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The High-End Consumer Is Rolling Over: Will Apple Save The Economy From A Recession This Time?
The latest BAC credit and debit card spending data is out and it is not pretty, and not just for the mid-level consumer who, as documented previously, has been tapping out ever since April as the following Gallup consumer spending chart shows...
... but also for the high-end.
While the data revealed a modest improvement in consumer spending in September, as retail sales ex-autos increased modestly 0.3% mom SA in September, this is only a partial reversal from the 0.7% mom SA decline in August.
Additionally, in what may be good news for the stock market, if not the economy, the trend in BAC consumer spending has fallen below that of the Census Bureau, suggesting risk of weaker Census data when it is released next Wednesday, further pushing out a Fed rate hike.
But while the headline data is not pretty, it is the higher-end consumer that is suddenly at risk, with BofA noting that while sales at luxury apparel retailers are still up year over year, there has been a notable slowdown in the sales growth pace over the past four and a half years, following a marked recovery after the recession.
According to BofA: "The performance of the stock market and global growth are important determinants of sales at luxury retailers, which suggests to us some caution going forward. We also note that spending on travel, which includes airfares, cruises and hotels, has looked strong relative to other categories."
BofA also notes that the luxury goods sector is facing structural headwinds such as reduced revenue growth, increased competition and greater digital transparency.
Then, in addition to luxury fashion sale, BofA looks at that other staple of the higher-end consumer, spending on travel which includes airlines, lodging and cruises.
While the growth rate in this categiry accelerated through 2014 to reach a cyclical high in early 2015, more recently, growth has started to slow. Is this merely correlated with the stock market? If so don't be surprised to see it roll over in the coming months with a 2-3 month lag to the S&P 500.
So what may be the marginal factor that determines the fate of high-end spending? The answer should surprise no one: Apple.
According to BofA "September is becoming synonymous with Apple releases. The latest version of the iPhone was released in September, helping to boost electronic sales, which is typical for such releases, as the chart shows. According to press reports, there were 13 million of the newest iPhone models sold. While electronic store sales were up 1.1% mom SA based on the BAC data, this is more muted than in prior Apple releases. We may see an additional boost into October. If iPhones were preordered in September but not ship until October, the sale would show up in October data."
Or, if the high-end spender is indeed tapped out, then not even the new iPhone can save this most important and largest, amounting for about 70% of total, component of GDP.
Keep a close eye on the high-end spender. If, as we supposed, it correlated closely with the S&P 500, then this could well be the determining factor that decides whether or not the US slips into recession as soon as next year.
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Why is ZH talking like MS media? We ARE in recession.
Or is this just about Apple?
a recession means when stocks go down. nothing else matters. the fed will buy crAAPL common before this is over.
who do ya think is buying Craaple now........
Meanwhile, a country so insulated from the rest of the world spent USD 1bn over a 7 day holiday period where the domestic consumption had a growth of 11% over the last year's similar 7 day period of holidays.
This country is called - China.
The consumption in China keeps rising and is now 50% of the domestic economy and has risen from 39.2% of the it's economy in 2010.
Golden Week spending behavior underlines new economic pattern
Factbox: Facts and figures about China's economic restructuring 2011-2015Most data is astounding on hos China is reshaping their economy from an export and manufacturing driven model to a domestic consumptoipn driven model.
Their spending on tourism rose an astronomical 44.6%. While on public transportation rose 86.2%.
China holiday consumption boost seen in tourism, transport, F&BOh look, another key metric losing cabin pressure.
Not it. I'm looking at a droid phone. I hate Apple's business practices. Dear Apple. I don't like being spied on. I don't like overpriced underperforming gadgets. I don't want my recently purchased iGadget to be rendered useless 1 year after purchase when you totally change your OS. Oh, and I don't like supporting your political agendas with my purchases. Go fuck yourself.
That's it!
A recession as confirmed by the career academics at the NBER.
Not a recession as obvious to everyone else, such as readers of this website whom we have shown for the past 5 months the US entered a recession some time in March.
We already know that the NBER is worthless.
Were they to crash a car, they would have to wait for the final repair bill to confirm that the car was in the crash.
I wish we could interview those academics and learn why they are never in front of the news. They are always lagging far behind.
NBER's job is to identify when recessions began and ended. Not to predict them. There's a million prognosticators out there.
However, I seem to recall NBER saying the US would enter a recession a few years ago. Looks like they were early on that call. Of course, that was before QE-infinity.
Reality is, most drones have not experienced the so-called recovery. Most worker bees have been in a depression since late 07.
It's all about the Optics. WTFEver that means
"career academics at the NBER"
CLASSIC! wHAT WILL THESE FUCKS DO WHEN THE STUDENT LOAN AND GRANT $$$ GETS SHUT OFF? FUCKWIDS
Anecdotal, but I'm a CPA at a good sized firm and see alot of the high net worth clients liquidating investments the past 12 months.
yeah, and every central bank, pension fund, and corporation are buying with both hands.
Hand over that cap gain tax $$$$ shit brains!!! Thanks for playing!
This time the Fed will have to save Apple by buying billions of dollars worth of its stock
Snowden: iPhones Have Secret Spyware That Lets Govt's Monitor Unsuspecting Usershttp://www.alternet.org/news-amp-politics/snowden-iphones-have-secret-sp...
maybe all the school boards around the country can buy Iphones like they bought Apple computers for the children-----
We are beyond the point of no return with this spying upon us.
Not going to end well for any of us.
Ya know, on the very top, things ain't bad. Or so they tell me. I just like believing that somewhere in the world there is a good sized group of somebodies looking around and liking what they see. Because where I am, it's not happening.
Having experimented with IPADS and various makes of Android tablets, I see no reason to buy an IPAD for $500 when I can buy a perfectly functional tablet for $150 or less, that has GPS and a Microsd slot. Apple will soldier on for a while, with incremental improvements to the existing product line, but barring the kind of innovation Jobs ruthlessly pursued, it will begin a descent. This time, he's not coming back.
"be the determining factor that decides whether or not the US slips into recession as soon as next year" This current leg down began last winter, its probably only hitting retail now.
No...this time it's gonna be a whole lot different.
Like Disney, Apple can just start charging more for it's i-products.
Disney already charges over $1,000/night for some of it's rooms.
These rooms used to be $350/night not that long ago
Well past being ridiculously expensive.
$1000 a night? That sucker better have Cinderella come with it.
pods
And she better be ready for one hell of a night. lol.
She might have to bring along a couple of her princess friends and some blow too.
pods
Continues to amaze me. At this point all I can surmise is that most everyone has just said "fuck it" and is living on the edge of disaster... up to thier eyeballs in debt.
We took our kids to Disney two years ago. We were scheduled for a two night stay, but after eight hour at the park my kids had enough. We ended up heading to the condo on the beach a day earlier. Saved a lot of money and had a lot more fun family time. Disney is far to over rated and over priced, but for some strange reason people continue to pay no matter what the cost.
Real Appels will Apple won't.
Somewhat on topic but it seems that the Obama econ is so good that LA needed to declare an emergency due to the massive increase of the number of homeless folk.
http://www.hollywoodreporter.com/news/las-westside-wealthy-homeless-coll...
The high end spender is indeed tapped out. Look at Lamborghini Countach values. They charged higher for several years during QE swan song, and have now completely grinded to a halt.
Communist Depression Education
The communists are always in the denial, anger and depression loop, writing ever more laws to hunt you down and ensure the same for your family, the only possible outcome of which is depression. That is History.
Once again they have fubared the entire global economy under their control, they are still trying to force the remainder to believe that the individual is powerless, and will not be happy until they create another Hitler, when they still won’t be happy. There goes Russia, China and India, into the vacuum created by the implosion of American communism, and Japan isn’t far behind. Gotta give Afghanistan some credit.
The Great Depression didn’t begin or end in the 30s, and the only difference between then and now is the communists’ latest, self-delusional mythology; it’s always a technology to nowhere, and the I-phone is no different. The problem isn’t the number of people on this planet; it’s the stupid communist infrastructure. The only question remaining is who will make the dress to begin the next iteration.
All communist decisions are made from the perspective of insecurity, seeking security, in an artificial box. There are only three things worth learning from the communists: the majority seeks Pavlov conditioning in a small box, the majority will be happy to electrocute you for challenging its false assumptions in that box, and this, like time-lapse photography, shall also pass, if you keep your distance.
The slow-moving train wreck is demographic collapse, the market is intermittently registering impulse recognition, at which point the Fed injects more drugs in the form of real estate inflation, and the only possible outcome is war, with the communist body against itself. The communists completely fubared the economy, therefore you made a bad decision, therefore you must join the communists and accept their programming. How stupid is that?
On the way down, markets are inversely related to interest rates, and Boeing and NASA are run by communist morons, experts in arbitrary nothingness, who didn’t build them, surprise. Spending some time in the empire is useful in that nature on another planet, and the infrastructure on the way there, will be artificial relative to this planet, but that is no reason to give up your ability to adapt, to join a communist gang. Physics is physics, no matter where you go in the universe.
Don’t sit in the back of the bus every time you get on and be surprised to see a rule that you must sit in the back of the bus. Increasing the efficiency of cloning in a resulting shrinking box isn’t a good idea, but that’s communism. The typical job market is down to 3-6 weeks per job, as the full-time communists spread out what remains. Gear accordingly.
The folks who thought they solved the problem by joining the communists are about to find out otherwise. The difference in this iteration is that their overlord brats can isolate and distribute outcomes with far greater control, on I-phones, strangling themselves with far greater excess capacity for stupid. Individual initiative and responsibility are penalized accordingly.
Too funny, how proudly they use their I-phones to make purchases, ignorant of what a cashless society, robots of, by and for robots, means.
Watch the mindless Apple cult revolt during Applepay hack.
Its getting pretty boring reading the same crap every day. Good or Bad the majority of these numbers are all make believe or have we forgotten this.
We all know inflation is and has been vastly understated for decades, thus GDP numbers that are seasonally adjusted, with add ins (hookers and blow) are fictious. Please stop with this "Bankrupt of America" says. Who believes anything that comes out of the mouth of pathological liars? Goldman, Wells Fargo, JP Morgan are all confidence men. I would trust a used car salesman, an ambulance chasing lawyer, and Nigerian prince looking for a bridge loan more than anyone who works for the banks as an analcyst or an economist.
Its all mark to fantasy non GAAP of the books bullshit anyways.
Fed will use this data to justify QE4. The higher enders can't have their purchasing power drop.
Maybe we will get helicopter Iphones and watches to stimulate the 'economy'
According to my research, markets move in cycles, of which the table of 7 days (5 trading days) plays an important role. For example, when the 21, 35, 42, 63 day cycle line up, it’s Time to get ready for a change in trend (S&P500).
http://tripstrading.com/2015/10/09/sp500-how-cycles-take-their-time/
Today, OCT 8, points at a 7, 21, 42, 119 and 154 day cycle (TripsTrading Cycle Model, TTCM).
Tomorrow and Saturday represent a Bradley Model Date, OCT 9 and 10. According to the Bradley Model: October 9-10 – On these two Days there are very strong turns in both the Middle Terms and Declinations, and this could result in an especially strong turn.
If the total cycle lasts 63 days, the decline will last till OCT 26. The 1850 -30 Price Target is based on the Negative Reversal of SEP 30.
So the cycles seem lined up to change the short term trend.