45 am
Make that 3 Billion Dollars for Cahs for Clunkers — with $1B down, and $2B to go . . .
August 13th, 2009 at 9:46 am
Good point, Barry. We aren’t likely to see a 50% short covering rally in Inland Empire ranch homes any time soon.
SELL THE SPOOS, JAMIE. BUY THE TWOS! DUCK AND DIVE, LLOYD. BUY THE FIVE!
August 13th, 2009 at 9:49 am
Green shoots my a$$
I think we are seeing a nice distribution in the markets.
August 13th, 2009 at 9:50 am
Household wealth, equities and housing, is swinging upward, or in the case of housing, is not declining like it was and still should be. Ignore all the nonsense that it’s being fueled by massive infusions of newly-minted greenbacks that represent no new value, but rather just hope against hope that an inflationary delusion will somehow morph into real growth where none would otherwise occur. Delusion is the new reality. Perception, as mandated by government fiat, trumps everything. A man sees what he wants to see and hears what he wants to hear.
Happy days are here again. Buy now or be forever priced out. Don’t miss the next leg up in the markets. DOW 15,000 by Christmas.
August 13th, 2009 at 9:55 am
Retail = Not so small and very noticeable Canary in the Coalmine.
August 13th, 2009 at 10:03 am
I wait with baited breath to see how Kudlow and Kneale will spin this data today…
Maybe they’ll say that job losses are backwards looking? Maybe we’re in a new paradigm and retail sales don’t matter anymore?
HCF
August 13th, 2009 at 10:10 am
Maybe GS bonus babies will save the day. Using rough math, it looks like they will get about 5% of the $300b of the cash the Fed printed over the last year and directly injected into the economy to stabilize the financial markets.
August 13th, 2009 at 10:12 am
Think Wall Street has changed, think again…
http://online.wsj.com/article_email/SB125007909275825709-lMyQjAxMDI5NTEwMzAxNzM5Wj.html?mod=mktw
August 13th, 2009 at 10:14 am
How I figured 5% of $300b:
To repeat: Over the life of the Fed stabilization program, GS will earn about $30b in trading profits. 50% will paid out as compensation. Do the math.
August 13th, 2009 at 10:15 am
On a related green shoots note – Bob Toll at Toll Brothers wants a “Cash for Clunkers” program for housing and said as much in their recent conference call. Did I call that one (“Cash for Condos”) a few days ago or what? Free money for everyone…….but due to be repaid with interest later on. Just the ticket to get things going again. Take the last bubble and X it by 1,000 in scope/magnitude!! Happy days are here again in the ‘ol USA.
August 13th, 2009 at 10:16 am
So Obama turned the great ressesion into a great depression with his stimulus package, and now he has turned the great ressesion into a regular ressesion with his cash-for-clunkers. Someone has to stop this guy or we will have bears jumping out of windovs all over Wall Street :-)
August 13th, 2009 at 10:18 am
We’ll see, but frankly I was in the market to add to my wardrobe last week (thought I should get some new shirts for teaching…think a slightly dressier form of casual). I wanted to spend about $150. I ended up not spending a dime. Why?
Because the stores wouldn’t let me!
I went to Gap, and it was the same story at other stores I checked: nothing was on sale (and I never have bought a shirt at full price…ever), clearance sections had shrunk to 75% of what I’m used to (Gap usually has 6-8″ of rack space on clearance…this time they had 2″), and even the full priced inventory was slashed to the bone. They had 1 polo shirt style, 1 collared shirt style, and 1 t-shirt style…and that was it.
This could just be my area or just bad management at the Gap, but I checked the website to see if I could order online instead and it was the same story.
August 13th, 2009 at 10:20 am
@ Mannwich:
What’s next, cash for clunker stocks? Can we all get $100/share for our Nortel stock? This is really getting out of control. What the govt. is doing is the equivalent of hiring one guy to dig a ditch and another guy to fill the ditch in.
We built too many new homes in the last boom… Now, they NEED to correct. Not too hard to understand for us, so why is it so hard for policymakers to understand?
HCF
August 13th, 2009 at 10:20 am
@franklin411: I wonder why that is? If nobody is buying, why would retailers pack their shelves with stuff they’re gonna either get stuck keeping or selling for a loss? This will become more common as the Great Recession drags on and on and on.
August 13th, 2009 at 10:20 am
When I saw the number flash by this AM… ex-autos… it dawned on me that maybe things arent as good as they have been portrayed in the MSM… ;)
(Just having some fun with yall, in exchange for the fun I just had catching up on where the open thread wandered last night… but who IS cnbcsucks these days???)
What strikes me most about the juice that retail sales got from this foolish cash for clunkers nonsense, is just who did it help anyway? Likely folks who already had some dough lying around. And further…
Didnt this program only “rob” car sales from the future? Legitimate auto sales that would have arisen and helped us in a “real” recovery? Not some chickenshit engineered one?
Gets right back to the theme that keeps coming up, and I dont know who said it first… “mortgaging the future.” Sounds about right.
Rant time:
Why dont these asshats get it?! Put people to work, and they will buy cars, and other shit. Make good on your promises to unleash large infrastructure projects and put boots on feet and shovels in hands… then you’ll see the retail sales. Its just mind boggling, the ineptitude. But quit wasting money on bullshit “stimulus” that doesnt stimulate.
August 13th, 2009 at 10:21 am
@DeDude: Be careful assuming causation when there may only be correlation.
August 13th, 2009 at 10:22 am
@franklin:
Do not mistake good inventory management and/or slashing costs with robust growth. There’s a good reason that most companies beat on profit expectations, but missed on revenue. Not saying it won’t come back eventually, but I’m not convinced that retail recovery is happening right now…
HCF
August 13th, 2009 at 10:26 am
franklin411 Says:
August 13th, 2009 at 10:18 am
Because the stores wouldn’t let me!
reply:
——–
Agreed that only fools pay retail unless they absolutely have to. What you saw is common. The sales are gone now. Low ‘everyday pricing’ is all they have left. If no retail recovery soon, Marshalls and TJMaxx will restock from major retailer Chapter 7 events. Wait for that.
August 13th, 2009 at 10:30 am
@HCF and Mannwich
My first thought was “Back to School,” because this is a very wealthy area. But the K-12 population is pretty small. The big fish would be my university, but the undergrads won’t be back till the end of September.
I agree that it probably says a lot about store management instead of robust growth. I actually asked the manager why there was no inventory, and she said something about how the CEO had just visited them and they were changing the store (at least, that was what I think she said…she didn’t make much sense). However, it was the same story at Express and Banana Republic (home of the $125 linen shirt “on sale” for $75).
It does say something about demand, though. I have a job, I need clothes, and I have money budgeted for this. But they won’t let me!
August 13th, 2009 at 10:32 am
per yahoo: Business inventories down 1.1% and worse than expectations. Prior month revised down significantly.
August 13th, 2009 at 10:32 am
f411 and mannwich – the retailers are way ahead of the MSM in recognizing the ramifications of the economic reality here. They are already on the path of protecting their business against vastly reduced consumer spending. Fewer stores, less inventory, less square footage of floor space, narrow selection of merchandise, and merchandise priced for profits. The fire sale days (unless sponsored by DC) are coming to and end soon. This is the worm turning. This is the beginning signs of the future inflation. Retail will survive only by very aggressive downsizing. Eventually their margins will stabilize, but at a much lower revenue level.
Don’t get me wrong, we are still in a deflationary environment, but watch there signs carefully.
August 13th, 2009 at 10:35 am
@f411: This lack of supply will eventually cause inflation (not yet though) when demand comes back. Who knows when that will be though?
August 13th, 2009 at 10:46 am
“… consumers are worse off then (sic) they were 10 years ago.”
If this is true then we need to eliminate all sales taxes and pile all revenue into income taxes.
C’mon guys- face facts- the party’s over. Raise the income and capitol gains back to reasonable levels. The little people are dying- and I don’t mean they are lacking health care.
August 13th, 2009 at 10:47 am
“Don’t get me wrong, we are still in a deflationary environment, but watch there signs carefully”
Forestalling deflation, i.e., preventing or slowing otherwise naturally occuring price declines by massive money printing is inflation. And it’s happening everywhere. Automobiles (you think the dealer’s reduce their prices by $4,500 when taking a clunker?) Assets (stocks, bonds, commodities) and most especially, real estate (ex-a few basket case markets in the bad four states, prices have stabilized or are even climbing, no matter that virtually all markets are massively over-built).
I keep saying it, but all that monkeying with the money can do is get you monkeyed money. It just screws up the accounting. It changes nothing in the long run, and the long run looks like economic stasis or decline.
August 13th, 2009 at 10:47 am
Let’s see: If business inventory is down a lot and retail sales are down a lot and pricing is stable with fewer discounts then what could this mean? Perhaps it’s a new equilibrium where the economy is downsizing, starting with the consumer and inventories are keeping pace. It also suggests no restocking cycle at any time soon since there is no indication anyone will buy what is produced … it might require a sale at a loss.
To me, this looks like the first shoots in a permanently downsized economy. Or, to put it another way, the most optimistic case is a ‘L’ shaped recovery. Or something that will look ‘L’ shaped after is stops falling.
August 13th, 2009 at 10:50 am
dead hobo
Yep, trickle down baby. Just get the money in the hands of those who are already rich and they’ll spend it on the little people. Have to keep all those housekeepers and dog walkers employed, don’t ya know.
August 13th, 2009 at 10:50 am
@ Paul S:
Assume I am ignorant… how does
“Raise the income and cap gains back to reasonable levels” help the “little people” at all?
August 13th, 2009 at 10:51 am
Mannwich;
This is not biomedical research where you can control all variables or conduct double blind placebo controlled trials. So I am comfortable assuming causation in the absence of any other credible model to explain a change. Correlation and a highly credible model to explain causation is about as good as it ever gets in the world of economy.
August 13th, 2009 at 10:52 am
@dead hobo: I think you nailed it. This is probably as good as it gets economic activity-wise for quite a few years to come. The good news is we’ve stopped falling off a cliff. The bad news is we’ve hit the ground and likely will flat-line there for a long time absent any major groundbreaking invention here in the U.S. that changes the game.
August 13th, 2009 at 10:54 am
@DeDude: You’re comfortable with assuming that, which I believe is an enormous stretch. That’s fine. I’m not. This is just the kind of thing the Bush admin did (lowering taxes always spurs growth) and the liberals said that “correlation does not imply causation”, but I guess it’s different when your/our guy is in the WH, right?
August 13th, 2009 at 10:55 am
the stock market cracks me up- it is like Michael Myers from the movie Halloween- you know where he gets shot then stabbed then falls out a window, etc, etc, etc-
but when you look over your shoulder- he is on his feet again
August 13th, 2009 at 10:58 am
ahab
LOL! That’s the perfect metaphor for the market lately. I still don’t know if it’s just mass psychological delusion or indeed the “money printing” that’s having this effect. Probably a combo of the two, with some desperation thrown in.
August 13th, 2009 at 10:58 am
Of course by the end of the movie he’s got his head lopped off chopped up in a meat grinder
Hmmm….I dig
August 13th, 2009 at 11:03 am
Geez Barry, more unpatriotic talk.
You obviously don’t love this country enough. Didn’t you get the stories about “every economist agrees the Recession is over.” We’ve turned the corner, damnit! Everyone says so, and they’ve repeated it often, therefore it must be true! Now get with the program comrade! Get out there and start buying stocks like you love this country again.
[Feeling a bit snarky this a.m.]
August 13th, 2009 at 11:03 am
Mannwich Says:
August 13th, 2009 at 10:52 am
The bad news is we’ve hit the ground and likely will flat-line there for a long time absent any major groundbreaking invention here in the U.S. that changes the game.
reply:
——–
Not to be critical, but you just described the top of the range I suggested. There is no evidence the economy has stopped falling, it’s only falling a lot slower. You’re such an optimist!
August 13th, 2009 at 11:07 am
mannwich-
i slightly refined your idea-
the good news is- America is going to make it
the bad news is- it’s going to suck
August 13th, 2009 at 11:08 am
Should we declare retail sales as lagging indicator ?
I think the only forward looking indicator is the stock market. Since, it is going up, suggesting good things to come ahead, we should buy more stocks.
August 13th, 2009 at 11:09 am
I’d like to know who estimates what.
Let’s see…more than 50% of people in debt before the crisis started, 6 to 8 million more unemployed with thousands more in the near future.
Retail sales are not picking up, well, what a surprise.
August 13th, 2009 at 11:10 am
Very nice charts, Barry. Now we know where the stiumuls dollar figure comes from. One would guess every country in the world has similar charts. I guess we also know why there is talk of more stimulus. “Countries of the world, Reflate!” I’m just upset I did not understand the memo. Always on the outside looking in.
August 13th, 2009 at 11:25 am
long srs with no stops since yesterday ($12.13). Could be crazy. This just feels like, well, like the other bubbles felt at about the middle of the move.
I can’t believe that came out so easily.
August 13th, 2009 at 11:44 am
@ hope:
You sound like a sinner in confession… :)
August 13th, 2009 at 11:49 am
By the time I figure out how to go long a bubble, and stay long to the end, the bubble game will be over.
August 13th, 2009 at 11:54 am
Anyone have thoughts on CRE surviving by sticking it to the banks? I looks like the CRE companies are able to selectively default on the worst properties in their portfolios in order to try to stay solvent.
August 13th, 2009 at 11:54 am
[...] change in nominal and …Calculated Risk – http://www.calculatedriskblog.com/|||Green Shoots? Not Retail Sales or Unemployment Claims | The Big …Two weeks ago, I noted that the Great Recession was over, but we still had to deal with the ongoing [...]
August 13th, 2009 at 11:56 am
@IdiotInvestor2: My wife works in retail and she is not seeing an uptick in sales at all. None. Zero. Nada.
August 13th, 2009 at 12:01 pm
@hopeImwrong 12:25 am
A question — why SRS? Why not TZA, given the likelihood that the back-to-school sales will be inadequate generators of revenue, both from a lack of inventory and a lack of customers perspective? I would think that the small retailers would get hammered the most, and while Uncle Sam has the housing industry’s back, so far as I can see, there is an actual free market operating in the small stocks. Those small retailers are out there on the front lines, and are getting slaughtered.
full disclosure — I had some buy orders to pick up TZA @ 14.50 and they tripped in yesterday’s Fed spasm — a lot sooner than I expected them to. So I’m not exactly unbiased in this like of thinking. (I also have my sell orders placed, and would be happy to be taken out before I have to decide how long I’m going to suffer the death of a thousand end-of-day realignment)
August 13th, 2009 at 12:07 pm
@const.
I’m not comfortable with 3x etfs with overnight risk. SRS might not be the best here. It’s had some big swings lately. Looks like my timing is off on this one, and stops are going in at this time.
August 13th, 2009 at 12:07 pm
@IdiotInvestor2 11:08 am
What a serendipitous coincidence! Here you are wanting to buy stocks to take advantage of your perceived future of rising share prices, and here I am, with stocks to sell! The prices might be a little dear, as my inventories are a tad depleted, but I’m sure we can strike a deal.
Kinda like Tim Geithner trying to sell his Westchester house that he paid $1.6M for, at a bargain price of a little less than $1.7M …
August 13th, 2009 at 12:10 pm
http://briefing.com/Investor/Public/Calendars/EconomicReleases/claims.htm
Key Factors
‘There is cold comfort in the drop in continuing claims since it most likely reflects people losing benefits. To be sure, there isn’t much hiring happening.
Although the trend in initial claims has been better of late, a reading north of 500,000 at this point is still downright bad and still well above prior recession levels when the 4-week average for claims was closer to the 400,000-450,000 range.’
BINGO!…there is a reason they call this the worst since the GD….take a look at the claims of the last 6 weeks or so…that is why the decrease of the UR to 9.4% was such as sham…not even Einstein could explain losing another 275k jobs and decreasing the UR to 9.4 from 9.5….
Prior recession levels were 100-150k less than where we are now…
just go easy on the greenishness, please…
August 13th, 2009 at 12:11 pm
Hobo,
to put it another way, the most optimistic case is a ‘L’ shaped recovery. Or something that will look ‘L’ shaped after is stops falling.
we need a new letter or accent mark, like the letter “L” but pointing slightly downward to describe this jobless new economy, we can borrow from the French and call it an accent grave but pronounced the americun way
August 13th, 2009 at 12:13 pm
think the only forward looking indicator is the stock market. Since, it is going up, suggesting good things to come ahead, we should buy more stocks.
Your handle fits this statment, except it should be inwestor.
sorry
August 13th, 2009 at 12:14 pm
How about the “lightning bolt” recovery? Seems more honest than “W”
August 13th, 2009 at 12:15 pm
Bottom 80% of Americans in doldrums, have been and will be for a long time. They have been quietly suffering for a decade, hidden by house ATM but now bared.
They will continue to be supported by government handouts (now 1 in every 6 dollars in income is from government for Americans) but that just continues to hide the reality of what is happening to the lower tranches of society
middle class being carved out
http://www.fundmymutualfund.com/2007/12/do-bottom-80-of-americans-stand-chance.html
August 13th, 2009 at 12:15 pm
OK, so a lot of corporations exceeded drastically reduced analysts forecasts by cost cutting to cope with plummeting top line revs, but they ain’t hiring back and we’re still in an unemployment, real estate, retail death spiral. The only thing that could bust us out is consumer spending based on the wealth effect of our current overpriced market, right?
August 13th, 2009 at 12:16 pm
regarding the “shape” of the recession,
I believe we can officially rule out the square root idea based on the fact that the symbol is now being drawn out on CNBC. If for no other reason it should then end up being wrong.
my current holdings are taking a solid pounding today and I care not.
August 13th, 2009 at 12:17 pm
@ ben22 12:13 pm
RE: IdiotInvestor2 Says:
Should we declare retail sales as lagging indicator ?
I think the only forward looking indicator is the stock market. Since, it is going up, suggesting good things to come ahead, we should buy more stocks.
When I first read it I took it as snark. Goes to show you never can tell (on TBP)
August 13th, 2009 at 12:19 pm
Ben22:
How are you advising your clients now?
August 13th, 2009 at 12:21 pm
batmando,
hard to say, I’d expect more bullish posts here as we go higher, it only makes sense, like the people looking at bears at TBP as an indicator the market should go higher.
By the logic of both you would have been doing a lot of buying in late 2007.
Perhaps it was snark.
August 13th, 2009 at 12:24 pm
@ I-Man
you must have missed the part where I said get rid of sales taxes.
August 13th, 2009 at 12:26 pm
Mannwich;
No the trickle down BS that Bush did, had actually been proven NOT to work before. Furthermore, there were no credible mechanistic models to support it. No way would rich people put their additional money into factories that could hire people to make products if there were no (domestic or foreign) additional consumer class money to purchase those products. So anybody with a brain and a little historic data could predict that his taxcuts to the investor class would not grow the economy.
It was also easy to predict that when you shower the investor class with money and get a further imbalance in the investor class/consumer class ratio, the money does not get into production but is used in speculation and will create asset bobbles. We still have way to much money in the investor class, so I hope they soon get into taxing the rich, so the current bobbles can be deplated rather than allowed to run into a much more destructive poping phase.
The thing that Bush should have done, because it has been proven to work, was lowering taxes for the consumer class (poor people). If Bush had done his taxcuts via increasing the personal exemption and kept the top tax brackets where they were, that would have worked.
Correlation in itself does not mean causation, especially not if the correlation does not show up half the time (and you can’t explain why). You have to build a credible (mechanistic) multivariate model and then show that after X (presumably causative factor) you can observe Y (the hypothesiszed effect). Then correlation can be used to imply causation.
August 13th, 2009 at 12:31 pm
ISI Company Surveys continue to move higher. Wine & Spirits is up 1.6 this week… at least we as consumers have the right idea on how to cope. I did my part at happy hour yesterday…
August 13th, 2009 at 12:34 pm
@ Paul S:
No, I got that part. Taxes are not the answer.
August 13th, 2009 at 12:35 pm
Re: foretelling the future …
I think that we can look at the Labor Day retail sales as a proxy for the coming Christmas season. I fully expect that when the current quarter’s earnings come stumbling out in October — and I expect then to be about as profitable as the previous quarter’s were, sustained only by cutbacks in the size of the various businesses — the lack of revenue and likely bleak management guidance (where offered) will spook the herd, and we will finally get the next down leg of the W.
Whether or not we get a subsequent up-leg, and even if we do, how far it extends upward, is probably in the hands of the stimulus package, and how fast they pour it into the economy. The single best thing they could do, for my money, is to declare an income tax holiday, at least for those earning less than $50K. That would immediately be returned in the form of those dollars being spent in the real economy, without the overhead and misallocation of government. Charge the cost (lost IRS revenue) of such a tax holiday against the stimulus package.
August 13th, 2009 at 12:39 pm
@Bruce,
I can’t say exactly for a number of reasons but in general I would remind that we’ve used much more fixed income this year for a lot of our clients and the returns have been very good, yes, those people have not really participated in this rally, they also didn’t participate in stocks last year : )
As for the more aggressive clients, we are reducing equity but are not completely out of the market, this rally still has the potential to go much further than anyone expects so we are using insurance for these people just in case it ends abruptly. We have begun to build some smaller short positions but I’d rather not say how or what we are doing specifically for any clients.
August 13th, 2009 at 12:41 pm
Thanks Ben….glad you are still around
:)
August 13th, 2009 at 12:43 pm
Well, if you don’t think reducing sales tax would directly help the little people I’m clueless.
And here’s a sure sign how deep the lower classes are taking it- WalMart revenue down 1.4%.
http://www.nytimes.com/2009/08/14/business/14shop.html?_r=1&ref=business
August 13th, 2009 at 12:48 pm
bruce,
me 2.
the second chart tells the story so well of the last decade and how the real estate bubble fueled so much spending. I have heard recently that the new (or repeat) bubble is of course the stock market but after the wealth destruction that has occured over the last decade for many stock owners, if it is a bubble that will reflect in retail sales, it needs to get way bigger, even after this rally lots of folks are still down 30% or more from the 07 peak. I don’t see it getting big enough before another downturn, and what other bubble can be blown that will allow consumers to tap into the percieved equity of the bubble to spend.
when I couple this with the chart of the YoY change in consumer credit I’m thinking that shopping is going to be week for both back to school and the holiday session, despite the easy comparisons from last year, we’ve got a lot more people out of work than we did then and I believe something like 2 million people are going to exhaust unemployment benefits in Sept…. not very far away.
If we could just get a few solar flares…….
August 13th, 2009 at 12:49 pm
Hope people are watching the Sugar price. I recommended $IPSU a few days ago. Sugar is in a bubble.
http://ow.ly/15KTlR
August 13th, 2009 at 12:50 pm
@Paul S 12:41 pm
Good Luck with trying to get all 50 states — some of which don’t even have a sales tax and of the ones that do, the sales tax having a different value to each of those state governments (sales taxes are about the only reliable source of state revenue these days) — to agree on how to do this. Sales taxes are a competitive weapon between the states, as well as an essential source of revenue for them.
That’s why I think a federal tax holiday for the people least likely to save the money — the ones most likely to be collecting unemployment — would be both easy to effect, and would have the most stimulative impact.
August 13th, 2009 at 12:54 pm
Paul S,
certainly initially a reduction or elimination of sales tax would help but there are a lot of reasons that in a more intermediate term there is a great deal of risk on a number of levels in doing that as well as it isn’t really a long last solution, one that changes us into a healthy economy that creates private sector jobs again. Further, a small sales tax decrease to the little person won’t matter if they are unemployed or 65-70% of income is going to needs based items such as food, child-care or education and insurance. Plus, in some states such as mine, we don’t pay sales tax anyway. I don’t know what the defenition of “the little guy” is but Im’ thinking many of them already pay very little income tax as it is.
just a thought on it.
August 13th, 2009 at 12:57 pm
My point is, the tax issue is only a symptom of a larger sickness. Sure, on face value reducing sales taxes helps the “little people” on a consumption level. So they save 8% on a bar of soap, big deal.
Question: what is a larger consequence of lower sales taxes? Reduced revenue for state and local govt… this on top of in some areas a 40% reduction in property tax revenues.
Throw in the tidal wave of job losses, which leads said “little people” to look for state and local government assistance, and you see where I’m going with this. State and local governments are bankrupt and cant afford to help those “little people”.
The federal government meanwhile steals tax payer money, and doles it out to insolvent financial institutions and inept auto companies, and to ridiculous spending programs like cash for clunkers…
Turning their back on your “little people” too.
Which brings me back to my original point. Taxes are not the solution. JOBS are the solution. “Shovel ready” infrastructure projects are the solution, not because they sound good from a social utopian standpoint, but because they put peeps to work. Using “bailout” money to help people who cant find work in the meantime would have been a hell of a lot more effective from an economic standpoint than making sure GS got their shit back from AIG.
Thats all I’m trying to point out bro- not trying to flame you for wanting to reduce sales tax and raise cap gains and income tax. There’s no income to tax, and not alot of sales being made… because people dont have jobs. Period.
August 13th, 2009 at 1:03 pm
@I-Man: Not to stray too off-topic, but I’m think we’re going to see many tax filing shenanigans going forward as kind of a quiet “civil disobedience” by We the Sheeple. I’m sure many probably figure they might as well get their bailout too, or take back their portion of the bailout given to the banks and other corporations on their behalf.
August 13th, 2009 at 1:16 pm
Recovery is a lagging indicator.
August 13th, 2009 at 1:27 pm
Blurtman:
I agree. Also, if you take the words “Abby Joseph Cohen” and rearrange them it spells “No Hope Baby” and you still get a rebate of 4 letters…
It is lunchtime here in the salt mine….
August 13th, 2009 at 1:29 pm
[...] insurance, no money – what might that do to spending? Take a wild guess,” Barry Ritholtz writes at The Big [...]
August 13th, 2009 at 1:37 pm
Yeah, what’s up with all this…taking advantage of your crap car and getting a new one while other’s are fighting to make ends meat…
August 13th, 2009 at 1:50 pm
I-Man @ 10:20;
Cash for clunkers did exactly what it was supposed to and then some. Yes it robbed some sales from the future (5 years from now the same number of cars will have been sold that would have been sold without the program). But an economic stimulus of additional cars sold during a contraction has a lot more positive multiplier effects than the sale of those same cars when the economy is growing. These sales have allowed car companies to reduce their inventory drastically and ease up their need for credit (which at this time they can only get at exorbitant cost). As a result they can afford to stop desperation sales (which are done at a loss) and begin making money on their sale of cars. Furthermore, we have already seen that Ford will begin to produce more cars and as a result both they and their suppliers will be hireiring more people (unemployed folks from the consumer class, who will now be able to consume etc. etc.). All of that means that for a minute little amount of 3 billion, we have made sure that the previous investment in GMC and Chrysler will be recovered rather than lost. And we haven’t even talked about the national security and environmental benefits of people increasing their mpg by an average of 9 miles. Furthermore, the stimulus of this program is multiplied by a factor 4-5 because people either borrow that much or take it out of savings to pump it into the economy. And because the downpayment is so big they have no problem getting a loan to cover the rest of the purchase price (saving up that kind of downpayment would have taken years for many of them). So not only is the stimulus effect of this program a lot faster than infrastucture, it is also being multiplied in a much stronger way.
August 13th, 2009 at 1:55 pm
Franklin411;
It costs money to have inventory. They have to borrow that money at exorbitant cost. So they are all trying to reduce their inventory to a minimum. However, with a minimal inventory there are no huge stocks of summer clothes to move out of here by the end of August, and they don’t have anything for the traditional end of summer sale. We shall see whether the consumers of the stores get to hold out longest.
August 13th, 2009 at 1:56 pm
[...] job, no unemployment insurance, no money – what might that do to spending? Take a wild guess,
August 13th, 2009 at 2:01 pm
[...] job, no unemployment insurance, no money – what might that do to spending? Take a wild guess,” Barry Ritholtz writes at The Big [...]
August 13th, 2009 at 2:02 pm
Paul S;
That is so true. The investor class is so overcapitalized that it creates dangerous bobbles. The consumer class is so undercapitalized that it is killing our (70%) consumer driven economy. Stop killing the consumer class with consumption taxes and get the revenue by using a progressive income tax to drain the investor class of excessive capital.
August 13th, 2009 at 2:03 pm
dedude-
why stop there? let’s give everyone a credit- seems plausible to me. And to buy a house- how about a $10,000 credit to all buyers- not just first timers- then we can give a credit on a brand new refrigerator, washer, dryer, range- but let’s don’t stop there- how about credit for new furniture- the other shit is probably out of style anyway- and did I mention clothing? credits for brand new energy efficient wardrobe-also-
let’s tax savings- not just the interest- but the principal- to change people’s behavior and make them want to spend so they don’t get taxed-
i love this- it’s so easy- and i’m not even a financail genius-
before long the economy will be humming along beautifully
August 13th, 2009 at 2:04 pm
DeDude – Ford is going to produce 10,000 more cars for this year. Given we are millions off the peak auto sales numbers that’s hardly reason to rejoice.
August 13th, 2009 at 2:04 pm
Oh oh.
I am new here and should have added appropriate smilies and tags like () around my comments about the recursive logic – Buy stocks because they are going higher predicting rosy future.
But ben22 did say one thing correctly – my handle befits me. And that’s NOT a sarcastic statement.
August 13th, 2009 at 2:09 pm
http://www.businessinsider.com/henry-blodget-elizabeth-warren-we-have-a-real-problem-coming-2009-8
Elizabeth Warren: “We Have A Real Problem Coming…”
Ben22: This video reminds us (I believe Elizabeth Warren would be considered fairly liberal) that most of our problems have not gone away…..
http://www.mortgagebankers.org/tools/FullStory.aspx?ArticleId=6721
Second-Half Recovery Not Likely, Data Suggests
This is a summary of where we are right now…and why hope may be trumped by reality…
August 13th, 2009 at 2:16 pm
And do not discount the effects of the raised minimum wage. At a time when many employers are tempted to use the high enemployment rate to lower wages (feeding the down spiral), the floor is being lifted and will counter that unfortunate trend.
August 13th, 2009 at 2:17 pm
call me ahab Says:
August 13th, 2009 at 2:03 pm
dedude-
why stop there? let’s give everyone a credit- seems plausible to me.
reply:
——–
Don’t worry. It’s coming. Rumors of the Treasury issuing perpetuities to refinance the debt are beginning. Banks will be required to purchase them, but will be able to consider them as capital. Once that happens, everything can be subsidized.
I want a new kitchen. Why does Obama vex me by not buying me one to support the economy? I’ll even pay for 1/2 if he wants.
August 13th, 2009 at 2:20 pm
@ dedude:
“So not only is the stimulus effect of this program a lot faster than infrastucture, it is also being multiplied in a much stronger way.”
You honestly believe that statement to be true?
And you seriously call our “investment” in GM and Chrysler just that… an “investment”???
If so, dude, then I dont see our interchange going much further.
August 13th, 2009 at 2:20 pm
ahab,
that last post of yours has so many strawmen it’s a firetrap.
August 13th, 2009 at 2:21 pm
Plus – I think we’re missing the bigger picture here is that yes, the economy does seem to have stopped falling off a cliff. What’s apparently caused that is the massive government stimulus and 0% interest rates. Our economy is 70% consumer spending which does not appear to be picking up at all. The government seems to be of the mind that at some point in the near future the consumers are going to start spending again. I think this is a stretch, what we’re seeing right now it probably a generational change in spending habits.
What’s going to happen if this turns out to be the case? Government stimulus simply cannot go on forever, there just isn’t enough money floating around in the world for this to go on indefinitely.
August 13th, 2009 at 2:23 pm
Constantnormal; unfortunately when the consumer class is realy pressured and scared, they use any additional money to pay down debt and/or save for a rainy day. At this phase the only effective stimulus is direct government spending or spending incentives (that are directly tied to the spending). Holiday sales tax-free days could work, but the Feds would have to finance it for the states.
August 13th, 2009 at 2:24 pm
@II,
sorry, didn’t realize you were joking. the handle is kind of funny. that sad thing is, people have said to me, in all seriousness, exactly what you said above.
DeDude,
Imho you are going to eat your words on CFC. You are making the same arguments the proponents of the SUV tax credit scheme made just six years ago, now we are paying those same morons that bought the gaz guzzlers to hand them in so they can get a new one. You remember all that right? And, one of my clients runs floor operations at the largest ford dealership in philly, I can tell you, as he told me, hiring more people,…. out of the question for the foreseeable future. Also, your statement about loans being easier to obtain b/c the down payment is so big, according to my client, is also not true, he’s had people put down over 50% but b/c of the credit score, or income he cannot get the customer a loan, he says this happens still now in 35% or so of the cases.
Bruce,
i saw that video at ZH yesterday. She’s a breath of fresh air if you ask me, too bad her position does not carry more weight.
August 13th, 2009 at 2:25 pm
Thor Says:
August 13th, 2009 at 2:21 pm
Government stimulus simply cannot go on forever, there just isn’t enough money floating around in the world for this to go on indefinitely.
reply:
———
Not true. If the perpetuities idea gets legs and grows into a UST program, the national debt becomes an interest only credit card. This can probably finance social security through year 2100 and buy me a kitchen.
August 13th, 2009 at 2:29 pm
DH – I don’t know whether to laugh or cry over your statement. On the positive side, if what you say is true – Social Security is set to run out of money right around the time I’m supposed to start collecting it.
August 13th, 2009 at 2:31 pm
The economy has now met the economist’s definition of a depression. We passed the recession phase with the Q2 GDP figure. Please keep up.
August 13th, 2009 at 2:33 pm
“that last post of yours has so many strawmen it’s a firetrap.”
thank you- I pride myself on my gift to point out the absurd
DH-
I have heard no such rumor about a perpetual bond- so I assume you are j/k
August 13th, 2009 at 2:35 pm
@Thor: “Run out of money?” The only time that will happen is when our global creditors finally put the clamp down on these shenanigans once and for all. Until then, put it all on the giant credit card and hope for the best. QE baby QE. Print baby print. Rinse, lather, repeat.
August 13th, 2009 at 2:35 pm
@
“a breath of fresh air if you ask me, too bad her position does not carry more weight.”
Yeah, imagining Bair as next Fed Chair, dream on, he sez to hisself.
August 13th, 2009 at 2:36 pm
Pat G. Says:
August 13th, 2009 at 2:31 pm
The economy has now met the economist’s definition of a depression. We passed the recession phase with the Q2 GDP figure. Please keep up.
reply:
———
That should be worth $100 oil and S&P 1100+ by the end of Q3. The recovery should be spectacular, thus justifying the optimistic asset valuation. The further it falls, the more fantastic the springboard back. Time to go long and borrow to do it.
August 13th, 2009 at 2:37 pm
I’m holding out for the “Cash for Kitchens” and “Cash for Cans” (new bathrooms) programs. Both are badly outdated but work OK functionally but if Banana Ben wants to give me free money that we’ll all have to pay back collectively (or default on) down the road, I’m game. Just say “when”.
August 13th, 2009 at 2:39 pm
Manny – yes, both Cash for Kitchens and Cash for Condos would be be very useful to me personally. Where can we sign a petition!
August 13th, 2009 at 2:39 pm
@DH
I need to raise cash? Let’s see, what can I pawn? lol
August 13th, 2009 at 2:39 pm
call me ahab Says:
August 13th, 2009 at 2:33 pm
I have heard no such rumor about a perpetual bond- so I assume you are j/k
reply:
——–
I read something on ZH about greenies. It sounded semi sarcastic but also had a ring of possibility. The current crowd in DC come across as the type who would try to sell it as a great idea. Especially since it could finance every social program ever dreamed of until reality finally catches up.
August 13th, 2009 at 2:41 pm
I need a new refrigerator- black- french door model- external ice and water dipenser-
too much to ask for? i think not
August 13th, 2009 at 2:42 pm
pat g-
I suggest ebay
August 13th, 2009 at 2:45 pm
@ahab
Here, kitty, kitty… I need to take your picture.
August 13th, 2009 at 2:45 pm
@DeDude 2:16 pm
“And do not discount the effects of the raised minimum wage.”
I figure the shrinking work week is a direct consequence of the increased minimum wage.
August 13th, 2009 at 2:47 pm
what dedude fails to mention is that if the minimum wage was $50/hr – then all the workers would have even more money to spend-
damn- maybe I am a financial genius
August 13th, 2009 at 2:52 pm
Ahab; I know all you investor class people (me to) hate not having been invited to the party. But the investor class have not and will not increase their spending due to incentives; they just re-arrange it (that’s why they all think the car rebates will just rearrange, they cannot imagine being unable to purchase brand new unless someone pays the downpayment). The current spending incentives are guided towards the biggest problem sectors (housing and cars), and target the consumer class to get the biggest bang for the bucks. That is how it should be to get the most stimulus bang for the bucks. And sorry that you happen to be rich so you don’t get anything – but I am sure I can find some poor black drug addict who would be happy to change seats with you so you can enjoy the experience of getting tax back without ever having payed any, and then he can experience the horror of making so much money that you cant get a break from the government
Not only is it brilliant – its actually working and always have ;-)
August 13th, 2009 at 2:53 pm
Barry,
Even when you fuss at us, we still would rather come over to your house to read the paper…I leave my computer on all day here at the salt mine just to see what the bubbas and bubbettes have to say…
I have a question for you: Did the German cash for clunkers have any real effect of their GDP? I have seen it speculated about today on the web, but was wondering…I know it hasn’t helped Mercedes or BMW….
August 13th, 2009 at 2:56 pm
dedude-
would it be possible to change places with a “white” drug addict- otherwise it just seems so stereotypical
August 13th, 2009 at 3:03 pm
@DeDude 2:23 pm
“… when the consumer class is realy pressured and scared, they use any additional money to pay down debt and/or save for a rainy day”
Paying down debt will precede saving. That’s deleveraging, which needs to occur (more at the federal/bankster level, but every bit helps) in order to make it possible for this economy to get off the ground. When the national DC-3 has 100 tons of debt on board, it’s never gonna make it into the air, no matter how much fuel you pump into the wings.
For the beleaguered consumer to be able to pay down debt will also relieve their fear to a certain degree, as when a person may lose their job and needs the paycheck to service their debt load they feel a lot worse than if they had a bit of disposable income and might lose their job. It’s the “backs against the wall” phenomenon.
The only thing the government is doing thus far is to tell them that everything is under control (perhaps the biggest government lie in living memory), and throw them some cash4clunkers, pulling cars sales forward from about 5 years in the future (or pushing a portion of the auto industry’s problems 5 years into the future, depending on your perspective). And the tax breaks on new home purchases — paying people to assume a boatload of debt (like that’ll help the deleveraging).
August 13th, 2009 at 3:06 pm
@ahab “$50/hr minimum wage”
but but but … what about the millions without jobs — shouldn’t we pay them something too? :-)
See — I can be as snarky as the next cynic.
August 13th, 2009 at 3:13 pm
without jobs- Say what? well let’s give them jobs-
sheesh- do I have to think of everything
August 13th, 2009 at 3:13 pm
Thor@2:04; that is 10,000 in the third quarter (40K/year) and 140,000 in the fourth quarter (540K/year). That does not fill the hole completely but sure goes some of the way.
http://www.nytimes.com/2009/08/14/business/14ford.html?hp
I-man@2;20, If you don’t see it that way I would be happy to see some rational logic explanation for why you don’t. If there is something wrong with those statements it should be easy for a smart guy like you to explain what.
Ben22@2:24; the SUV tax was strongly geared towards the rich and instituted at a time when both the economy and the auto industry was doing pretty good. Furthermore, it incentivized the purchase of gas guzzlers which in itself had a negative effect on our economy and national security. These two programs are “apples and oranges” even if they both are fruits ;-)
ahab@2;47; actually in the Scandinavian countries the minimum wage is about $20 and there are a lot of economists in Chicago that are outraged that those countries are doing so fantastically well. Income distribution actually works, as long as you don’t completely sink the investor class, sorry.
August 13th, 2009 at 3:20 pm
DeDude – in all the countries in Scandinavia other than Denmark, there is no mandated minimum wage. Where are you pulling the $20 number from?
August 13th, 2009 at 3:23 pm
ahab@2:56; no this is actually a two for one so you can also experience the lack of health care of those kinds of people who fat white men at current townhalls are screeming that they don’t want to pay health insurance for ;-)
August 13th, 2009 at 3:25 pm
Thor; you guessed it Denmark; I’ll be damned ift those two others have fallen so low.
August 13th, 2009 at 3:32 pm
constantnormal@3:03; delveraging in the middle of a severe ressesion is about the worst thing you can do (its like gas on a fire). At this point in time we need to stop the deleveraging. But I agree that when the economy has stabilized and economic groth returned we will have to deleverage both in privat and public sector.
August 13th, 2009 at 3:34 pm
@DeDude: And once that deleveraging occurs, we will go into another recession, maybe even a Depression, so why not just do it now and truly fix the problems once and for all?
August 13th, 2009 at 3:35 pm
I wont waste my time with you Dude… you just keep on keepin on.
August 13th, 2009 at 3:36 pm
“those kinds of people”
hmm . . . fat white men are screaming? because they don’t want to pay for something?
selfish bastards- and there fat too- big fat selfish bastards-
white men suck
August 13th, 2009 at 3:38 pm
Mannwich; no you do it at a pace that the economic growth can absorb, and you stop if it drives you into a severe recession. Its like driving, adjust the speed to the conditions of the road.
August 13th, 2009 at 3:39 pm
@ ahab 3:13 pm
Can I have one of them $100M bankster jobs? Or if that one requires more than the normal quota of luck, how about a senior VP bankster job? One with a platinum parachute for when (not if) I screw up.
August 13th, 2009 at 3:39 pm
OK DeDude. Let’s just sit back and watch it all play out. I hope you don’t go anywhere in the coming years when (not if) these half-measures fail.
August 13th, 2009 at 3:41 pm
ahab; I know – I so wish I could be black so people didn’t think I belonged to that tribe ;-)
August 13th, 2009 at 3:42 pm
DeDude,
Give me a break. Geared towards the rich… sounds like another one of your political talking points which as far as I can tell is all you’ve got, you know how many poor people or middle income households are rolling around in SUV’s, or construction workers that took advantage then to buy some giant Dodge pick-up?? here is a tip the one’s with some spinning rims are a tip-off. The point is, people are going into more debt b/c of CFC, if you don’t understand the debt problem by now, it would help explain why you love the program so much.
August 13th, 2009 at 3:43 pm
DeDude says:
delveraging in the middle of a severe ressesion is about the worst thing you can do (its like gas on a fire). At this point in time we need to stop the deleveraging.
response:
Nevermind my last post that line explains everything.
August 13th, 2009 at 3:43 pm
So “Cash For Clunkers” was such a BIG success other aspects of the markets are wanting a piece of this pie, well what if there was a way to both stimulate the economy and help make the world a better place to live?
The other day, I was at McDonalds and ordered a number 3 (It so much easier to point at a number then to actually say what you want) My order came, I ate it and went on my marry way, but low and behold about 12 hours later nature took it’s course and my body magically turned my number 3 into a number 2.
My proposal, if I save my number two and take it to say Olive Garden, I should then be able to redeem it for “Cash for Crap”. This program will then insure that McDonalds first gets my patronage then Olive Garden, PLUS my crap can be used for compose.
And slowly but surely our economy will turn around by the up swing in consumer spending and our environment will be cleaner.
Cash for Crap – saving our country one turd at a time.
August 13th, 2009 at 3:44 pm
Mannwich; we are all on this roller coaster together, so I will be there with you on the ups and downs and to the final riding into the shiny sunset :-)
August 13th, 2009 at 3:49 pm
franklin420d; the fact is that Cash for Clunkers actually worked like a dream. I am sorry, I know it really pi$$es the right wing GOP’ers no end. But fact is that it worked exactly as it should no matter how much you holler and scream.
August 13th, 2009 at 3:51 pm
@ben22
Hey ben…It’s 3:50 PM (on 8/13)
Cue the sunsopots…cue the phi!
August 13th, 2009 at 3:51 pm
@DeDude 3:32 pm
“delveraging in the middle of a severe ressesion is about the worst thing you can do (its like gas on a fire)”
It all depends on why you happen to be in a severe recession — if you got there by leveraging yourself to Uranus and now have a crushing pile of toxic debt, then getting rid of the debt is the quickest and least painful path to recovery. Normally this is accomplished by taking the worst offenders out back and shooting them via bankruptcy, and dealing with the collateral damage. Replacement businesses spring up to occupy the niches formerly held by the deceased corporations.
However — we have chosen to take on additional debt, with the proceeds going to support the fools that blew themselves up. No way is this turkey going to fly with all those bags of debt — it must go, and is going, as more and more of the little people lose their jobs and homes and eventually the banksters that everyone else has sacrificed everything to save will finally expire, taking their toxic debt with them, and all the money that has been borrowed as well (except for that which has been paid out in bonuses for failure).
This is not a “normal” recession. The things that have driven us to this point are not going to go away in a brief amount of time, as they would if it were an inventory recession or even something like the S&L collapse (which was pretty well contained, unlike this mess).
August 13th, 2009 at 3:52 pm
franklin320d; Perhaps you can learn from that sad fact; this is what happens when you create your view of the world from what your ideology tells you, rather than using simple facts and logic.
August 13th, 2009 at 4:01 pm
Oh man… I had totally added you to my ignore list…
but seriously… YOU, De Dude, giving the cool Franklin a hard time about “creating your view of the world from what your ideology tells you…”
Almost made me choke.
With constant references to “right wing GOP’ers” “the investor class” “the rich”… puh-leez.
You are so full of shit… Dude.
Alright, back to the ignore list.
August 13th, 2009 at 4:02 pm
It seems to me, we are ending on the same numbers we opened with.. another string along day for johnny-come-lately longs and long-suffering shorts.. weekly candles are setting up for a rest next week, possible starting as early as tomorrow.
August 13th, 2009 at 4:03 pm
@DOA,
not many hours until phi day indeed!
Bubba, I know you don’t like fibo’s for the market but you should at least blow out 1.618 candles tom. to celebrate.
August 13th, 2009 at 4:05 pm
Karen… you just calmed me. Thank you. And I agree… this is sit and wait tape. I’ve been short USO via SCO since last Monday, and it hasnt moved a point. Kind of weird having a trade that doesnt give you a reason to close, or to add.
August 13th, 2009 at 4:05 pm
karen -
jumping in to save the thread with actual trade talk?
August 13th, 2009 at 4:05 pm
Constantnormal; I will go with you as far as agreeing that you can and should liquidate the banksters and that process can be initiated during the ressesion (and that is deleveraging). However, you cannot do that so fast that you paralyze the lending system (and businesses close from a lack of banks that can lend them money to get through the bad times). And the reduced spending that comes from deleveraging the government and consumers is an absolute disaster during a ressesion when you need increased spending to turn the economy around and create jobs so that people can afford to spend (=sustained economic growth) and deleverage at the same time.
August 13th, 2009 at 4:07 pm
I-man; I knew I could breathe a little life back in you; just wish I could breathe a few coherent arguments out of you too ;-)
August 13th, 2009 at 4:09 pm
“You are so full of shit… Dude.”
maybe dedude needs to get in on f420′s “cash for crap” program?
and by the way- f420- didn’t we already do that program with the banks?
August 13th, 2009 at 4:10 pm
- and puh-leez and “full of sh*t” are barely coherent and not arguments
August 13th, 2009 at 4:10 pm
Karen – can you explain “setting up for a rest next week” in J6P speak for me? :-)
August 13th, 2009 at 4:12 pm
Nah… Just pretend I’m dumb and cant come up with coherent arguments… then we can be friends I guess. Today was a rarity. Last time you see the I-Man getting into these fundamental debates. I’d rather talk trading, thats what I come here for. I’m sorry I said you were full of shit. I like to play nice.
August 13th, 2009 at 4:16 pm
I-man; that’s OK I know my style is provocative so I don’t cry if people get mad. It’s just words. The past 8 years have been infuriating for me so there is a lot of anger spewing out from me.
August 13th, 2009 at 4:16 pm
and puh-leez and “full of sh*t” are barely coherent and not arguments:
yeah just about as coherent as the fat white man and black drug addict comments eh?
someone gave you some good advice the other day…
get over yourself.
August 13th, 2009 at 4:17 pm
Actually have not been following the thread as I thot the moderator was not allowing “chat.”
Thor, setting up for a rest means correcting, falling back, going red… you knew that, you don’t fool me : )
August 13th, 2009 at 4:17 pm
speaking of trades:
is anyone looking at retailer shorts at all for the coming weeks/months?
August 13th, 2009 at 4:18 pm
also, I keep hearing that back to school shopping is going to come in later this year.
Why?
August 13th, 2009 at 4:23 pm
@ben22
“is anyone looking at retailer shorts at all for the coming weeks/months?”
Yesterday I bought some way out of the money 2011 “puts” on Macy’s
& I bought the same style puts on SPG (in the REIT category)
August 13th, 2009 at 4:27 pm
b22 @ 4:18
waiting for the sales on schools supplies and clothing I imagine
August 13th, 2009 at 4:27 pm
@ben22
My logic on those is that I don’t really have to worry about time decay…
& I feel that when we actually do get a correction, it’s going to be swift and vicious…
When it happens, I don’t want to be in there trading the swings because I think it’ll be too confusing and involve a lot of whiplash…
August 13th, 2009 at 4:27 pm
I think there will be a great short opp in that space, many of these clothing stores have nearly tripled since the March lows.
August 13th, 2009 at 4:28 pm
ben22 Says:
August 13th, 2009 at 4:17 pm
speaking of trades:
is anyone looking at retailer shorts at all for the coming weeks/months?
Answer: Yes. Looking seriously at many of them, including Macy’s. Might wait a bit though. This insanity hasn’t run its course yet.
August 13th, 2009 at 4:29 pm
I posted this on another thread today but people weren’t there, did anyone else get a look at Paulsen’s Q2 stock purchases? He had bought BAC. That guy is just money, he deserves to make every penny as far as I’m concerned.
August 13th, 2009 at 4:30 pm
Karen – you are too sweet. I had an idea that’s what you were talking about but I wasn’t sure if taking a rest meant flat, or going back down :-)
August 13th, 2009 at 4:32 pm
Ben22 – I’m not sure what’s with back to school coming later this year. How much later can it be? School starts in most places in a couple of weeks – unless we’re going to see a huge jump in August I’m not sure I’d agree with that statement.
August 13th, 2009 at 4:37 pm
also- re back to school- school usually starts the tuesday after labor day- labor day this year is on the 7th- a bit later than normal- so school will start on the 8th
August 13th, 2009 at 4:41 pm
Well, I didn’t know that there is a new Franklin on this board (and I’m not talking about super funny fake Franklin) – DeDude – a happy go lucky Franklin-On-Steroids.
Check this MSM report from first page of very popular Marketwatch.com about the great success of Cash for Clunkers
http://www.marketwatch.com/story//us-stock-market-disheartened-by-weak-spending-2009-08-13
Subtitled: ‘Clunkers’ dent retail sales
August 13th, 2009 at 4:46 pm
@ben22 at 4:17 pm
anyone looking at retailer shorts at all for the coming weeks/months?
at the close today…
nibbled at TZA
also took some ZSL
those households with one (or two) unemployed will buy the bare minimum in supplies & clothes
will be interesting to see just how heavily the mass merchandisers have laid in inventory, i.e., they may count on a sell-through of a lighter-than-usual initial inventory, thus no (or smaller) big after-school starts close-out sales.
August 13th, 2009 at 5:55 pm
elsobo -
At this point most of this is over my head (And it is nice to have someone like Thor here, to ask questions I did not know should be asked) But the longer I stay in the pool the better swimmer I will be.
From reading the way many of you are posting, it sounds like the waters have never been so unsettled and terbulant – And I pick NOW to take swimming lessons.
But if I learn to survive swimming in such trecherous waters, how much better will it be when we eventually come to a clear lagoon.
But I can only start to learn with they tools I have been given and one of those is humor, so thank you.
And BTW I am not “The Fake” franklin I am “The Baked” franklin.
August 13th, 2009 at 6:42 pm
JOSB looks like a short to me, but that is more a gut feel than anything.
Anecdote — Kohl’s had a big sale going last weekend. Their P/S is about 1.0, pretty high for retailers (same P/S for JOSB I notice).
Anyway, big sale, limited time, no sales tax, 20% off everything, bunch of stuff marked down already, etc. I took my son there for some back to school shopping, we bought 3 pairs of pants, 3 shirts, one pair of shoes, and a small kitchen appliance for $135 total.
The store was packed, the checkout lines were long, and it took 30 minutes (maybe longer) to check out. But, the kicker is that there were lots of people in line with one or two items. They weren’t loading up, even though it was a perfect opportunity to load up. My read is that they were taking the opportunity to buy things they really needed, cheaply. The waiting in long lines to save $15 or so didn’t strike me as a hallmark of a healthy retail environment.
This is in Silicon Valley, FWIW.
August 13th, 2009 at 6:49 pm
f420 Says-
“And BTW I am not “The Fake” franklin I am “The Baked” franklin.’
LMAO-
dude- you are a multi-layered super cool dude- party on and be most excellent to others
August 13th, 2009 at 8:57 pm
InmyO, XRT is an interesting short . It is not dominated by any one retailer like RTH, and it trades for the same price it did in January ’08, which is what first got my attention.
I am long some Dec and March puts. I have some bids lower for more. Pump it up you fat bastards.
August 13th, 2009 at 9:15 pm
f420,
regarding picking now to swim, this will be the most exciting time for the market in probably most or all of our lifetimes, what better time to start learning about it.
August 13th, 2009 at 10:29 pm
Ben22 thank you for the incouragement, and you are correct, I figure if anyone can learn to swim in these waters they should be able to do very well when things calm down. TBP and you guys have been an invaluable resouce. There is so much of this stuff they should be teaching us in school, but instead they want us to trust in the government.
August 14th, 2009 at 10:35 am
[...] Sobering data for those that choose to take off their rose colored glasses. Maybe soon the SPYs and QQQQs won’t look so rosy. Posted in Uncategorized « How Long Until This Seems Like A Good Idea? [...]