What happens when we roll back into the next official recession, unemployment soars, and consumers really stop spending? What is revealed when you look under the hood of this economic recovery is that it is a complete and utter fraud. The recovery is nothing but smoke and mirrors, buoyed by subprime auto debt, really subprime student loan debt, corporate stock buybacks, and Fed financed bubbles in stocks, real estate, and bonds. The four retailers listed below are nothing but zombies, kept alive by the Fed’s ZIRP and QE, as they stumble towards their ultimate deaths. The coming recession will be the knife through their skulls, putting them out of their misery.
How can it be implied that the markets are too fragile to deal with an unexpected raise of interest rates to (gasp) 1/4 of 1%, if all the “data” we were told (or sold) has been showing signs of all this “improvement?” The question still remains: How does any Ivory Tower prognosticator, or Wall Street talking head, square all these circles? Simple – they don’t. They just act as if it they didn’t or won’t happen. Or, just continue to act as if we’re too dumb to answer. This is complacency, idiocy, and more – all turned up to 11!
Last week the government reported personal income and spending for April. After months of blaming non-existent consumer spending on cold weather, shockingly occurring during the Winter, the captured mainstream media pundits, Ivy League educated Wall Street economist lackeys, and Keynesian loving money printers at the Fed have run out of propaganda to explain why Americans are not spending money they don’t have. The corporate mainstream media is now visibly angry with the American people for not doing what the Ivy League propagated Keynesian academic models say they should be doing. An economy built upon the consumption of iGadgets, Cheetos, meat lovers stuffed crust pizza, and slave labor produced Chinese baubles, along with the production of enough arms to blow up the world ten times over, and the doling out of trillions to the non-productive class, is doomed to fail.
“What’s going on is the customers don’t have the f***ing money. That’s it. This isn’t rocket science.”
The Long/Short Strategy for the New Reality
1. Go long companies that cater to the 1%.
2. Short companies that cater to the middle class.
3. Go long companies that cater to the poor.
Sometimes I wish I could just passively accept what my government monarchs and their mainstream media mouthpieces feed me on a daily basis. Why do I have to question everything I’m told? Life would be much simpler and I could concentrate on more important things like the size of Kim Kardashian’s ass... The willfully ignorant masses, dumbed down by government education, lured into obesity by corporate toxic packaged sludge disguised as food products, manipulated, controlled and molded by an unseen governing class of rich men, and kept docile through never ending corporate media propaganda, are nothing but pawns to the arrogant sociopathic pricks pulling the wires in this corporate fascist empire of debt.
Our entire economic paradigm is built upon desperate measures. Zero interest rates, $3 trillion of QE, systematic accounting fraud, fudged economic data, and doling out subprime loans to auto renters and University of Phoenix wannabes have failed to revive our moribund economy. Delusions don’t die easily. But they do die. We are reaching the limit of this delusionary dream built upon debt, denial, and deception. Make sure you wolf down that Thanksgiving feast before 5:00 pm. There are HDTV’s to fight for at 6:00 pm.
When you see the headlines touting strong retail sales, you need to consider what you are actually seeing in the real world. RadioShack will be filing for bankruptcy within months. Wet Seal will follow. Sears is about two years from a bankruptcy filing. JC Penney’s turnaround is a sham. They continue to lose hundreds of millions every quarter and will be filing for bankruptcy within the next couple years. Target and Wal-Mart continue to post awful sales results and have stopped expanding. And as you drive around in your leased BMW, you see more Space Available signs than operating outlets in every strip center in America.
Has the next major economic downturn already started? The way that you would answer that question would probably depend on where you live. If you live in New York City, or the suburbs of Washington D.C., or you work for one of the big tech firms in the San Francisco area, you would probably respond to such a question by saying of course not. In those areas, the economy is doing great and prices for high end homes are still booming. But in most of the rest of the nation, evidence continues to mount that the next recession has already begun for the poor and the middle class.
The inevitable shuttering of at least 3 billion square feet of retail space is a certainty. The aging demographics of the U.S. population, dire economic situation of both young and old, and sheer lunacy of the retail expansion since 2000, guarantee a future of ghost malls, decaying weed infested empty parking lots, retailer bankruptcies, real estate developer bankruptcies, massive loan losses for the banking industry, and the loss of millions of retail jobs. Since we always look for a silver lining in a black cloud, we predict a bright future for the SPACE AVAILABLE and GOING OUT OF BUSINESS sign making companies.
On Tuesday, new Federal Reserve Chairman Janet Yellen went before Congress and confidently declared that "the economic recovery gained greater traction in the second half of last year" and that "substantial progress has been made in restoring the economy to health". This resulted in glowing headlines throughout the mainstream media such as this one from USA Today: "Yellen: Economy is improving at moderate pace". Sadly, tens of millions of Americans are going to believe what the mainstream media is telling them. But it isn't the truth. As you will see below, there are all sorts of signs that the economy is taking a turn for the worse.
"It looks like this year’s economic horse will pull up lame," warns Bloomberg's Richard Yamarone, adding that the Bloomberg Orange Book Sentiment Index – a proxy for the overall state of economic affairs in the U.S. – has been running below 50 for 49 consecutive weeks, which implies a stagnant growth rate in GDP in the 2-to-2.5% range. The driving theme behind this subpar, sluggish recovery, Yamarone points out, is the lack of desirable growth in real disposable personal incomes, which grew at just 0.6% during the 12 months ending in November.
After Seven Lean Years, Part 2: US Commercial Real Estate: The Present Position And Future ProspectsSubmitted by Tyler Durden on 01/20/2014 16:32 -0400
The first installment of our series on U.S. real estate by correspondent Mark G. focused on residential real estate. In Part 2, Mark explains why the commercial real estate (CRE) market is set to implode. The fundamentals of demographics, stagnant household income and an overbuilt retail sector eroded by eCommerce support only one conclusion: commercial real estate in the U.S. will implode as retail sales and profits weaken.
If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun.
One can debate whether QE has benefitted Main Street or Wall Street until one is blue in the face, even though five years later, the answer is perfectly clear to all but the staunchest Keynesians and monetarists (and if it isn't, just pay attention to the 3:30 pm S&P ramp every day). One thing, however, that is undisputed is what the market itself says about where the QE money ends up when it is being spent by its recipients. And that story is so simple even a Keynesian would get it. Stated briefly, luxury retailers such as Tiffany, Coach and LVMH are now up 500% since the Lehman lows, and about 30% above the prior cycle highs. On the other hand, regular retailers such as Macy's, Kohl's and JC Penney are barely up 100% from the crisis lows, and still more than 30% below the last bubble highs.