This page has been archived and commenting is disabled.
Americans’ urge to shop is overriding anxiety about the economy.
Today’s Data & journal links
Data sheets describing major market metrics, news and a journalling area for trading records in the centre of the pdf.
eurusd | gbpusd | usdjpy | s&p500 | nasdaq | dow jones | gold| crude oil
News and Views in brief
Economy
Americans’ urge to shop is overriding anxiety about the economy.
While household-sentiment measures are at levels typically observed during a recession, an increase in spending during the third quarter boosted growth to the highest level of the year, Commerce Department figures showed Oct. 27. The schism partly reflects consumer ire with the government’s failure to reduce 9.1 percent unemployment or stem rising deficits, said James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management.http://www.bloomberg.com/news/2011-10-30/economy-improving-as-u-s-consumer-shows-what-s-done-refuting-what-s-said.html
European governments are running into initial resistance as they seek to use this week’s Group of 20 summit to turn early praise for their revamped crisis- fighting strategy into financial support.
The G-20 leaders convene Nov. 3-4 in Cannes, France, a week after euro-area authorities pledged to magnify the capacity of their rescue fund to 1 trillion euros ($1.4 trillion) and look beyond their borders for help in doing so as they combat the debt turmoil posing the biggest threat to global growth.
While the help of China and cooperation of the International Monetary Fund were immediately sought, pledges of hard cash are proving hard to come by as G-20 members press for more details of the plan. In an indication Europe may eventually prevail, Brazilian and Russian officials said their governments may be willing to provide assistance. http://www.bloomberg.com/news/2011-10-31/europe-seeking-crisis-fighting-funds-faces-resistance-before-cannes-g-20.html
Hopes for a bounce in Britain's ailing economy were dealt a blow on Monday after data showing a slowdown in mortgage lending alongside a modest pick-up in unsecured lending highlighted the tough conditions faced by hard-pressed consumers. http://uk.reuters.com/article/2011/10/31/uk-mortgage-approvals-idUKLNE79U01O20111031
Indexes –
U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will trim its biggest monthly rally since 1974, on concern European leaders will struggle to raise funds to contain the region’s debt crisis.
Morgan Stanley and Citigroup Inc. dropped more than 1.8 percent, following declines in European lenders. Alcoa Inc. and Ford Motor Co. slumped at least 1.1 percent to pace losses in companies most-tied to economic growth. Chevron Corp. erased 1 percent, while SanDisk Corp. decreased 2.5 percent after analysts slashed their recommendations for the shares.http://www.bloomberg.com/news/2011-10-31/u-s-stock-futures-drop-as-europe-woos-china-for-bailout-fund.html
European stocks dropped, paring their biggest monthly gain since July 2009, as some investors remain reluctant to buy equities before the euro area’s leaders explain how they will fund their expanded bailout facility. U.S. index futures and Asian shares fell.
The Stoxx Europe 600 Index slid 1.1 to 246.19 at 12:21 p.m. in London, paring its monthly gain to 8.8 percent, the largest advance in more than two years. The gauge slipped 0.2 percent on Oct. 28, having rallied 3.6 percent the previous day, after the euro area’s leaders said they will boost the European Financial Stability Facility’s capacity in a bid to stem the debt crisis. The gauge jumped 4.2 percent last week, its fifth straight weekly gain. http://www.bloomberg.com/news/2011-10-31/european-u-s-stock-futures-decline-vestas-may-drop-barclays-may-move.html
Currencies
Currency markets were in risk aversion mode on Monday, but investors were limited in their choice of havens after intervention to weaken the yen by Japan left the dollar as the only safe bet. Indeed, the US currency was up 1.1 per cent to $1.3987 against the euro and gained 0.7 per cent to $1.6006 versus the pound.
Riskier currencies saw deeper losses. The Australian dollar, sought out under conditions of stronger risk appetite for its higher yield, fell 1.5 per cent to $1.0552. The dollar index, a measure of the dollar’s strength relative to a basket of six other currencies, gained 1.3 per cent to 76.037.http://www.ft.com/cms/s/0/7193770a-03ac-11e1-bbc5-00144feabdc0.html?ftcamp=rss#axzz1cMZhGdji
The US Dollar Index was broadly under pressure on account of overall optimism over the solution to the European debt crisis. Better recovery from the United States too was favourable for high-yielding currencies.
The European banks were downgraded, which hardly shocked market participants as investors knew very well that European banks are poorly placed due to the mounting debt on their balance sheet.
Despite risk aversion, the markets rallied as all this news was fairly priced-in and the greenback was under immense pressure throughout the fortnight.
http://www.moneycontrol.com/news/rupee/fortnightly-outlook-for-currencies-nirmal-bang_607944.html
Commodities: -
World equities fell on Monday after commodity shares were hit by a stronger dollar which jumped in the wake of Japanese intervention to weaken the yen, while returning doubts over the EU's plan to solve the debt crisis added to the cautious tone.
U.S. crude futures also fell, by 0.8 percent, as the dollar hit a three-month high, making commodities priced in the greenback more expensive for investors holding other currencies, cooling demand.http://www.reuters.com/article/2011/10/31/us-markets-global-idUSTRE79N45620111031
Oil fell in New York on speculation demand will falter after the biggest monthly gain in more than two years and a surge in the dollar. Brent’s premium to U.S. crude was near its lowest in almost four months.
Futures fell as much as 1.2 percent after Japan took steps for the third time this year to weaken the yen against the dollar, making commodities priced using the U.S. currency less attractive to investors. Crude prices at $80 to $100 are “reasonable,” the United Arab Emirates’ energy minister said in Singapore today. Oil is up 17 percent in October, the biggest monthly increase since May 2009. http://www.bloomberg.com/news/2011-10-31/oil-declines-paring-biggest-monthly-increase-since-may-2009.html
»
- advertisements -
More aptly...Americans's anxiety about the economy is overriding it's urge to shop.
'I got a mile of numbers and a ton of stats!'.
This is just the effect of sub-prime lending coming back....car loans, credit cards....it is the quickest way to goose the economy since each dollar lent is spent right away. This is NOT real consumer spending, but is just handing out money to the poor and pretending it is a loan.
Too bad the longer term impact is to completely destroy what is left of our miserable, deformed economy.
Happened to go by a nearby strip mall that I haven't been by in about a year. This consists of 2 buildings with about 360ft frontage in each. Last time I was by there there was one storefront empty. Thia time, one entire building is empty. All the cars in the lot were parked in front of the OTB racing facility. Not much of a recovery there.......but, lots of reasonably priced space for some bright entreprenuer in the area I suppose.
Brand new upscale looking strip center was built out where a new intersection/road was supposed to go in. The road conversion was put on hold. One donut shop opened up and was the sole occupant for a year but a Fl Highway Patrol office moved in. Funny as hell to see a dozen FHP cars in the same lot as the donut shop. 2 1/2 years later they are still the only occupants...
the internet killed the retail store. I never understood why the gov stood by and let AMZN and other co's like her wreck that sales tax dollar flow. Tech destroyed big gov, in that instance anyway, meanwhile the hard workers who funded the gov got the shaft. Meanwhile big gov refuses to take advantage of tech/net as obama and friends could easily teleconference anywhere they want yet still insist on huge black buses and expensive 747 fortresses to go meet anyone anywhere
the internet killed the retail store. I never understood why the gov stood by and let AMZN and other co's like her wreck that sales tax dollar flow.
That's called "Creative Destruction," and yes, it can bite people... like the retail store owners.
We got lucky this time - it happened too quickly for power-addled politicians to stop it.
Government figures... that figures.
How come the malls are like ghost towns? Not buying into this recovery/revival spin.
Our malls are filled, guess it depends on the area. I just people watch.
Livin in the DC area, huh? ;)
With my 'savings' earning a whopping 1/4 of 1% interest - in a bank that's likely to be insolvent in a few months (bankrupting the FDIC) and Wall Strreet losing 20% of my IRA, and REAL inflation approaching double digits, the BEST thing I can do with my money is spend it while it's still worth something.
As a sidenote, we got FOUR (4) credit card offers from the SAME bank topday - bringing the total nomber of credit card offers this week to 8.
I wonder how many people are actually taking these offers and maxing out as fast as they can, whie they can before declaring bankruptcy. I'll bet THAT accounts for part of the uptick in consumer spending.
any recommendations for water purification systems? preferably <$300 (I live by myself in an apt)
Berkey
http://www.bigberkeywaterfilters.com/
thanks
The Pop in Q3 most like had to do with the hurricanes that hit the East Ooast, as consumers were force into spending because of storm damages.
Q4 might match Q4 because of the snow storm that hit over the weekend, knocking out power for millions of consumers, which may exceed the level of damaged caused by Irene. Some of this is coming from insurance, and the rest is tapping in the little savings consumers built up post 2008 when consumers starting saving. The lastest consumer figures shows the saving rate is plunging once again to the 2007-2008 lows.
Remember, that big spending boom of 2004-2007 was caused by cheap and easy debt. Those debts still remain and need to repaid. if Consumers had not been given cheap and easy debt back in 2004 there would have been no spending boom because they didn't have substantial savings to consume with. Today its worse since they have hangover debt from the credit bubble and the wages are falling and still no savings. Many liquidated 401K/IRA, post 2008 crash to spend, but thats a one time blimp. Its all downhill until wages start rising again, and that won't happen until money printing from the Fed starts flowing into consumers, perhaps triggered by a global currency devalution of the US dollar, sparking inflation.
I would be fascinated to see the breakdown of Who is shopping by income group, WHAT is being bought, WHO are the savers, and HOW MUCH each income group is saving. Then we can talk.
Only thing I'll be buying is psysical silver.
psych
Yeah frustration Shopping. I do it too sometimes.
Actually they figure WTF.... the economy is shot to hell so I may as well spend it and max the CCs.... I'll just declaire bankruptcy like everyone else........
I want my, I want my, I want my jubilee.
read breakfast at tiffanys. it is nothing to new to the observant.
And Other Fallacy Ridden Conclusions
Actually... the majority of increased personal consumption is from the upper 10% income group... Surprise, surprise
And as other ZH commenters have astutely observed... Nothing like understating inflation to overstate PCE and therefore overstate GDP...
BTW Tyler: I need to give this "guest" post a -5... How do I do that?
This must have been like it was before the 1930's depression or before WWI or WWII. Absoloutely everyone I know is consumed with consuming or entertaining. Everyone believes that the entitlements, financial aid, food stamps, welfare, medicare, and pensions will not only continue but increase in the future. No one I know is the least bit worried. This is similiar to 2006 when everyone in So. CA thought housing prices would increase forever. Even that lesson has had little impact.
I guess it depends where you live. I don't see much spending around here. I splurge at the thrift store once in awhile :-) I have many internet friends and far away family that seem to keep spending.
What happens when G also becomes I, C, and E-I?
Summer of 2010 when coffee futures took off and our local grocery marked 34 oz. brandname coffee down to $5.99, I bought 10 cans for the storage room. Friends gave me that look. Prices recently: $12.99.
For some, when the going gets tough, the tough go shoplifting, or worse, as in many CA areas where soft-target retail stores, as well as banks, are incurring much higher robbery rates. One of our favorite small ethnic restaurants was recently robbed, including all the seated patrons. Nearby BAC branch now has 6 day/week armed guard. Local newspaper advises to watch for package deliveries as delivery trucks have been followed and packages taken after truck turns onto new street.
And I'll wager that these things are just the beginning, and the next anxiety will be over going out banking, shopping and dining.
We should only buy stuff made in US of A. But that would seriously curb our spending!
Welfare babies! We make lots of those every day in the good old USA.
Good luck finding anything made in the USA. You can do it, but it's like finding a needle in a haystack.
Macs / Apples... aren't made in the USA. They are DESIGNED in California... created with slave labor in China.
There are plenty of products made in the US, I make a conscious effort to buy US. Electronics being the major exception, IMO.
Isn't that what you're supposed to do when faced with greater than normal inflation?
The price of everything is going up, as even headline inflation is starting to get the message.
But there's a deeper dynamic at work. When the crash hit in 2008, Americans hunkered down and tried to spend as little as humanly possible. Purchases were put off. Unfortunately, time wears things out: cars break down, tires blow out, washers break, etc. Americans are dipping into their savings and whipping out the plastic to replace the things they would have replaced 3 years ago, in a normal economy. They're not trying to keep up with the Jones, they're trying to keep up with the 1950s.
Something came over me and I was looking at getting a new 50in LED flat screen TV.
I bought a couple of cases of .233 ammo instead.
"I bought a couple of cases of .233 ammo instead."
There's your mistake right there...
You should have bought a reload kit so we could add a manufacturing job...
Inherited the dies, am looking for a better press. Kept the Rem 700 .223. Invite the neighbors 'kids' to come over and shoot with their buddies, 'All your brass is belong to me' as they just throw it out anyways. Some guy on CL was selling an automated loading outfit for .223/5.56 for $5k, was just a little tempted.
Wait - that makes sense.
And what are the stats on savings:
Especially the 'savings' of the still-employed 5 Mil or so "stay-in" mortgage and RE tax delinquent 'homeowners' whose spending distorts the consumer expenditure estimates by, let's see, call it $1200/month average unpaid mortgage and tax, times 5 million, = $6 Bil/month overstatement? Or maybe I have some zeroes wrong...
The reason spending is up and savings are down is because the people have no choice! Inflation is up big in the thrid quarter of this year.
SGS (ShadowStats) now tracks inflation at truly stunning levels above 11 percent! Up about 4 percent from a year ago and about 6 percent from 2009.
http://www.shadowstats.com/alternate_data/inflation-charts
The BLS report reads QUOTE:
For spending to go up as consumer confidence completely collapses is an indication of something seriously wrong with the economy. This is not good news, although it will be interpreted that way.
I shop for Silver and Gold. Plastic Chinese crap I'll pass on....
Where do you think the plastic monster boxes come from?
APMEX? The Mint? Some dudes 3D printer?
Tupperware?
We are Americans!
Nothing can stop us! Certainly not a little debt.
I am doing my part. I am probably the most spendthrift American that has ever walked the earth.
Shop Shop Shop!
Are you my wife???
Yup.
She posts ZH comments in between QVC and Home Shopping Network orders waiting for your credit card to go through...
We are Anonymous. We seek the truth. We don't shop to support fiat currencies, corrupted corporations, politicians, lobbyists. Expect us (to by more gold & silver)!
Bullish on bullshit.
Bullshit (BS) up 25% the last two quarters in the DOW and has positively affected US GDP and USDEUR.
Shopping for guns, food, ammo, water filtration/purification systems, boots, jeans.
Jeans? As in cotton? As in retains only 20% of warmth whence wet vs wools 80%? You aughta be ashamed of yourself. It's all in the wool, but surely you knew that? Being SD1 and all...