Most Overhyped Black Friday In History A Dud? ShopperTrak Reports Just 0.3% Increase In Black Friday Sales Over 2009, Drop In Real TermsSubmitted by Tyler Durden on 11/27/2010 19:53 -0400
The shopping day that was supposed to signal the renaissance of the US consumer, and justify the massive overhiring by US retailers (not to mention the completely dislocated from reality surge in stock price for razor thin margin retailers like Amazon), is increasingly seeming to be a dud. WSJ reports, citing channel checker ShopperTrak, that "Black Friday sales rose only slightly from a year ago even though more
shoppers visited stores, retail traffic monitor ShopperTrak said
Saturday, setting the stage for another uncertain holiday season for
retailers. Sales increased 0.3% to $10.7 billion, according to ShopperTrak, which
installs monitoring devices in stores to gauge traffic. Traffic rose by
2.2%, ShopperTrak said." For the observant ones out there, this is in nominal terms: adjusted for inflation there was actually a drop in end sales. Even so, the primary reason for the disappointment is that Black Friday actually started early on in the month, with most retailers offering comparable loss-leading deals such as those seen on the Friday after the national holiday early in November, reducing the actual purchasing power for the all important day. "The smaller than expected increase is due in part to discounts offered
earlier in November as well as online-only promotions, ShopperTrak
founder Bill Martin said. Traffic to stores was up over 6% for the first
two weeks of November, an early boost that could affect retailers'
performance in the coming weeks, he said." Last but not least it should also be noted that with millions of Americans living mortgage payment free for over 18 months now, and using money that should be going to banks (and nationalized GSEs) to instead purchase shoe closet 32 inch TVs, that sooner or later the bulk of American taxpayers who funded yet another top line (but certainly not margin) bonanza for the nation's retailers may soon say enough, and vote against further subsidies of zombie companies whose existence allows for continued US consumer "strength."
The prospect of major hedge funds and mutual funds getting redemption notices makes traders on Wall Street very nervous. This is the type of stuff that makes me nervous too because you don't know how it's going to play out. It might turn out to be nothing, and blow over, or it might snowball and wreak havoc in financial markets.
Putting a cheery on top of one of the best days in capital markets history, FOX Business Network’s Charlie Gasparino is reporting that Citadel Investment Group, the giant hedge fund run by Ken Griffin, has received a subpoena from the Department of Justice. It is unclear if the Chicago's fund long-rumored 'dark pool' dealings with Brian Sack's Open Market Group will be exposed as a result. From Charlie: “They got a subpoena. It’s the same subpoena that sources tell FOX Business Network that Steve Cohen over at SAC Capital got. It’s a wide ranging subpoena and it dates back to 2008 asking for information on certain stocks. From what I understand, it’s not just healthcare stocks, which has been a primary focus. FOX Business Network has learned two other hedge funds have received subpoenas. We have put calls into Millennium Capital Management and Maverick Capital Management and we are waiting to hear back to them.”
As a disgusted and powerless nation (save for a few irrelevant, ex-Enron consultants) is drowning its post-QE2 monetary sorrows in Blue Label courtesy of a recently, if very temporarily, discovered wealth effect, we present a comedic interlude which presents (in proper chronological order for facility of reading) the email chain that culminated with the decision to embark on the QE2.
When we first read Matt Goldstein's narrative of a rabbi named Milton Balkany, whose attempt to extort Steve Cohen's SAC for $4 million landed him in jail, we thought little of it and dismissed the story more or less as one in which an individual had gotten access to information that had been first perceived as damaging, yet ended up being simply innocuous. However, Goldstein's follow up to the very curious saga of Balkany, which also includes recently alleged insider trading in company Human Genome Sciences by one Joseph "Chip" Skowron, most recently of Morgan Stanley spin off FrontPoint (and previously of S.A.C.) caught our attention, and after doing some additional research, we may have uncovered some circumstantial facts that could indicate that the connection between Chip Skowron, the insider trading scandal, and SAC may be more substantial, that the rabbi may have indeed been on to something, and that there may be far more here than meets the eye.
The market held steady today as headline-y good macro news was mixed with a dose of disappointing earnings news and topped off with a healthy heaping of who gives a shit. That's because with mid-term elections looming and everyone waiting to see the details of QE2...
A financial insider makes a big claim ...
In a stunning turn of honesty, Goldman's David Kostin does a 180 and renounces everything that the Fed wishes the gullible public would swallow hook line and sinker. But first the facts: while the strategist has no choice but to raise his 12 month S&P forecast (this is a new development for all the headline chasers) from 1,250 to 1,275, which is a token nothing compared to the recent 12 month gold price boost from $1,365 to 1,650. This merely reinforces the Zero Hedge view that gold has now become the natural, higher beta, and unlimited upside short hedge to stocks. Indeed, a 1% boost in the S&P PT, is meager compared to the 20% expected gold appreciation. And digging between the facts, we encounter this stunning admission, that would force all current and former Fed chairmen to spin in their graves, assuming a deceased state is attributed them all: "The economy is not the market and QE2 is not a panacea." Read that again, because this is only the first time in history a sellside advisor, especially one who works for Goldman Sachs, has said this truth so fundamental, that nobody actually dares to admit it, least of all the public or the Fed. Below, we present the latest strategy piece by David Kostin which is probably about the most bearish note released by the traditionally permabullish successor to Abby Cohen.
Some rather scary predictions out of Paul Farrell today: "It’s inevitable: Wall Street banks control the Federal Reserve system,
it’s their personal piggy bank. They’ve already done so much damage, yet
have more control than ever.Warning: That’s a set-up. They will eventually destroy capitalism,
democracy, and the dollar’s global reserve-currency status. They will
self-destruct before 2035 … maybe as early as 2012 … most likely by
2020. Last week we cheered the Tea Party for starting the countdown to the
Second American Revolution. Our timeline is crucial to understanding the
historic implications of Taleb’s prediction that the Fed is dying, that
it’s only a matter of time before a revolution triggers class warfare
forcing America to dump capitalism, eliminate our corrupt system of
lobbying, come up with a new workable form of government, and create a
new economy without a banking system ruled by Wall Street." And just like in the Hangover, where the guy is funny because he's fat, Farrell is scary cause he is spot on correct.
David Kostin, traditionally the most optimistic person in the world after A.Joseph Cohen warns clients that the best market performance September in 70 years may be a one-time event, and that in advance of another turn in economic indicators, it may be prudent to lock in profits. "Looking ahead we see the potential for US-MAP readings to again turn negative. Our US Economists expect the two MAP inputs with the highest relevance scores (US ISM and non-farm payrolls) to weaken into year-end. If realized that outlook would be negative for US equities and consistent with our more defensive sector weights." Nonetheless, it is pretty obvious that the apocalypse is now firmly priced in. And as we all know now, the only entity that everyone is frontrunning is the Fed, becase as Tepper so well put it, stock can only go up. That said, Zero Hedge Structured Finance, in collaboration with some very secret and anonymous hedge funds, has some Arizona-desert bridge backed CDOs to sell to Mr Tepper and everyone else buying that gobbledygook.
One can just smell the revulsion emanating from the pages of David Kostin's writings these days. While his predecessor, Joseph Cohen, can serve the crazy juice on CNBC on a daily basis, Goldman's strategist is forced to follow the grand master plan and telegraph to clients just how ugly the future seems. And with prop allegedly no longer a main revenue driver, and thus holder of securities, Goldman better hope volume makes up for the loss in directional bias - what better way to score volume than to incite some fear and loathing. As Kostin said: "We shifted to a more defensive sector allocation this week in anticipation of slowing economic growth indicators and downward revisions to consensus earnings and real GDP forecasts. These changes put us at odds with bottom-up consensus EPS and large cap core mutual funds, particularly in our Consumer Staples Overweight vs. Discretionary Underweight where mutual funds hold the opposite position." Goldman's 2011 earnings forecasts are most below consensus in growth-sensitive sectors such as Consumer Discretionary which is 23% below bottom-up consensus while both Energy and Materials stand 10% to 15% lower. Whether this means to buy every Consumer Discretionary share or sell, depends on just how quickly the Goldman prop roll off is proceeding. All this and all the other must see weekly charts included.
As our economy hurtles towards its meeting with destiny, the political class seeks to assign blame on their enemies for this Greater Depression. The Republicans would like you to believe that Bill Clinton, Robert Rubin, Chris Dodd, and Barney Frank and their Community Reinvest Act caused the collapse of our financial system. Democrats want you to believe that George Bush and his band of unregulated free market capitalists created a financial disaster of epic proportions. The truth is that America has been captured by a financial class that makes no distinction between parties. These barbarians have sucked the life out of a once productive nation by raping and pillaging with impunity while enriching only them. They live in 20,000 square foot $10 million mansions in Greenwich, CT and in $3 million dollar penthouses on Central Park West. These are the robber barons that represent the Age of Mammon
The SEC’s crackdown on the State of New Jersey this week for misrepresenting the condition of its pension funds has cities and states scrambling to make sure their pension disclosures are in order. Is this the tip of the iceberg?
Keynesian stimulus can’t be blamed for all our problems, but it would have been nice if our politicians hadn’t relied on it so blindly. Debt is debt is debt, after all. It doesn’t matter if it’s owed by governments or individuals. It weighs on the institutions that issue too much of it, and the ensuing consequences of paying off the interest costs severely hinders governments’ ability to function properly. It suffices to say that we need a new economic plan – a plan that doesn’t invite governments to print their way out of economic turmoil. Keynesian theory enjoyed a tremendous run, but is now for all intents and purposes dead… and now it’s time to pay for it. Literally. - Eric Sprott
Things in the middle east are back to normal (which means the usual deadly massacre), although with a twist. An earlier rocket attack on the Israel port city of Eliat missed its target completely, and instead slammed into Aqaba, in neighboring Jordan, located 6 miles away just over the border. Instead of firing the rockets from Israel and prompting immediate airborne retaliation, the launch point for today's attack was Egypt, which prevent Israel (or should that be Jordan) from retaliating. Sky News reports that the reason for the shelling is connected to a recent agreement that will see the Palestinian authorities talk face-to-face with the Israelis, and radical elements, who do not want that to happen, are escalating the violence as a means to stop it. It is unclear if Jordan will also escalate now that its own territory has been impacted in the ongoing conflict, and it is also to be seen how Egypt will react should it become perceived as a peripheral zone of cross-border attacks.