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The Consumer Contraction Begins: May Same Store Sale Summary - 12 Misses, 5 Beats
It is still not too late to short that consumer discretionary basket, albeit with a footnote: whatever you do don't short the ultra luxury retailers. Those will be doing very good, courtesy of all their shoppers having the Amex Discount Window credit card. Everyone else: better luck next time. As the chart below from BofA shows the May retail SSS data turned very sour with 12 misses and only 5 beats, and just like every other segment, very soon the stock market, which since Jackson Hole has been reacting to newsflow like a retárd, will finally grasp that even with nobody paying their mortgage, the reality of diminishing squatter returns is unavoidable. That said, since the data comes from Bank of America, naturally there would be a scapegoat: "may results were negatively impacted by unseasonably cool weather as well as pressure from high gas prices." That's ok: In keeping with tradition, QE3 will very soon be blamed on unreasonably normal weather.
From BofA:
May results below consensus estimates
May same-store sales were below consensus expectations with significantly more misses than beats (12 vs 5). May results were negatively impacted by unseasonably cool weather as well as pressure from high gas prices. The lower-than-expected results follow the better-than-expected comparable-store sales that we saw during the previous five months (Dec – April).
Luxury segment performance continues to be strong with an average increase of +13.2% of the three that we track (+9.7% excl SKS). Although the equity market performed poorly during the month (-2.9%) we believe that its performance year-to-date has luxury shoppers feeling more confident. The DJIA increased 6.6% between Jan 3 and May 27. Department store performance (+1.4%) lagged the performance of the discount/dollar stores that we track (+2.6%). We believe this is the result of increasing gas prices (~+23% ytd) and unseasonable weather which negatively impacted the sales of discretionary goods at department stores.
Notable high yield performers: BONT SSS -2.3% (-0.3% est.), DDS SSS +2.0% (+3.0% est.). NMG SSS +12.0% (stores +14.8%, online “direct” +0.7%). SKS SSS +20.2% (+7.6% est.).
Mass – (BJ, COST, TGT) generally above of consensus with TGT In-line.
Specialty – (BKE, GPS, HOTT, LTD, SSI, WTSLA, ZUMZ) below consensus with ZUMZ and BKE in-line.
Discount/Dollar – (FRED, ROST, TJX, SMRT) mixed with FRED and TJX missing and SMRT and ROST in-line.
Department/Luxury – (BONT, DDS, JCP, JWN, KSS, M, NMG, SKS). Luxury dramatically outperformed the moderate department stores with all moderate department stores missing besides M.
Forget GroupOn and Pandora: when is the Robb Report social network going public?
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Robotrader will have new losing picks for ZH by morning.
/S/
Or Hamy's = Dave Del Dotto Anti- Cash Flow System
What is wrong with you people? I've never seen a bigger group of humorless morons in my life. What is so difficult to understand about RoboTrader?
Whenever he'd post a chart of various teen retailers or restaurants or whatever "equity du jour", it was with a tone of incredulousness or indignation because the performance of those stocks were, indeed, incredible - charts 45 degrees to the upper right corner. Nothing could stop those stocks, not tornadoes, not nuclear disasters, nothing. While everyone tried to make the "smart" choice of putting money in gold or silver or shorting treasuries, the best returns were found in normal, every-day equities, often times the goofiest and most unlikely ones.
That's the fucking humor behind his fucking posts. But you idiots don't get it. You all are so damn sensitive about your doom/gloom, you just get offended and tell him to fuck off from your bomb shelters. So what does he do? Same that anyone would do.... rub it in your face. He doesn't have any allegiance to any of those equities. He's a trader, looking for alpha, you idiots. Nothing more. Nothing less.
I've watched you guys ridicule him for a year, and it's retarded. You miss his point, completely.
Yep, we completely miss the point of being a stupid douche. Cherry picking stocks in the rear view mirror is so amazingly funny and insightful.
Oh, so what you are saying is that we don't get the joke? Thanks for clearing that up Soupy.
"I've watched you guys ridicule him for a year, and it's retarded. You miss his point, completely."
Assuming that is his point, the Village Idiot agrees.
Robo seems to me to have a great sense of humor
I'm not sure you're correct about RT, but there have been times when I have wondered exactly that.
If it's true, then he's a very bad man.
I always had the same reaction. I thought he was amazed at the ridiculousness of the moves, not that he was touting them.
I also like his taste in pinups. Not so skanky as Leo's
Looking for alpha: funny. Kinda.
liar. you've been at zh for 5 weeks. when you joined you said you were referred here by friends at the coin shop. you posted absurd comments and people called you out.
now you post this on robottrader: "I've watched you guys ridicule him for a year, and it's retarded. You miss his point, completely."
you'll need a new sign on.
you're outed for the fraud you are.
Give the guy a break. He calls it like he sees it.
And I wish I took more of his advice when I knew better. Showing you what is smoking should be a welcome dose not an adversary unless you lost your skin in the game.
In which case look in the mirror.
Wall Street and big bankstas: "We don't need no stinkin' consumers no more no way no how. We got the Fed and the Treasury...that's all we need now. We have taxpayers by the balls. Congress and the Federal and State prosecutors got our backs, baby. Consumers can take a hike."
Robo is not going to like you. Must be licking some wounds.
I realise this is going to be hard, but that's essentially true now.
Income inequality may be a political talking point in Washington D.C., but it's also a reality that marketers need to consider when they are positioning products aimed at upscale consumers. In the wake of the Great Recession, it's time to rethink how to market to the segment that drives nearly 50% of consumer spending. But just who is affluent today? And which group is on the path to the rich life? This Ad Age Insights white paper, based on studies and data from strategic partners Digitas and Ipsos Mendelsohn, identifies five tiers of affluent households and explains why true affluence isn't achieved until the $200,000 household income level. Two distinct groups are found at the $100,000-$199,999 household income level, one on the path to riches, and one that has fallen back into the middle class. Learn why career is one of the strongest indicators for attaining wealth, and how media habits change as consumers move up the tiers. This white paper includes 10 charts, available as downloadable Power Point slides.
http://adage.com/whitepapers/whitepaper.php?id=47
http://adage.com/article/adagestat/ll-rich-35-100k-household-income/227671/
Translation:
We, the advertising industry, are no longer targeting the middle/upper middle classes and will be adjusting our marketing and focus accordingly.
tldr;
What happens to Pop Idol / X Factor / mass popular sports when there's no advertising revenues to keep the show's going?
Hmm... boom, headshot:
http://www.guardian.co.uk/media/2011/jun/03/simon-cowell-britains-got-ta...
Cowell's lawyers reported an offence of "malicious communication" after an anonymous internet blogger alleged that Ronan Parke, the favourite to win the current series of the hit show, had been groomed for stardom after being spotted by talent scouts two years ago.
TPTB stir the masses into hating Twitter as much as they do? A bit of social engineering there. A bit strong for suggesting (gasp) that the Great & Secret Show is scripted? *cough* WE WUNT A SNIVILIZD INTARNET NAUW, WAAAA.
http://www.legislation.gov.uk/ukpga/1988/27/contents
If Sony thought LulzSec were nasty before, wait until this goes viral - with non-existent security, I suspect the next level of damage to start occurring. "This shit just got real" - hint, "UkLegion" twitter broke the story, claims Anonymous connections, claims "hacker and coder". Sniff... might be a pot-plant? 2600 Irc would be a better way to find out, not tweeting a facebook page. Or you could, you know, get the torrent: http://thepiratebay.org/torrent/6443601
MSM gets on the band-wagon:
"The producers of BGT are not looking for the talented people; they already have those. The reality is they are hunting out oddities, freaks and mentally ill people to act as amusing fillers in the audition shows.
People come from all over the country, often at great personal expense, because they think BGT is a talent competition and they stand a chance of realising their dreams. I can tell you from the inside that BGT is no more a ‘competition’ than I am an astronaut.
Nothing is left to chance on BGT, everything is micro-managed, choreographed, manipulated and planned down to the last detail, including the telephone voting.
The ability to manipulate viewers’ opinion is vital if you are to control telephone voting and, indeed, get the required result. Syco see this as essential to the success of the show.
Planning and delivering live shows of quality is impossible if it is purely left to the public vote. As Simon said in a meeting once: ‘The public need to be told who to vote for.’
Everything on BGT is geared towards telling you who you should vote for. It’s an art really, which Simon has honed to perfection and Syco are now world leaders at."
http://www.dailymail.co.uk/tvshowbiz/article-1393766/Britains-Got-Talent...
[Background for USA readers - The Daily Mail is basically the champion of the aspiring middle classes in the UK, and has slowly been turning from a 'instill fear, love thy masters' rag into a "Going out, going to take as many bastards with me as I can" rag as its editors realise their core constituency is marked for extinction. It is fascinating, but tragic. Note: Editors of Daily Mail not middle class, of course.]
*PopCorn* - part of me lives in horror and fear & loathing that Sony is such a paltry stage player, it is shameful. "One thing I'm scared of more than zombies... fucking clowns".
Market - buy Syco [*groan* Puntastic *puke*] - next project is guaranteed gold. http://en.wikipedia.org/wiki/Syco
[style: tribute to LulzSec semantics & dubbing in Cronenberg 'Crash']
Disclosure: Deleuzian [with ironic nod to included pun, of course]
while retail is one of the strongest sectors in the market.
weekly chart
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s223085872]&disp=P
daily chart - just threw a preliminary sell signal
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s223085872]&disp=P
I wonder what these charts will look like when people arent allowed to live (squat) rent free in foreclosed homes and the consumer debt bubble starts to deflate in earnest.
I know first hand about squatterville living in las vegas. it is an epidemic of fre loaders. How do you think this town survives. In my cul-de-sac alone, 3 of the six don't pay.
This picture has been played before. The dollar is shit. So the rich elite come to America and buy shit on the cheap in N.Y and N.V. while on vacations, also cheap. Meanwhile, most Americans are dealing with 4.00 gas. Isn't it great. Not.
I just puked a little.....that is bad. You see us Canadians have zero clue what awaits us soon.
to bad for you canadians, good thing i live in quebec!
they headed down a deadend road
Sorry about the spelling above. On the cell phone the box on the right blocks part of the typing so I have to guess if the spelling is right. But going back to my original post now that I am at home after a long night of slinging drinks.
First- there is a massive amount of squatting going on. As a HOA board member, I have inside knowledge of how the homes are in my neighborhood, and my neighborhood is just like countless others in Las Vegas. Its bad.... 20%+ HOA and/or bank delinquents, 8~10% empty and bank owned. Nobody who bought within the last 8-10 years can sell do to negative equity. That would also include my primary home(-80k equity) and my rental (also at a great -80kequity - thats x2 BITchEz!).
Second- The $50+ billion in extra squatter income sloshing around the U.S. is for real . I think its much higher than that. One neighbor has bought two new cars in 1 and a half years. Another neighbor had a truck repo'd , and then bought a beater truck. My girlfriend's best friend and husband haven't paid a mortgage in 2 1/2 years and have saved 30k to buy a new car this summer in cash.
* Auto stocks overpriced.
* Retail stock are overpriced.
As soon as the squatters are given the boot, those two sectors will get crushed.
And last.... If you take out gas/food, there has been MASSIVE DEFATION going on in Las Vegas since 2008. Everything is cheaper. And by alot. I have a whole kitchen drawer full of 20% of this, 30% off that, buy 1 get 1 free. Some things are just straight up free, like In-n-out sending me a free cheeseburger coupon, or McDump's 2 free lemonade drink coupons. Business's are so desparate for customers the will give away the place. Craig's list in Las Vegas is a cluster fuck of everyone selling everything for cheap. I don't see inflation as the issue here... not anytime soon.
J in Vegas
J I am really sorry about conditions in your neighborhood in Vegas. On the other coast in Richmond we have far fewer Repos, but most are underwater to some degree. We definitely have felt real inflation here besides just gas/food. Buying clothes for the kids is painful. Can't say about prices for luxury goods...Paying mortgage, gas, food pretty much drain the paycheck. Dreaming of Vegas vacation but probably won't happen this year.
Deserts are really brutal places to live when the water dries up.
Don't envy that location.
Nice charts cruzer. I have started this weekly news show in order to try and get the word out. I actually start out with the US housing market and then Europe's crap along with Japan and the middle east. Let me know what you guys think, i know will always get an honest response here at the hedge. Thanks
http://www.youtube.com/user/zedgehero
Retail is strong! Look at PIR! A pillar of useless consumerism.
Here is a stretch -
Consumer spending will continue to drop as unemployment checks continue to drop......
You mean wicker is better than real wood funiture. LOL
Tornado alert.....
fuck! .... begin QE3 immediately
yeah yeah, bullish tomorrow. If not, the plunge team will be in full force to protect and serve.
When will all this end and we get on with the real business. Lets get this over with. Out of the depths of a depression we will rise to fight again. But this, it is like a cancer spreading, slowly but the end result is known.
Enough. When will the sheeples start marching like the march of millions in Egypt? How can so many be so stupid. Makes me want to cry.
New Groupon vouchers combined with food stamps & unemployment checks will turn lower corporate expectations around.
Wal-Mart is admitting their customers are running out of money before the end of the month. I verified this today as the local Sou Cal 'Mart was jam-packed and just before M-day it was pretty thin of consumers.
I'm thinking this is a visible cue more than breadlines, etc. (which are outdated-Chase has the card for you).
Knowing the BLS numbers are fudged by sloughing off verifiable unemployed through a technicality (sure they've given up looking since there are NO jobs) and knowing we've burned through about $6 Trillion with nothing to show for it (except a robust luxury class) tells me we're about one loose top step from a huge tumble. What recovery? Look out below!
STFD * Coines Sell the fucking dip before it becomes a black hole LOL.
Welcome to COSTCo, I love you!
Bankstericide homicide genocide
the PATRIOTic Act of Shit and the whole SCOTUS-approved police state INFRASTRUCTURE (the crowning achievement of the war on civil rights...er drugs) is because they expect civil unrest.
Civil unrest, bitchez....
OT - Trichet seeks single EU Finance Ministry
http://edition.cnn.com/2011/BUSINESS/06/02/eu.ecb.trichet.ft/index.html?hpt=hp_bn1
"That's ok: In keeping with tradition, QE3 will very soon be blamed on unreasonably normal weather."
Now now, let's keep cause and effect properly, Syllogistically unremittingly proper.... Poor weather will be blamed on QE3 necessitating the imposition of Uncle Al's carbon tax to help balance the budget.
Watch.....
Not THOSE retailers idiots, look over here at:
Remington, Olin, ATK, Novak, Colt etc.
Just some examples of consumer desperation from the CA gutter;
Roundtable Pizza used to call the house every couple of months and offer a "special" Wednesday night - any large pizza for $10. This week they called and said the offer is good for any number of large pizzas until June 8. A large is typically $16, now a 37% discount for a week. How is that for consumer desperation. Pizza - hard to compete with the Dollar Menu. They are hoping you will buy their $3 2-liter bottle of Coke.
In terms of last gasps, Blockbuster (remember them) now runs a special wherein you can rent one movie for $1.99 or $2.99 and then exchange it for any movie in the store the next day free of charge. The kicker is you can keep physically coming back into the store to exchange this movie as many times as you want - ending in July. For a goof, we watched over 12 movies off the original $1.99 with no plan to end it. Same story, they are cross selling concessions in store and basically they want you to default and buy the rented movie for $20. The last Blockbuster in town is a disaster. It looks like Beirut. The staff are literally begging patrons to go online and vote the store "all 5s" "so that the store can stay open."
These are the folks that have jobs.
Coupons/deals/(Groupons! HA!) everywhere I look. I agree 100%. Desperate business's everywhere fighting for the dwindling customers that still have money to spend on discretionary items. Classic DEFLATION(light demand, heavy supply).
J in Vegas
Pizza biz in most of the country is cut throat, that is normal in my opinion. They come and go. County seat a couple of years ago had something like 13 pizza places that delivered, this is a small town. Coupons are all over for them.
Blockbuster? Please. I will see how they are doing right after I find the buggy whip manufacturer. The writing has been on the wall for years about brick and mortar video rentals, what took blockhead so long to figure out that their overpriced rentals were going to be history? Our local mom & pop $1 video rental went out of business three years ago, and they used grandma on a pension as the labor so you can't get a lower labor cost, and they were not turning enough profit to make it a go.
I guess for me the shocking thing is how long blockhead stayed in business. Close to $4 gas why drive in to exchange a movie?
" Those will be doing very good"
You guys got to start paying an editor...
i know what you mean...."those will be doing very gooder" is alot better
Can someone run over to Ben Bernanke, slap him in the face and say.....
"Its the fucking debt, stupid !!"
Slapping him in the face sounds good.
Not so sure about calling him stupid.
Evil maybe, Devil-Incarnate maybe, bad genius boy, maybe.
But stupid?
No, not sure that fits.
I am not disagreeing with your position per se ... but having acknowledged in April that he is facing diminishing returns for his QE dollar ...
Einstein's quote, "Insanity: Doing the same thing over and over again and expecting different results."
If Bernanke does even one additional QE, he documents his decision process is driven by insanity - not that I would expect that to stop him from doing so ... if he is insane.
Bernanke has one winning move left. Crash the system and take us back before QE. He will cause the U.S. to default sooner rather than later, he will destroy the E.U. and the euro for once and for all, he will cause China's governement to fall (it sucks to be a creditor when you can only recover pennies on the dollar), and he will set off some regional wars that will kill a couple million people.
Any other move ... all the same things happen but the death toll ratchets up by an order of magnitude for every further QE (or similar devaluation of the dollar, exporting inflation effort) cycle he subjects the world to suffer through.
So - is it fair to say someone who is insane on Ben's scale can't be stupid too?
barliman
According to Ben & Tim it's transitory.
Then there's Howard Davidowitz
http://youtu.be/cwRwT3qrT4M
Well, there's one for the books. First job was "unloading trucks for tips". That, my friend, is 100% Mafia owned.
'Two niggers just stole my truck! Can you fucking believe that shit?"
http://www.youtube.com/watch?v=GmPBgK-jvB0
Can't make this shit up - and your MSM is too stupid to even bother to edit it out.
Silver hit a low of $35.18/oz and I trust that more and more futures contract are taking physical delivery of registered silver and then taking their eligible silver out of the CRIMEX.
Only 59 days left before the COMEX goes to ZERO registered silver.
The CRIMEX is Too Big To Live.
Gold short term bubble (July-October) is coming closer :
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=420#p32823
Some Simple Deficit Reduction Arithmetic Here’s a short lesson about something that every policy-maker should have learned in Macro 101, but apparently has been forgotten by many of them.
Suppose we are in a country that is running a large budget deficit but, for whatever reason, decides that it needs to dramatically reduce it. Take your pick of examples, because there are plenty to choose from: Greece, the UK, the US...
Suppose that the country – let’s call it Austerityland – has a GDP of $100/year, and a budget deficit of $10/yr, or 10% of GDP. And suppose that the government decides it wants to get the deficit down to 5% of GDP. How can it get there?
No, the answer is not “cut spending by $5/yr”. Nor is it “raise taxes by $5/yr”. And last but not least, it is also not “enact a combination of tax increases and spending cuts that total $5/yr”. To see why, let’s do just a bit of arithmetic.
To keep things simple (and to make it particularly relevant to the three examples mentioned above), let’s focus on the strategy of trying to halve the budget deficit primarily through spending cuts. So the government of Austerityland decides to cut spending by $5/yr. What happens?
Recall that GDP is the sum of spending on final goods and services by domestic consumers, domestic businesses, and the government, along with net exports:
GDP = C + I + G + (X – M) = Y. Recall as well that GDP is, for our purposes, the same thing as income (Y).
If G is reduced by $5 in Austerityland, the first thing that happens is that GDP falls by $5. But then a bunch of secondary effects kick in, including:
So, what is the budget deficit in Austerityland after a $5 reduction in government spending? If we assume a relatively modest multiplier of 1.5, and a tax rate of 25%, then we get:
ΔG = -$5
ΔY = -$7.5
ΔT = -$1.875
And the new deficit is now $6.875, which is 7.4% of the new level of GDP. Wait, I thought we were trying to get the deficit down to 5% of GDP? What happened?
What happened is that we’ve missed our target, by quite a bit, due to the multiplier effect and the fall in tax revenues that resulted from the shrinking economy. In fact, just a bit of simple algebra allows us to figure out that government spending in Austerityland will have to be cut by about $9 in order to reach a budget deficit target of 5% of GDP. In other words, the government will have to cut spending by almost twice as much as it initially thought it would in order to reach its deficit target.
(When that happens, by the way, GDP will fall from $100 to around $86. Yes, that’s a 14% drop in output. But hey, at least we’ve hit our deficit reduction target!)
Somehow, this simple exercise in macroeconomic math seems beyond the reach of policymakers around the world.
Why do people keep getting surprised that austerity doesn't work as well as hoped to reach budget deficit targets? I know, I know, there are people who argue that basic Macro 101 has it all wrong. Even people who know better (ahem, Douglas Holtz-Eakin) somehow allow ideology to get them to make the bizaare claim that when income goes down, people will actually increase spending. Confidence fairies and all that.
But when basic Macro 101 both makes good theoretical sense and also fits what we actually observe, it's really time to start looking for your handy Occam's Razor. I wish I could take more satisfaction from the fact that mainstream macroeconomics, as it has been taught to first-year college and university students around the world for decades, does such a good job explaining what we see happening across the globe today...
UPDATE (May 27): To see an alternative, much less destructive way to get a deficit and debt problem under control, see this post: Two Approaches Toward Deficit Reduction.
UPDATE (May 25): New data from the UK continues to show that the British austerity program is having exactly the effects predicted by this model. From the Financial Times today:
Dramatic, we know. But the ONS has confirmed the economy grew only 0.5 per cent in 2011′s first quarter after its 0.5 per cent fall in 2010′s last three months... confirming a double-dip in GDP in absolute terms over the period...
More worrying is the fact that sectors which previously pushed recovery forward are now definitely double-dipping.
Here’s Howard Archer of IHS Global Insight:
But the thing with re-balancing is — the Treasury wants private investment to fill the hole that will be left by government cuts to spending. It’s not happening.
No, it's not happening. But it's not really surprising that private spending isn't filling the gap left by reduced government spending, given that income is falling...
I'm in the retail sales business. This slow down started last November 2010 and really went off the cliff in January 2011. Sales are now off over 85%. In my 30 years of business have never seen it this bad.
Menawhile, the state-approved media tells us this morning that The Teleprompter will be in Ohio today to visit a Government Motors Corp. (junior partner, aka Chrysler) plant to talk-up the "recovery" of the automotive sector. The media is already spouting the approved propaganda that said said visit is meant to "highlight a rare bright spot in the sluggish economic recovery."
Obviously neither The Teleprompter nor the state-approved media do much reading of ZH. Too bad, for them. They might actually learn something.
Next log on the recovery bonfire = NFP
U.S. Treasury Secretary Timothy F. Geithner: "said the world cannot again bank on the cash-strapped U.S. consumer to drive growth and urged other nations to stimulate their own demand."
Busan Korea, June 2010
"bank"
hilarious
Sell your paper silver for time being
Stocks under key resistance
http://deadcatbouncing.blogspot.com/2011/06/silver-breakout.html
the ultra wealthy shopping at tiffanies and the like all month long without a care in the world....
....while the masses can only afford to shop at Walmart at the beginning of each month when they still have money to do so....
....this can not end well.
Probably wouldn't want to short the guns and ammo business right now either...