Blame Amazon.com (AMZN)? Or something much worse? That’s the question investors are (once again) wrestling with today in the wake of lousy retail news.
Market Roundup
The latest casualty is department store chain Nordstrom (JWN). It warned last night that same-store sales at its full-price outlets dropped 3.2% during the holiday season. Pressure on margins and those weak sales drove profit down to $180 million, or $1 a share in the most recent quarter, from $255 million, or $1.32 a share in the year-earlier period.
Analysts were looking for $1.22 a share. In the wake of the disappointment, more than a dozen of Wall Street’s finest cut their price targets on Nordstrom shares. They’ve lost 30% of their value in the last year.
Meanwhile, Wal-Mart Stores (WMT) warned yesterday that sales would miss expectations. The giant retailer said it expects flat sales in the current year, down from the 3-4% growth forecast it issued back in October. Fourth-quarter profit dropped 8% year-over-year.
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| Wal-Mart lowered its sales outlook for the rest of the year. The Amazon effect? Or is there a bigger problem for the retail sector? |
What’s more, Wal-Mart said the strong dollar and store closures would continue to weigh on results going forward. Wal-Mart U.S. CEO Greg Foran also said deflationary pressures on pricing would persist through at least 2017.
Finally, clothing supplier V.F. Corp. (VFC) reported weaker-than-expected sales and earnings in the most-recent quarter. The company makes North Face, Lee and Wrangler jeans, jackets, shirts and other products, and its per-share profit of 95 cents missed the average forecast of $1.01. Sales dropped 4.6%.
So what exactly is going on? Is this even more evidence the retail business is getting Amazon-ed? That the online retailer is stealing sales like crazy and traditional mall-based chains just can’t compete?
Or is this a sign that the economy is in worse shape than commonly appreciated? Gas prices have plunged, and government reports suggest wage and job growth remain healthy. The government’s retail sales report for January also showed a 0.6% rise in sales excluding autos, gas, building materials, and food. That was a larger “core” gain than economists expected.
| “Is this a sign that the economy is in worse shape than commonly appreciated?” |
But if that’s the case, why do we keep getting warnings like these? It’s not like Wal-Mart is some tiny company whose updates we can safely ignore. It’s the biggest retailer in the world. And it’s not like buying Amazon and selling Wal-Mart is working anymore; Amazon shares have dropped almost 21% year-to-date, while Wal-Mart shares have bounced by around 5%.
Here’s my read on the situation: The U.S. economy and U.S. consumer aren’t in very good shape … and that the trend is worsening with time. Tighter credit conditions, weaker consumer sentiment, rising costs for non-optional expenses, like health care, housing and more, are really starting to bite.
So it’s not that Amazon is stealing a greater share of the retail pie. It’s that the overall pie is shrinking! If I’m right, it’s going to be another serious negative for the stock market to confront.
Now that I’ve said my piece, what’s your take here? Are consumers in trouble? Or just traditional retailers? Is Amazon.com still a buy because it’s eating everyone’s lunch? Or are the warnings from traditional retailers bad news for the online retailer, too, because they signal broad-based weakening? What does this all mean for stocks? Hit up the discussion board and weigh in when you get a minute.
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Many economists and government advisers are calling for increased fiscal spending now that monetary policy is proving ineffective, as I noted in yesterday’s column. So what do you think of that idea?
Reader Lifestudent38 offered this skeptical take: “The government cannot give to anybody anything that the government does not first take from somebody else. You cannot multiply wealth by dividing it.”
Reader Oliver H. also said it would just risk repeating past mistakes. His comments: “The problems we have were caused by overspending by governments. Inflation is a devastating thing, yet the Fed wants more of it.
“They keep saying we need growth. But people don’t need all that excess stuff. Why should business invest more into making more goods and services when people don’t need it, and many don’t have the money to buy more even if they do need it? I don’t see an answer. We are in a jam, and a severe recession may be the only thing to cure it.”
But Reader Gordon suggested there are things governments could invest in here, to the benefit of the economy: “Let’s get out the picks and shovels and start sprucing the country up. Infrastructure is falling apart, and waterlines are contaminated.
“You say people must find a way of working for it, so here it is. Manual labor. We are not all Bill Gates or Warren Buffett. There are so many who depend on society for a hand up.”
Reader Fabian also picked up on that theme, saying: “There are a lot of infrastructure projects in the U.S. that could spark economic activity and yield some good profits for the future. Public transportation, roads, and connectivity come to my mind. However, from Bush to Obama, the debt has grown from $10 trillion to almost $19 trillion. Where did the money go?”
As for monetary policy, Reader Fred W. said he’ll be glad when central bankers just get out of the way: “Living through the end phase of the global central banks (sucking up) world wealth is going to hurt. No way around it.
“But sanity must return to global economics. … Bring on the pain. The sooner we start, the sooner we can come out the other side.”
Thank you for sharing your opinions. If we’re going to see massive government intervention in the economy and the markets, I would at least prefer we get something lasting out of it. New bridges, new roads, better airports, better rail systems, you name it. Pumping up asset prices artificially and stiffing savers out of their wealth, which is all we’ve gotten from the ridiculous amount of central bank intervention over the past several years, doesn’t help anyone in the long run.
Is there any other ground I didn’t cover, or any additional thoughts you want to share? The comment section here is your best outlet.
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You know the wave of Chinese takeovers in foreign markets that I mentioned yesterday? The Wall Street Journal puts the tally at $81.5 billion so far in 2016, the strongest start to a year ever.
But unlike offers from companies in other Asian or European countries, offers from China face much more bureaucratic and political opposition. That’s because the U.S. government is worried about China’s military ambitions, and its reputation for stealing U.S. corporate secrets.
U.S. jets struck a terrorist camp in Libya overnight, killing an estimated 30 ISIS personnel. The main target of the air raid was Noureddine Chouchane, an operative suspected of planning attacks on a museum and resort in neighboring Tunisia last year.
I’ve talked about the threat of so-called “hidden sellers” — sovereign wealth funds and other governmental entities that are being forced to liquidate stocks and other investments. Today, Bloomberg reported on a fresh dire warning out of the Norwegian central bank.
The head of the Norges Bank said the government’s earlier forecast that it would need to raid the country’s sovereign wealth fund for only $570 million was entirely off base. Instead, Norway may need to tap the fund for a whopping $10 billion.
This year will be the first time in more than a decade-and-a-half that Norway’s fund will see net outflows. And as I noted earlier, sovereign wealth funds all over the Middle East and in other commodity-sensitive nations are being forced to liquidate assets to support their economies and markets, too.
So what do you think about China’s plans to take over more American and European companies? How about the latest anti-terrorism strike in Libya? And what are your feelings on the “hidden sellers” in the world’s stock markets? Should we be worried about them? Hit up the comments section below and let me hear about these issues.
Until next time,
Mike Larson
P.S. There are just THREE DAYS left to reserve your seat in Boris Schlossberg and Kathy Lien’s inaugural LIVE Global Currency Investor webinar.
Normally, this is a private, members-only event, but because their work indicates that the next big market decline could happen at any moment, and the threat to your wealth is so great …
They have decided this one time only to offer you a VIP Guest Pass so you can attend.
You will also have the chance to ask Boris and Kathy questions that they will answer LIVE.
But you must hurry, registration closes MONDAY!
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Recommended Articles by Mike Larson:
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
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NOTHING COULD BE WORST THAN AMAZON ID STEALERS
I sometimes think our government is asleep,or to busy making deals,for self interests, or gains. Everytime I hear on the news why is the consumer not spending? They are spending but on drugs and alcohol. Can our government and the reporters be that blind that they don’t see this.
The new political Partry coming to your town, if I have my way it will be called the Equity Party of the United States,Donald Trump didn’t have enough gonads, but this woman does. Please pray for a miracle, I may be the miracle ???
I believe to a large part it is Amazon and consumers have been spending money on home improvements, new furniture, and new homes.
We own a small retail store and many of our top customers in 2014 hardly spent any money in 2015. We still had a good relationship with them and they all were doing what I mentioned above, so their clothing, etc, money was going away from clothing and fashion. In the past week several have been back making large purchases so it could be part of the economic cycle.
I also see UPS and Fed Ex drivers on a daily basis and they tell me their fellow drivers who service residential say it is amazing how many more home deliveries they are making verses several years ago. The Employees at the FedEx store next door say they also having consumers bringing in more returns to Amazon and other websites compared to several years ago.
Sovereign wealth funds liquidating stocks says to me that we may have reached the limits of debt financing. This is a good thing because I have never understood the idea that you can solve a debt problem with more debt. I also suspect that growth is weak globally because of the same debt saturation point.
Solving debt problems with more debt is the brave new world we live in. We’ve never had a world where fiat currency was relied upon for ~100% of all commerce. So there are strange new tricks that can be tried – and I think they are trying them all. We are living in the middle of a huge, high stakes experiment.
“We need growth”
Until the living wage goes up, I’m unsure who the retailers think will be their products. Real income hasn’t gone up since the 70’s! Almost all expansion since then has been based on credit. There’s only so much credit to go around unless cash starts flying out of helicopters. There should have been a deflationary cycle in ’08. Since the Fed and governments tried to stop that pain, and since the banks were bailed out, the inevitable was prolonged. How long that can continue is a great question. The Fed is out of ammo to do it. Cash coming from helicopters probably the only way (in a metaphorical sense). Then it would be very wise to have copper, gold, silver, platinum, etc….
If only we’d spent a few trillion dollars of this recent debt increase on roads, pipes, and fiber. Our economy could use a few hundred thousand more jobs.
President Obama and the Democrats tried that back in 2009, it was called the “stimulus”. However, all it did was “stimulate” the National Debt an extra (nearly) Trillion Dollars, and we have nearly nothing to show for it except “crony capitalist” projects that went bankrupt like Solyndra which cost the taxpayers $500 Million…
I believe the big crash is getting real close. Most people I know feel the same thing is about to happen. The write up on Amazon is just a distraction to keep people from pulling assets out of the stock market. What the main stream media never reported on were the huge loses in tax dollars from the clean energy investments such as Solyndra that Brian mentioned but there were about a dozen more that just closed their doors. They ran out of tax dollars and could no longer afford operating costs. We paid the bill. Now our nation is broke and cannot even afford to pay the interest on money borrowed from such countries as China and god only knows what our Federal Government used as collateral. Unless everyone wakes up tomorrow which will never happen then I think our nation is doomed to collapse. This is what happens when the people responsible for our safety, our constitutional rights and our industry sell us out to foreign countries and allow them undercut all domestic production. We produce so little now that we have become dependent on imports and have lost our standing as a major manufacturing nation. Thank you Bill Clinton for starting this and also Obama for allowing ten more nations to compete for production rights.
Don’t look now william but it is happening again with the TPP. Asian countries here are selling out their citizens to big Pharma who will under the pact enter these countries and charge their outrageous fees for drugs. Like in America people here do not make the wages or have insurance plans to pay for them. Obama thinks signing the TPP will improve human rights here wrong again. Improve the standard of living wrong as well. Mayalasia jumped on the deal and signed without even reading it. Sir Obama will ride off into the sunset early next year with this attached to his legacy and his resume for his next overpaid job. You the people sadly will as usual be left behind to pick up the pieces and try to survive. Its every man for himself folks and Obama is no different.
You said,,So what do you think about China’s plans to take over more American and European companies?
Could that mean they intend less serious harm, if they are joining the firm so to speak.,
I doubt China intends “less serious harm.” The harm they intend now is economic and technologic – they want our money and technologies. There’s little risk of war (old school war, where we really mean it). Saber rattling, sure. But China wants to effectively take over their side of the world first.
I’m not condemning; we (USA) want to take over our side of the world (and we mostly have). They want “more”, just like we do. More money, more power, more control over their physical, economic, and political environment.
The real threat of China is that they want to rule via threat of force more than Western, democratic nations rule (we largely use economic force). If they want to play the economic game and downplay the military, then it’s not as scary.
Of course, the USA has the world’s mega military, so there’s a risk of hypocrisy. If only the USA lived up to the image of the world’s protector, engaging in wars only as a “policeman”, and not as an aggressor. We haven’t always done that, but we’ve done better than most nations in history IMO.
(I’m not counting the peaceful nations that don’t have to fight because we’ve got them covered)
u say
The real threat of China is that they want to rule via threat of force more than Western, democratic nations rule (we largely use economic force). If they want to play the economic game and downplay the military, then it’s not as scary.
i say haha
what a crock , we fight wars for the bankers & industrial complex …
USA got involved in situations that are not of our concern !!!!
and we waste our usa money every time we do..
Government / Fed / Wall Street machinations are all about tipping the flow of money towards the “winners” – those currently with power and wealth. In small doses that’s arguably not a problem, since these elites have shown some level of usefulness to society. I’d rather have an educated CEO control millions of dollars rather than some angry and confused Marxist protester.
But it now feels like the elites are panicking, and are raiding the “lower tier” folks. For example, printing tons of fiat money – it disappears into numbers on a balance sheet for the rich. When everything crashes, those numbers will reveal the “rich” own 90% of what’s left. An engineered soft-landing for the lucky few. All the rest of us can struggle to preserve what we have, but when the debt crisis lands it won’t make much difference.
Two thoughts: First, Labor participation is low…while unemployment is 5%, it’s 5% of a smaller universe so less income to spend at retail. Second, the population is aging and the ‘echo boom’ is paying down college debt, not buying homes, appliances and baby clothes like the boomers did (and ‘stuff’ doesn’t matter to them.
Need more good jobs and people in them to fuel growth… I don’t see that happening aoon
Let us face it. no politician or their staffs want to have the inevitable blunt force of their own sov. debt crisis ,happen on their watch. Hence the same old”kick the can down the road” behavior of the western world.Either we ultimately get a default or runaway inflation,which can occur in a no growth environment. Look at the US In1979-1981,when we had stagflation,growth problems with an 18% prime borrowing rate before Volker
I have thought of the possibility of the way sov. defaults could really happen. If the European Union breaks up,certainly possible ,what happens to the euro? Might be the perfect excuse for all the individual countries to say “NOT MY PROBLEM and force all the bond holders to take a 50% haircut. Then the european countries have essentially gone bankrupt, discharging a ton of debt thus restructuring the new debt for each country and all know that producers love to sell to a clean balance sheet with terms for working capital. If it 1/2 way works,Japan will probably go next and then even the US can flip,saying they must stay competitive ,and a weaker $ won’t hurt either..Keep your eye on Europe as the Union will probably not last too much longer.
I appreciate your clear reasoning. Of course we don’t have a crystal ball, but your EU breakup scenario is consistent with the way people work.
Sorry,I forgot the conclusion of the retail question. The citizens of the western world will suffer the most,as usual when gov. blunders ,and the initial liquidity crisis and economic contraction will cause consumers to decrease their consumption and spending,save more if they can,go bankrupt if possible.Thus,the retail battles will be over a smaller pie,for some time. The “dissolving” middle class will be in a bag of trouble.
I shop at Walmart on a regular basis and what I see being bought there (food, clothing, household supplies of all sorts, car supplies, sports eqpt, etc.,) by the low-income masses is not what would ordinarily be bought on Amazon. So it’s not obvious to me that there’s that much competition between the two. It also seems to me that the prices aren’t much different, and of course no wait for delivery at Walmart, and they have an on-line purchase option if anyone craves it. In my area (SF Bay, CA), rents have increased dramatically and that might have a greater effect on in-store retail sales than does on-line retail.
when you speak of Walmart and those that shop there maybe consider the fact that likely those shoppers now have less money due to technology, robots and computers taking over jobs since technology costs less than humans
And there’s Walmart’s explanation of the results: the strong dollar and having to pay higher wages.
There seems to be a natural law for the strength of the nation which simply says the more people gets wealthier the stronger the nation. It was true in Roman Republic (decline started when elite limited reaches to themselves), was true in Venetian Republic until the elite limited the riches to themselves, was true with British Imperium when the law system evolved to allow more free trade and more Brits became rich. And it was true with the USA where all what could be sold was being sold to whoever could buy what turned the country into the superpower. And it is now true about China. China took 700-800 million people w from below poverty to above poverty, middle class in China is now over 300 million. Sure, it is different level but they are many times wealthier than they were 10-15 years ago and their wealth is rising. The increase of Chinese takeover is another sign of wealth of China.
Worryingly, USA shows the signs which signal demise of this great nation. Some economists are lamenting that the real earnings of the middle class are stagnant or decreasing for over 40 years now. A few months ego, Bloomberg discussed a chart showing that from 2006 to 2015, 90% americans earnings became lower and the 60th percentile drop was more than $3,000! At the same time the earnings of the top richest increased. Are the elites limiting wealth to themselves? Are there mechanisms or policies which unwittingly introduced mechanisms which lead to demise USA. Or is ist a sign that USA used up its chance and it is now China’s time? USA was always rising to the challenge but it is now 40 years and has not solved the problem.
A healthy inflation indicates that people becoming richer. How can you get inflation if 90% Americans are earning less now than 10 years ego? The trickling is to little and may be the volatility of markets prevents the trickling to be grater. The volatility is driven by interest rates what in turn keep afloat the riskier investors. Now the Fed must rise interest rates to reduce the volatility and increase the trickling down effect. But it is double sided sword. Too long Fed was nice to people and now is a situation when he must use the amor which will cause collateral damage. Otherwise China will buy the USA – no need to worry about spying and stilling secrets, China will own it. Perhaps China is evolving superior system, it is called communism country but many says that it has the healthiest capitalism.
china will buy us with our own money since our corporations sold us out [like walmart who convinced its suppliers to move to china ! ]
so our money and manufacturing went to china ,,and other countries .
That’s a Great Ignorant Question(s) of yours, and sadly for many others.
Look, wake up people! It was a design all along, by the elites, to screw you all hoi polloi. What they did, for over the past 30+ years, was just that to unravel the New Deal(which is the only thing that gave you hoi polloi a decent living … the Great Middle Class); but of course that was not what the elites wanted. So the elites had done quite well in duping the hoi polloi to support their policies of undoing the New Deal over the past 30+ years, and here we are. The right-wingers and libertarians were/are the original and main culprits in all this, and then later on the Democrats were also corrupted and dragged into doing this thing.
This artificial prosperity. It will fade into malinvestment.
The problem seems related to many problems. For walmart it may be the high dollar and low other currencies used to pay for products in dollars. By the way if you visit another country I found that they can give you change in another currency at the exchange rate not at a banks rip off rate. The black market may be better and you need to go with someone that offers you a service at a good price to find them. For Nordstrom common
people used to buy their product but now with the sales of new cars and credit and
cell phone cost and coverage that 15 % or so is not their. Rich people are spending their money on trips since the dollar is high. It is easy to see why things are like they are, the middle class has less to spend with their wages and increase cost of eating out and cable and cell phone cost not much is left. The upper class need less to buy value, have less people in the house to support, they simply wait for the price to drop while getting ready for the bottom of the stock market and can easily get things cheaper every day, why not wait. The price for them of food is very little more than they normally pay since expensive
eating places will not go up from hundreds of dollars per meal unless their greed kicks in and with so many people catering to the rich who have money it is tempting to spend and save at the same time to do so, instead of shopping at Nordstrom they can go to another country and pay for the trip, have fun and get the same products. Nordstrom simply cannot complete and people are not stupid to spend a lot when they do not have to pay needless markups! What is the solution is another question that cost to find out.
Aloha Folks…Government propaganda aside…this is not Retail Rocket Science…lol 1) Most Hard-working Americans are NOW making about the Same as they were 20 years ago…correct? 2) The TOTAL Costs involved in Living just a normal American Lifestyle..now 20 years Later,has become far more expensive….3) The Size of the Retail marketplace both Brick and Mortar as well as On-Line has EXPANDED Immensely (multiples of the population Growth),during the same time-frame…. So,I think it safe to say…when Looking at All current Available American disposable income…going into an Expanded marketplace..we are now Seeing the Pure Economic Results…True? However,think of the Tragic results,were it not for Lower Consumer Gas prices…thanks for reading aloha
I have watched the Bernie Sanders show gain momentum but have not been comfortable with his message. It just occurred to me where I have heard the “one per cent are the cause of all your problems and I am going to take them down and your lives will be instantly better”line. A certain German leader told his economically and politically stressed people that the educated, financially successful one per cent of German society were the source of all their problems. They were no more the problem then than our one per cent is the problem now. The overwhelming majority of both groups are decent, hard working people who made it good for the right reasons. Even though I know it will elicit howls of derision I will contend that Bernie Sanders is the real demagogue in this campaign. He is peddling a grand and seductive lie. Jim
Jim, I think you’re a troll. If you’re not, you sure sound like one. Bernie Sanders is NOT the problem. The Republican Party, champion of the 1 Percenters, is destroying America, bit by bit.
Nonsense! Jim
You need to look up what the initials NSDP stand for. Jim
Nella maybe you should take a closer look at the democrats they are good at spending other peoples money and blaming someone else for your malaise but the real truth is Obama’s reckless spending habits have set in motion the destruction of America we are now over 19 trillion dollars in debt and Obama gleefully is doing everything in his power to destroy America soon the national debt will be 20 trillion do you realize because of these reckless and unsustainable spending habits……. the debt per citizen in this country is now at $58,892 dollars that’s for every man woman and child and even you Nella but a more realistic number is the debt per taxpayer which as of today is $159,034 but there’s one problem with these numbers that’s todays debt owed and tomorrow next week and next month it will be even more and if those number scared you just a little bit realize the unfunded liabilities in (GAAP) amounts to over $101 trillion dollars that means that the debt per taxpayer is $846,035 dollars I heard this on CNBC that once the united states reaches a national debt of between $22—-$23 trillion dollars we fall in the same category as Greece I really don’t see this country handling austerity measures too well theres too many people think the object of voting someone in is to get more freebies look at Hillery Clinton and Bernie Sanders that’s all they have to offer
the elections are rigged. look at dubya. he took control of the white house even before the votes were counted in brother jeb’s state florida, due to some problem with chad. not to mention the new electronic voting machines were delivered with votes for dubya already preloaded.
have you voted in the primary yet, jim. no? you must not live in iowa or new hampshire. these people pick your president for you. you’re so lucky you get vote for the person of THEIR choice in the end. unless it’s like dubya and the machines are preloaded.
And yet your wonderful and fair Democrat Party has allotted 450 delegates to Clinton and 19 to Bernie. Jim
i’m not a democrat. i’m not a republican. i vote for the candidate i like best. a little more than 50% of the time that happens to be a democrat, so i register as a democrat. so far, the only idiot running that i can’t eliminate is trump. all of these idiots should here the words: you’re fired. including trump.
your talking about Obama having the voting machines rigged
Jim, I think the troll is named Nelly, troll on Nelly, troll on. ROFLMAO!!
Mule
Correction, that’s Nelly dee……..(<:
Mule
Mule. I know I have hit the mark when they start calling me names. Dee may be right about Trump though. I don’t care what he is as long as he will defend my right to be what I want to be. Sanders is scary because he is angry. The angry German guy was considered a harmless crank until he was given real power. Jim
I basically agree, Jim, Bernie has the simplistic message that will appeal to an awful lot of Americans who have seen their money, sizeable bits of their freedoms, and often their jobs disappear this last 16 years. Why haven’t the Dems given us a candidate worth our votes. The Reps haven’t done any better – an opportunist and an outright fascist seem to be the leaders.
Aloha Jim…I do not have an axe to grind one way or the other,though it might sound like I do lol just a sense of Fairness….do yourself a favor..go on UTUBE Find,Watch and Listen to some of the actual/factual translations of some of Hitler’s Entire Earlier Speeches…Things said and mannerisms will remind you,I think of someone else running for President…lol thanks for your time.aloha
I will believe the reports from WalMart, Nordstroms, and Amazon long before I will believe any report issued by government a government agency. This economy is in worse dire straits than any government report indicates.
Re retail companies seeing reduced sales
– the economy is bad and getting worse- the reports of poor results from companies are historical, projections for future business are purely a guess in this economy, and as you reported, recent results do not meet prior expectations.
I live in Mid Florida – Polk County – it has high unemployment, underemployment, and many people who have dropped out of the workforce – there are no jobs for them. There is a broad spectrum between very wealthy and very poor. Some families have 3 generations living in a mobile home – others decide between paying for food or medications – both becoming very expensive. There are also very wealthy families living in this area with million dollar motor homes in the driveway – almost no middle class – then the poor and poorer. In 2008 there were thefts of copper pipe, outside air conditioners from new stranded homes – there isn’t any left.
China – a communist country that has gained enormous wealth. Buying up US companies is cheaper than ever before, same company running leaner than before -selling at 1/4, 1/10th of prior value. I think this would be one of China’s goals – owning America – US has essentially sold out to China. It would be wise on the part of the Chinese to swap Bonds for real estate and corporations . Could this be manipulated?
I am hopeful for the future. The United States is still a great country with great potential’
Our wonderful politicians are certainly doing their best to destroy our potential.
Almost every analyst I read is preaching a market collapse, and catastrophe. Simply by the principle of contrarianism, I have to wonder. When everyone agrees on something, the opposite very often happens. Will that hold true this time? There is always the exception that proves (tests) the rule.
you’re right on, chuck. but you have to know how to play it. wait until you see the whites of their eyes before you pull the trigger on a stock buying spree, and be ready to cover if you’re wrong. i’m old like you so i never put more in than would cause me to lose sleep at night.
it’s when the bulls are out in herds that i’ll worry.
are you trying to play in my sandbox? would you like ME to show YOU how it’s done? i have the ability to do that.
Amazon is killing retail, I get great prices and free mail service. Bad weather kept a lot of people from going out when they can shop at home .
Also food prices have gone through the roof, not to mention utilities have tripled!
Between utilities and cable its like paying a house note ugh!
Californians are being gouged by gas companies, have the highest prices in the nation, almost $3 some still charging over that.
Ok the USA economy is in danger of collapse. All intelligent people know that. In the meantime, we have a president that spends his time calling and entertaining celebrities, playing golf in Hawaii, and sending his male wife on multi-million dollar vacations.
Yes, where did the trillions in US dollar debt go? I have not received one penny nor did I expect to. But that money would have repaired 100% of our infrastructure, cured diseases like cancer, aids, Alzheimer’s, employed millions of people who have given up looking for a job, etc, etc.
Why is all our manufacturing done in China, because it’s cheaper. But why is it cheaper, Federal taxes and Federal regulations and the litigious society and our inept court system have driven jobs out of this country. Think about it, 50% of US citizens do not pay any income taxes, many receive a Federal tax rebate check because they earn a little less money than the middle class worker. The middle class worker are all those that get up early in the morning every day, go to work, pay all their taxes and are tired most of the time. They cannot get ahead, And yet the non-worker gets food stamps, utility allowances, rent subsidies, free health care, free dental care, free cell phone and free minutes, and free everything. The free loaders actually make more money than the middle class worker.
Is this country sick and tired of a totally inept Obamy, yes they are. Are we sick and tired of the news media kissing the Obamy a–s. Yes we are. Are we sick and tired of Obamy’s mission to deliberately destroy our country, yes we are. Look what has happened in the past seven years, unprecedented racial issues, out of control national debt, out of control unemployment for people who are desperate to work, zero percent interest rates that retired folks expected to earn on their LIFE SAVINGS. And the dumb a_s government and economists wonder why consumer spending is down and heading even lower. Retired folks are suffering because of drastically reduced cash flow. And now social security my become insolvent, could it be because obamy increased the number of people on disability to such a great extent that we cannot pay for this additional welfare.
Sure we should take care of people that need food and shelter and health care etc. But just sticking your hand out and saying “Gimme” does not qualify a person for billions and billions in handouts. Yet they feel entitles because they are alive and someone should take care of them. All handouts do is destroy society, meaning employment and a decent wage is vastly superior to a handout. So lets bring manufacturing back to the USA homeland, lets get the money out of banks and loan money to people at simple interest rates and lets put people back to work so they can regain their pride and ownership in America.
Military spending is 57% of the Federal Budget and is going up.
99.99999% of entitlement benefits and welfare payments are returned to local
business economies within 30 days. Benefit recipients are not the only ones
who benefit.
How can Social Security be insolvent when most of us have actually paid into the trust fund our entire adult lives while programs like SNAP are well funded and none of us has paid for it? Jim
Hi Jim,same over here in the UK,we had road tax for our cars which covered our highways,but some bright spark thought lets put it all in the big pot,now our damn roads are a disgrace,and guess what,no money to fix them.
GREAT PIECE ED couldn’t agree with you more
Such ignorance should be edited from this blog. I was under the FALSE impression that this was a place to exchange investment strategies, comments on issues raised by the author, and events of the day. NOT THE MADCAP RIGHT WING AND LIBERAL rants of uneducated and uniformed idiots that just regurgitate the latest DOGMA of their biased party. No respect for The President, No respect for this country, no solutions just GLOOM AND DOOM and who can You blame for your own failures and shortcomings.
Please find some place else for all of you fools that just want to BLAME someone else, if you do not have any constructive ideas, please go find a blog that corresponds to your own ideals and spare real investors your ignorance and paranoia.
lifestudent38 must have been listening to a radio station that airs in Las Vegas. It is Kent Davenport from “Quality Hearing Aids” I agree 100% with Kents full commercial’ Thank you lifestudent38 for posting.I wish people could hear the entire dialogue.
thank you for this feedback! I am not familiar with the commercial that you have mentioned but am drawing this from what is I have written down as the five most important maxims of economics. In full they are (as I have them and I may be wrong);
– you cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
– what one person receives without working for, another person must work for without receiving.
– the government cannot give to anybody anything that the government does not first take from somebody else.
– you cannot multiply wealth by dividing it.
– when half the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation!
I hear all the time from my customers that unless you have a great credit score, the interest rate on credit cards is so high that instead of shopping people are using their discretionary income to pay off the high interest debt. What do you want that would make you willing to pay 29.9%?
I often ask Wa- Mart clerks if they “own a piece of the pie?” I.e. – are paying into an employee stock option plan or 401K. Even $10 a month. Usually they say …”a what?”
or …”no, I can’t afford it.”…I rent a room and don’t have a car. One young gal
said…”No. I’m trying to pay of my credit card. I missed a couple of payments and the interest rate rose to 35%”
Correction in first line- Wal-Mart
Could be that everyone is reading Dave Ramsey’s suggestions for paying off debt, saving for three months expenses and having an emergency fund.
People not driving to the malls to shop is lessening our personal use of gasoline.
As an author whose books sell almost exclusively on Amazon I can verify that sales, at least for my books, are way down from past years. January was my worst month since 2008. I’m thinking it is not that Amazon is stealing a bigger piece of the pie, I think the pie is smaller. However, I invested in some home improvement products in January & February, and my retailer/installer seems to be swamped. I waited a long time to do this, fearing that I shouldn’t spend the money, but then it got so I didn’t have a choice; it had to be done. I will definitely cut back on all my spending for the rest of the year to make up for it. It seemed to me Home Depot has been much busier lately too; another reason to believe home improvement is on many people’s minds and not suffering like other sectors.
BJ: It could be that your book sales are down because no one reads anymore…and noticing the POOR spelling that many are employing in their writing these days (even in “professionally written” news lines that run across the bottom of the TV screen) I don’t believe the majority did very well in English class either.
Poor customer service at W M stores Under Stocked … Middle Clash SHRINKING and basic things GOING HIGHER in prices . . . . but check out WYNCO and tell us how are they doing ? and WWIII alreadt STARTED quietly in SYRIA over 20 countries plus OUR SPECIAL FORCES in there .. What that heck is going on ????
With negative interest rates being the global theme nowadays, why not take advantage of the situation and issue 3 trillion dollars of negative interest rate bonds dedicated to rebuilding U.S. Infrastructure. We not get such deal in our lifetimes. That is just good business. This recommendation comes from a libertarian! Some deals are too good to pass up! In a world of increasing risk, there will be plenty of wealthy people from unstable countries that would pay us to secure their money!
Small story about AMZN. Yesterday my wife got a chandelier installed in the living room. 30 bulbs at 40 watts. On the same dimer there is a ramp with 5 spotlights at 40 watts. The installer told us that’s going to be too many watts for the dimer. The dimer will manage 500 watts top before melting. I had two solution, pull another cable through the ceiling to the wall and install another dimer or reduce the wattage with LED bulbs. I went to Costco, 30 LEDS for the chandelier cost $ 200. They didn’t have the small one for the spot ramp. I went to WalMart. They’d sell the chandelier one by the piece only at $ 14 a piece and the spot ones by the piece at $ 18 a piece plus CA tax. So I came home a checked AMZN. I got all my bulbs for $ 150, free shipping, no tax, delivery in two days. What can brick and mortar do against that. Plus at AMZN I had a choice in pack size, brand, design.
The official retail sales figures are very dubious. The problem is the seasonal adjustments, which seem to be broken.
A better approach is to just compare January to previous Januarys, December to previous Decembers, and so on. Then no seasonal adjustments are needed. January 2016 numbers were weak, and whole holiday season was poor.
no wonder there’s so much impoverishment?
Mall sales falling is probably due to many reasons and we are seeing a fundamental way shopping is being done. Would you rather run from store to store looking for the best price or checking a few websites for price on the same item? And you don’t have to et dressed and get in the car and walk across the parking lot. And there are services that will deliver dinner to your door. There are websites that compare prices and ebay automatically does that, either showing similar items at the bottom of the listing and an active “see similar items” option. I bought a rocking chair from Walmart through a independent seller on ebay, no local store including Walmart had one on the floor. I do expect more sellers having to collect state sales tax in the near future. In my part of California it is ten percent, so right there is a savings. I may also be that despite consumer confidence said to be higher that many people are concentrating on paying off debt or saving money or getting ahead on some of their recurring bills. My rent is paid through April, utility is about four months ahead, Medicare supplement is paid quarterly in advance, and my credit card has an overpayment for most of the month. And I’m just not spending the money I used to spend, my favorite brand is “on sale”. And I think that people are discovering that they can live without the latest thing, my cell phone actually does little more than make calls and I do not have a landline, you can only talk on one phone at once. We may have succeeded in stopping having to have latest tech gadget that hits the market, in spite of all the hype. Maybe we are just getting burned out.
This Is Troubling!
Last year the Jet Center at Eagle Co was full. This season there are 80% less customers. The ramp is empty. So the 1% are not taking high end ski trips.
The Kilowatt Dollar
This is the most opportune period we’ve had in over 100 years to retire the Federal Reserve and move into a bright new era with solid, absolutely defined money that will have the same longevity as gold and would be available in infinite abundance. The IMF’s continual manipulation of the funds would have no function. In fact existence of the IMF itself would become unnecessary. The economy should be left to itself to attain its own balance. Constant monetization of our debt makes a financial catastrophe inevitable. If the US were to adopt the following ideas it would have a positive international effect within a short time.
In 1971 when Nixon jumped out of the gold standard and created the petrol dollar as the new standard, he and Volker didn’t go far enough. There was no way there was enough physical gold to service the world economy but energy was a good start at replacing the gold standard but we opened ourselves to manipulation of our currency by a bunch of uneducated, third-world Bedouins. If Nixon and crew had gone just a few inches further and predicated the value of the dollar on all forms of energy we would have a stable and worldwide currency today.
Like gold, the new energy currency would have infinite durability, be infinitely divisible, impossible to counterfeit, readily portable, and easily storable as computer entries or as one-use computerized script in small or anonymous transactions such as in grocery shopping. An important feature would include the use of prime numbers to assure each monetary unit is encoded with a primary identity and used one and only one time. After use, when it is finally returned to a bank, it would be retired forever—and not put on a back shelf as a reserve. The quantity of currency would be created only on a basis of need but could be reserved as a future loan for use anytime in the future. If the money were stolen, it could be frozen before it was spent or the person using the money could be almost immediately identified when he tried to spend it.
It would be absolutely defined as the product of the volt, ampere, and second. All three of these physical quantities are absolutely defined to an uncertainty of a few parts per billion or better. Their product is called the volt-amp-second or watt-second and has the same value anyplace in the world and, in fact, even over the entire universe! The watt-second is a very small unit of energy. I propose it be designated as the kilowatt dollar, a unit of convenient size. The kilowatt-hour has a value of about 11¢ where I live. In translation of old currency to the new Kilowatt dollar an agreement would have to be reached on values that would remain constant in perpetuity.
A kilowatt is a measure of energy so it could be generated from any existing electrical generation scheme including coal, oil, nuclear, tidal change, waterfalls, wind and/or solar and all joined together on the national power-grid. Keep in mind, precious metals are nothing but place-keepers: energy is life!
Some politicians are calling for a flat tax to fund the government. With the new currency, a discount of whatever the politicians think is an amount of funding required to run the government could be taken from each currency unit generated. Some politicians want a flat-tax of 20%: others think 10% is sufficient. In any event, the IRS would disappear. This will have to be worked out. People would be given the choice of keeping their present “green-backs†or exchanging them for this new currency. I’d bet within a short time the old currency would be hard to find except in museums.
All materials produced by chemistry can be stated in kilowatt-hours based upon thermodynamics. Thus the energy to produce one pound of copper, for example, could be easily computed. Similarly, the cost of producing a ton of cement can be calculated– etc, etc. The pricing of raw materials like wood could be calculated by the kilowatts used in its cutting, transportation and shaping at the sawmill. With this exercise we would be shocked at the prices put upon raw materials and building costs. There are many flaws in pricing that could lead to sharp reductions in their correction.
Not all the problems can be addressed here but if you would like I’d be happy to join a group in making decisions on flat taxing and production and also in creating guidelines on compensation. It would be interesting to see what value many present-day company directors actually have. A new scheme would have to be developed to address the concept of interest because this new money would be absolutely constant so its risk, therefore, would be zero.
My background includes about 20 years in the Nuclear Chemistry Division of Lawrence Radiation Laboratory in at the University of California, Berkeley as a Staff Scientist III. But I have a wide range of interests beyond science and since that interest comes from a desire to learn rather than formal training maybe I would have fresh eyes on the monetary mess we find ourselves in today.
Looking forward to your response,
Regards,
Ray G. Clem
You’re wrong, Ray. there is enough gold to cover all the fiat money in the world, but it might mean the buck would only buy maybe 1/100,000th of an ounce of the metal.
It is interesting concept.
I am not being smart, but how would you pay people? How would the markets work? How would you consider the demand-supply would be working?
Hey Ray, you better mix in a heaping helping of common sense and logic to back your kilowatt dollar. (<:
Mule
Demographics.. the aging and retirement of the Baby Boomer who is spending less and hunkering down will continue to be a drain on growth and stock prices in the US until Millennials pick up the slack. Boomers are starting to retire, selling real estate, and selling their nest egg assets while Millennials are about 4-5 years out from picking up the gauntlet, having just left their parents’ basements and gone into rental units. Millennials are being squeezed by high rents, high student loan debt, and the high cost of health insurance. Their salaries are also being squeezed by employer costs of higher health coverage and lowered growth rates created by the retiring Boomers. I expect this Bear market to continue through around 2020 as a result of all of the above in transition.
With an estimated 93 million people out of work, it would seem to me that there is a lot less money being spent on just about everything. Let’s face it, those who keep spinning the yarn that this economy is good and getting better are either delusional or just plan liars. And, those who believe them are just plain stupid.
They are mostly politicians, Becky, therefore liars, ipso facto.
“IT’S THE SHRINKING PIE, STUPID” I agree wholeheartedly with you. Buy a home? The payment will be $600 a month and the escrow for taxes, insurance, sewer etc. will be $800 making the payment $1400. No inflation? Food is UP, cars are UP, household goods are UP,
insurance is UP,Taxes are waayy UP. We are being squeezed from all sides. Glad I am not raising my children now, do not think I could do it.
Wasn’t it Greenspan in Clinton’s time that changed the way inflation is measured? Didn’t he explained that if a car is to expensive for you then you would buy a cheeper one therefore the effective inflation for you would be zero. Actually he said that regarding t-bone steak and mince. In other words he used, deteriorating living standards to report official inflation low which is not real inflation. This of course kept the interests low and increased the debt recklessness.
The role of the Gramm–Leach–Bliley Act 1999 (in Clinton’s time again) which effectively repealed Glass-Steagall Act 1933 could be also fundamental to the present situation.
Clinton did “good job” but all hit home at the end of Bush’s time and he got blame for.
get the government out of the economy. what makes you think they have a better handle on what needs doing than the private sector. they don’t know anything and it’s not their money they’re spending so they have nothing to lose. they have nothing at risk. that includes all New Deal public works projects. imho.
Amazon will rule what we now call retail and WM will be an also had along with Sears. … Commodities shipped directly to your home in two days or less with no tax or shipping is the new normal. Men’s suits, women’s dresses, serious art, serious jewelry, etc. requires a thorough inspection, yet commodity items do not. … The department store model is DEAD!
Good point, Al. Those who want to invest in retail, need to shift to the specialty stores – especially those that just about everyone goes to at some time or other Home Depot and Lowes are examples. Jewelry chains, convenience stores, supermarkets – though there may be too much competition in those. Look for a moat.
If Walmart is closing many of their free-standing grocery stores, what does that say about the companies whose only business is free-standing grocery stores? …and we’re talking about GROCERIES! Everyone HAS to eat!!
And, if one prepares meals correctly, NO, it does NOT “cost more to cook it at home than it does to eat out!” …could be that we’ve become to lazy to cook any longer….
Former students arrested for late student loan payment. Paying down debt is slowing down the artificially propped economy.
Increasing national debt doesn’t equate to sustained growth. We are also in a deflationary era that transcends into lower prices. Feel we are a bear market that people won’t believe.
In a big picture ,it all started with these few things :
“too big to fail” , “QE and more QEs ” , ” aging population so demand drop” , ” More people worldwide are worried about their future resulting in further cut in spending “and “now negative interest rate , it just double confirmed things are not right so companies and individuals reduce capital expenditure and personal spending respectively resulting in bigger drop in demand going forward ” its about demand and supply , it’s going to get worse ….
The author is right on point-as a retiree on a fixed income,it IS the non-optional expenses that dictate what I can or cannot afford to buy.Mercifully,at our age,we have pretty much most of what we will ever need,and the fall in fuel prices has been a Godsend,if only temporary,as many suspect…..
That aside,from talking to many people,there is a growing sense of frugality among many people,and the most chilling omen for the retail sector may simply be that there is just way too much “junk” for sale that most people really don’t want,don’t need,or,like me,can simply no longer afford.
i remember we Weiss PRAISED AMZN IN THE LATE 90’S YEA RIGHT