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When Americans Can't Afford A Dollar

Tyler Durden's picture




 

Today's market moving news (or at least what should be market moving news) comes from hyper discounter extraordinaire, Family Dollar, whose stock is getting clobbered on what is merely the latest downward outlook revision (because as much as the Fed would like, reality, and cash flows, still do matter). Yet, while earnings not only for the $0.99 store but for the entire S&P will be atrocious something that apparently only selling copious amounts of VIX and buying up the ES in hopes of lifting all sinking boats can fix, it is the comments on the conference call that are most disturbing. To wit:

  • FAMILY DOLLAR QTR DISCRETIONARY SALES SLOWED MORE THAN EXPECTED
  • FAMILY DOLLAR SEES NEAR TERM CHALLENGES IN DISCRETIONARY ITEMS
  • FAMILY DOLLAR SEES 2Q GROSS MARGIN PRESSURE MORE VS 1Q
  • FAMILY DOLLAR SEES 1H13 MORE CHALLENGING THAN EXPECTED
  • FAMILY DOLLAR QTR AVG DISCRETIONARY INVENTORY PER STORE DOWN
  • FAMILY DOLLAR SAYS BUSINESS CLIMATE REMAINS UNCERTAIN

In any other universe, when Americans can't afford a dollar, literally, on purchases, this may be cause for alarm. But not in this one: here, courtesy of Bernanke's central planning, all shall be well. After all: instead of buying "stuff", America's 50 million food stamp recipients should just buy AAPL stock, and retire happily in a few short months if not weeks.

Worst case, they can always convert their stocks into fruity paraphernalia.

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Thu, 01/03/2013 - 11:53 | 3118731 tango
tango's picture

Silly me.  I thought chicken was SUPPOSED to be priced like steak and that all veggies were SUPPOSED to cost twice as much for being "organic".  (How can ginger, a root that grows naturally, be anything other than organic?)  I need the EBT for the incredible cheese and olive selections at Whole Foods.

Thu, 01/03/2013 - 11:50 | 3118718 tango
tango's picture

Discretionary income is being squeezed from every avenue - phones, cable, web, soaring health care and food, high gas, taxes...the amazing thing is that we still have money left to spend on any discretionary items.  Truly, this is the European way - no discretionary income to speak of.  

Of course, as Tyler has noted several times, the current setup supplements low income folks enough to live a good lifestyle.  My peeve all along has been that politicians imply that those without an education, skill or experience should enjoy the living standards of those who do.   If that's the case, why in the hell try at all?

Thu, 01/03/2013 - 11:58 | 3118750 LawsofPhysics
LawsofPhysics's picture

Wonder if things would change if our "representatives" enjoyed the same standard of living as their constituents?  Let ME say it one more time;  Nothing changes until the supply lines break.  Only then will you see compensation go to those who are actually worth a shit and know how to actually create things of REAL VALUE.  History is very clear on this point.

Thu, 01/03/2013 - 12:20 | 3118836 centerline
centerline's picture

And the supply lines will break the moment cash flow stops (or is insufficient in value or quanitity to keep things running).  Given the complexity of modern society, various supply chains can be broken in many critical places.  Getting harder and harder to keep the plates spinning.  And the irony is the mathematics which suggest spending cuts will fix the problem!  lol.

Thu, 01/03/2013 - 12:27 | 3118859 LawsofPhysics
LawsofPhysics's picture

What is "velocity" these days anyway?

Thu, 01/03/2013 - 12:31 | 3118873 centerline
centerline's picture

Have a feeling it is going to get really interesting sooner rather than later.  Some shock and awe coming up.

Thu, 01/03/2013 - 11:50 | 3118719 Iconomissed
Iconomissed's picture

Welcome to the Dollar Store where everything's $2.00.

Thu, 01/03/2013 - 11:55 | 3118734 GMadScientist
GMadScientist's picture

Better there than "The Gold Store" (we'll buy your scrap....even your momma's dentures, they got gold in em).

Talk about some immoral stuff to pull on your fellow man just because you have info asymmetry.

Thu, 01/03/2013 - 11:51 | 3118721 in-Credible Banker
in-Credible Banker's picture

Schiff radio is a must listen today.  One of the things he pointed out was - the ENTIRE tax increase from the Cliff deal is about to be pissed away in the Sandy relief bill, to be voted on tomorrow. 

Deficits headed to 1.5 trill or higher, starting this year.  The dude is AWESOME as always.....

 

 

Thu, 01/03/2013 - 11:52 | 3118723 Agent P
Agent P's picture

"Hey buddy, can you spare an iTunes gift card?"

Thu, 01/03/2013 - 11:52 | 3118724 GMadScientist
GMadScientist's picture

Hate the game, not the playa!

(still think that gentlemen is an entrepreneurial health remedy salesman and "tax resister")

Anyone have good estimates on how much of the American economy is under the table?

I bet there's another "hockeystick" hiding there!

Thu, 01/03/2013 - 12:09 | 3118781 adr
adr's picture

Actually not that much. I mean there may be a few billion in baby sitting and yard work money paid out to young kids. Cities have pretty much figured out ways to prevent any under the table maintenance work from being done. Massive penalties for not getting permits. Then you have the corporations that have made doing under the table work for family and friends a crime.

I tried to get my neighbor, who works for a heating company, to fix my furnace. I was going to pay him $200 cash since he only gets about $20 out of the money from a service call. I even bought the part I needed online for $80. The heating company wanted $750 for the repair when I got a quote from them.

My neighbor wouldn't do it because he said he wouldn't risk his job to do work under the table. I wanted to save over $400, and I wanted to give my neighbor $200 for two hours worth of work. Instead both lost because I got a repair manual online and did the work myself.

Don't get me started on the prescription bullshit with doctors now. A doctor can't even write a prescription for his own son anymore. He has to take his own family to a different practice and pay the fee to get medicine for them.

Everything is this country is set up to gang rape your wallet into submission. I think mine has a nightingale complex, it likes getting raped now.

Thu, 01/03/2013 - 13:53 | 3119187 Winston of Oceania
Winston of Oceania's picture

Well let me tell you I am being FORCED to change my entire business due to casual competition. Formerly a lawn service business I now have to expand into light construction as I am competing with everyone from disability frauds to retired public employees (read law enforcement). Wake the f up.

Thu, 01/03/2013 - 11:54 | 3118733 LawsofPhysics
LawsofPhysics's picture

"Among households with incomes between $500,000 and $1 million, taxes would go up by an average of $14,812…."

-----------------------------------------------------------------------------

14K ain't shit when you are collecting close to a million dollars.  Well, I guess I can thank our CONgress for that.  Depending on the margins, that capital will be re-invested in the wages of my employees and our infrastructure.  Good luck to everyone else.

Thu, 01/03/2013 - 12:00 | 3118755 GMadScientist
GMadScientist's picture

Seems an odd decision in the face of marginal tax rates, but okay.

 

 

Thu, 01/03/2013 - 12:05 | 3118767 LawsofPhysics
LawsofPhysics's picture

Equipment and employees both wear out.  If you can't depend on either, you go out of business, period.  Taxation and inflation are both forms of theft.  But at least with taxes, I can track where the money is spent.  I am not a paper-pusher.  I have REAL input costs because I deliver a real fucking product.  Remind me, what are commodities compared to 5, 10, 15, years ago? Your statement is more applicable to those who's business is nothing but pushing paper bullshit, fuck them.

Thu, 01/03/2013 - 12:14 | 3118803 adr
adr's picture

My business is barely hanging on. I do welcome the destruction of the Japanese currency though. Since I buy one of my main components from Japan, the Yen dropping will make up for some of the rising input costs from Obama's great regime.

My margin has shrunk from 40% to around 10% over the past five years. We can't raise our price on consumers because they simply won't buy. REAL BUSINESS SURE IS FUN!!!

I wish I could have no revenue, and no business plan and get bought for a billion dollars because my company is "social".

You can't have a real economy when paper pushing becomes the most profitable activity in the system.

Fuck the fuckers with fuckidty fucking shit.

Thu, 01/03/2013 - 12:27 | 3118854 centerline
centerline's picture

Same here, between a rock and hard place on razor thin margins now.  Really isn't any room to give at this point - else we will be forced to downsize again, reduce compensation/benefits, etc.

Thu, 01/03/2013 - 12:16 | 3118818 MiltonFriedmans...
MiltonFriedmansNightmare's picture

If you earn $500,000, you take home roughly 250,000.  That's roughly a 6% hit.

Add on the Obamacare taxes and it's not inconsequential.

Thu, 01/03/2013 - 12:21 | 3118834 LawsofPhysics
LawsofPhysics's picture

Being in agriculture and familiar with thousands of years of human history, essential commodities are all that matter to me (this is my only input and output).  You are talking about paper promises that won't mean shit when the supply lines finally break.  Inconsequential indeed.

Thu, 01/03/2013 - 11:56 | 3118745 GMadScientist
GMadScientist's picture

You know, there is an opportunity cost of gasoline to get one's broke ass to the Dollar Store...

Thu, 01/03/2013 - 12:31 | 3118868 Waterfallsparkles
Waterfallsparkles's picture

Or the cost of a Taxi.  One of the applicants for my Section 8 housing showed up in a Taxi and a very nice cell phone.  Dressed to the hilt of course.

Thu, 01/03/2013 - 13:02 | 3118971 GMadScientist
GMadScientist's picture

I'm sorry the taste of $30B government titty is so sour for you.

 

Thu, 01/03/2013 - 11:56 | 3118746 RSDallas
RSDallas's picture

Are we not sure that the economy maybe a lot better (not withstanding if it is real or not real, lasting or not lasting) than what is being reported and therefore their would be shopper went to Target and WalMart instead?

Thu, 01/03/2013 - 12:20 | 3118833 adr
adr's picture

no.

I sell to Walmart and Target. Nomatter what bullshit they put out. Holiday 2012 was terrible, the worst since 2009.

Absolutely nothing moved unless it was put 50% off. It was really insane. If a video game was put at $29.99 instead of $59.99, it sold out and none of the $60 games were even touched. Less than 20% of the Christmas decorations sold before Christmas. Every consumer knew they would go to 50% off after Christmas, the day the 50% sign went up, everything sold.

The best day of the year was not Black Friday. It was the first Saturday of Dec. Hmmm, what could have caused that. Oh yeah, the last welfare checks before Christmas filled up the EBT cards the day before.

Thu, 01/03/2013 - 11:57 | 3118748 lolmao500
lolmao500's picture

Well they can afford guns but not dollar stores.

Thu, 01/03/2013 - 12:04 | 3118763 Mad Mohel
Mad Mohel's picture

I bought some cans of dog food from there last month. You'd be surprised with enough ketchup it's actually delicious.

Thu, 01/03/2013 - 12:28 | 3118862 donkshover
donkshover's picture

And you are getting your vegetables!

Thu, 01/03/2013 - 12:04 | 3118764 SheepDog-One
SheepDog-One's picture

Aaaaaand...CUT! Thats a wrap for today, once again propped up futures to make it stick all day, all news over thats where we close, wait till tomorrow once again.

Thu, 01/03/2013 - 12:05 | 3118768 MajorWoody
MajorWoody's picture

The last thing we should do is raise the taxes on the rich.  I mean 15% tax on your stock dividends???  Ghastly I tell you.  Millionairs paying less percent of tax than middle income 50ker's?  Well that's fair, they make the jobs for us, right?  All you self employed small business guys are millionaires right? So it won't even make a dent if we raise taxes on the rich, is what they want us to argue over.  But is it right for people of means, money, to pay less tax than poorer folk? Time for golf at the club now, tata.

Thu, 01/03/2013 - 12:12 | 3118793 IridiumRebel
IridiumRebel's picture

Their taxes went up. What is your point? Is huffpo down right now or did you decide to pick a fight? Start with spelling. If you are going to come here with a talking point memo argument, you must spell correctly. All taxes will go up including yours. What is the point of you coming here to pick a fight? I suggest you reload the page, read my post and then engage. I will gladly converse with you. 

Thu, 01/03/2013 - 13:06 | 3118891 Dr. Engali
Dr. Engali's picture

Oh boo f--ing hooh. Cry me a river. We will never have a "fair" tax in this country unless we move to a flat or consumption tax.

Thu, 01/03/2013 - 12:06 | 3118773 youngman
youngman's picture

I predict a loss of good full time jobs of 4 million...and a gain of part time jobs of 2 million....the lowering of the bar...

Thu, 01/03/2013 - 12:08 | 3118778 q99x2
q99x2's picture

The price of a bag of heroin in NYC is still $10--the same as 30 years ago.

Who needs dollar stores with deals like that.

Thu, 01/03/2013 - 12:26 | 3118853 Clint Liquor
Clint Liquor's picture

It appears that 40 years and a couple of trillion in spending on the War on Drugs has been able to acheive the maintence of pricing.

Thu, 01/03/2013 - 13:06 | 3118988 GMadScientist
GMadScientist's picture

There's more than one path to price inflation...this is not the heroin of Lou Reed and Keith Richards you're shooting anymore.

 

Thu, 01/03/2013 - 13:41 | 3119113 Winston of Oceania
Winston of Oceania's picture

Yes and now hot dogs are more expensive due to the increase of fillers in drugs...

Thu, 01/03/2013 - 13:19 | 3119046 azzhatter
azzhatter's picture

I think Bernanke includes that in CPI

Thu, 01/03/2013 - 13:56 | 3119200 the grateful un...
the grateful unemployed's picture

according to his h(eroin)edonics, if heroin is too expensive the user will switch to Meth which is much cheaper (like chicken for beef), therefore there is no inflation (whatever happens before the last statement, the final phrase is a constant)

Thu, 01/03/2013 - 12:08 | 3118779 lovemesomeZH
lovemesomeZH's picture

This may or may not matter, but Family Dollar is not a dollar store. the author is confusing the Dollar Tree, where everything is one dollar. Family Dollar can be expensive on some items.

 

Thu, 01/03/2013 - 12:15 | 3118806 Zer0head
Zer0head's picture

wa'da'ya mean they got Gravy Train at 2 for $1

http://www.circularhub.com/flyers/familydollar-circular?type=1&locale=en...!/flyers/familydollar-circular?flyer_run_id=4202

 

http://d2e0sxz09bo7k2.cloudfront.net/flyer_items/3728512/1356634229/plus...

Thu, 01/03/2013 - 12:10 | 3118786 Gypsyducks
Gypsyducks's picture

At least we have a perpetual bid in the ES from the PPT.... which is nice.

Thu, 01/03/2013 - 12:25 | 3118829 10mm
10mm's picture

Family dollar,dollar general are not dollar stores.The Dollar Store is a dollar store.Dollar TREE

Thu, 01/03/2013 - 12:21 | 3118830 Cultural Capital
Cultural Capital's picture

/

Thu, 01/03/2013 - 12:26 | 3118851 adr
adr's picture

uh, in the Unted States Ghettos it is just called shoppin

My wife who was never exposed to the ways of the ghetto asked me once, "Why do black guys walk around with the tags on their clothing?"

I said because they went shoppin, they stole the stuff. Then they go to another mall or TJ Maxx to return the stuff for store credit after they wear it for a few days. She told me I was crazy. Then she asked a black guy she worked with, and he told her the exact same thing.

Thu, 01/03/2013 - 12:22 | 3118839 donkshover
donkshover's picture

"Office of Homeland Dependency"   quit yo bitchin and join us.

Thu, 01/03/2013 - 12:32 | 3118876 orangegeek
orangegeek's picture

Nothing is left untouched by government hands.

 

Yesterday's jump in SP500 on government raising taxes is the most bizarre move to date.  When markets get this emotional/irrational, watch out below.

 

http://bullandbearmash.com/chart/sp500-hourly-shows-todays-jump-of-36-po...

 

Q4 results to help to confirm these numbers - which they probably won't.  When consumers have their savings confiscated by higher taxes, spending drops - not a good thing for the private sector.

Thu, 01/03/2013 - 12:42 | 3118911 the grateful un...
the grateful unemployed's picture

notice the one group which didn't cartch a break in the negotiations was payroll taxes. lets guess they know the jobs number is about to take off and they can solve the deficit on the back of underpaid workers. and the labor force is quickly becoming a special interest group (smaller than the unemployed) with no leverage, no unions left with any clout. some of these people will realize they would be better off in China, but China won't have them (Americans have too many crazy ideas about individual freedom)

Thu, 01/03/2013 - 12:35 | 3118890 the grateful un...
the grateful unemployed's picture

 the dollar stores live off the overcapacity in the global economy. the day may be here when the shipping containers from China no longer arrive. its a great business model, Ninety Nine Cent stores opened an outlet in Beverly Hills. the rich like their bargains too.

if China can no longer afford U.S. (cheap consumer goods) then the U.S. economy will take off, and Bernanke will be scrambling to get those dollars back into the helicopter. inflation will outrun wages (as American replacement jobs for those manufacturing jobs in China will be at a comparable pay level)

but its also possible that the dollar stores have run into transportation issues (fuel costs and inventory managment - Walmart beats them all, the dolalr stores only live off what Walmart doesn't want) Walmart has overbuilt, and that could change too, as they close stores and stop construction of new ones.

consider FiDO's trouble to be a sign of change in the old global economy. if China can't play the multinationals will move back to the US, (if only the US gov would give them some incentive to bring jobs here - part of that midnight 70B in tax breaks they snuck in with the fiscall cliff deal,  included one for mulltinationals who make their money overseas) or its back to Mexico and the maquiladoras.

Thu, 01/03/2013 - 12:36 | 3118894 Sutton
Sutton's picture

"My policies have enabled the Family Dollar shopper to move up the ladder to Lord&Taylor and Saks"

BenSBernanke

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