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Posts Tagged ‘retailers’

Commercial Real Estate (CRE): The Slow-Mo Cliff-Dive Gathers Speed

Commercial Real Estate (CRE): The Slow-Mo Cliff-Dive Gathers Speed

cre marketCourtesy of Charles Hugh Smith, Of Two Minds

Commercial real estate is in a structural cliff-dive, currently in slow-motion but soon to gather momentum.

With all the hub-bub about the foreclosure crisis in residential real estate, commercial real estate (CRE) has fallen off the radar screen of crises. Don’t worry, it’s still careening off the cliff; the fall is just in slow motion.

No need for a fancy report to see the signs of decay in CRE. Signs of the ongoing CRE meltdown are everywhere--empty storefronts, mall shops and vacant office complexes abound.

The causes are all too familiar: lending standards went out the window, banks loaned too much, buyers paid too much, lousy deals were avidly securitized, cash flow projections entered Fantasyland and unhealthy speculation fed widespread fraud.

Since boom-and-bust cycles of overbuilding and retrenchment are endemic to commercial real estate, it’s tempting to view this as just another post-expansion trough. Since prices have already slipped a staggering 40% from the 2006 peak, those calling this the bottom of the current cycle have some history on their side.

But beneath what appears to be a standard-issue retrenchment--a glut of inventory to work through, lenders avoiding risk instead of embracing it, and so on--structural changes in the U.S. economy are changing the CRE landscape for good--and not in a positive direction.

A long-term structural decline in CRE is not just a real estate industry concern. With some $1.7 trillion in CRE loans needing to be refinanced in the next few years, a continuing decline in CRE values could push the still-fragile banking system into a new crisis and the economy back into recession as early as next year.

The extremes reached in the boom were certainly epic: investors paid $800,000 per resort hotel room and over $500 per square foot for Class A office space, numbers which no terrestrial cash flow could possibly justify. Retail centers sprouted alongside every new exurb subdivision.

cre - commercial real estate

By this logic, an unprecedented boom requires an equally unprecedented bust to work through the excesses in price, debt and risk. So far so good, but there is an anecdotal body of evidence which suggests that profound systemic changes are taking place in the U.S. economy which will structurally reduce the demand for commercial real estate--not for a few years, but permanently.

1. A significant portion of CRE
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Frugality the New Reality in Australia; Predatory Customers Addicted to Discounts

Frugality the New Reality in Australia; Predatory Customers Addicted to Discounts

Courtesy of Mish 

LONDON, ENGLAND - NOVEMBER 27:  A man views the discounted items for sale in a branch of Books Etc which has gone into administration on November 27, 2009 in London, England. The nationwide book chain, along with its sister brand 'Borders', is seeking a buyer for all of its 45 stores. Increased competition from supermarkets and online bookstores are being blamed for the chain's decline. (Photo by Oli Scarff/Getty Images)

I have commented many times on US Consumer and Corporate Frugality but inquiring minds might be interested in happenings down under. Frugality has gone global.

Predatory Customers Addicted to Discounts 

The Herald Sun reports Retailers could take years to recover because customers addicted to discounts.

A bargain frenzy since the global financial crisis has led consumers to expect and accept only slashed prices.

The dire forecast, from market research company TNS director Chris Kirby, comes as bored staff in some stores are put to work cleaning, tidying and changing window displays because of a lack of customers.

At some sites, especially fashion outlets, stock is discounted by up to 70 per cent as soon as it hits shelves to attract shopper interest.

"Consumers are no longer willing to accept the first price they find. They know there’s a good chance of finding it cheaper somewhere else," Mr Kirby said. "In essence the industry is training us to become professional, if not predatory, consumers."

The caution came as a Commonwealth Bank economic index that tracks credit and debit card transaction value trends across a wide range of industries reported the weakest spending since the height of the global financial crisis in early 2008.

Desperate Retailers Slashing Prices by 75 Percent 

NEW YORK - FEBRUARY 12: A '75% Off' sign is seen February 12, 2009 in the Brooklyn borough of New York City. U.S. retail sales unexpectedly rebounded 1.0 percent in January after dropping for six months in a row, according to the Commerce Department.  (Photo by Mario Tama/Getty Images)

Please consider Retailers slashing prices by 75% as Queensland sales slow

One retail organisation, the United Retail Federation, said the slump was at its worst in Queensland, where small retailers were struggling to move stock, even after heavily discounting items.

The bleak picture is at odds with scenes of hundreds of shoppers queuing at lay-by counters to take advantage of major toy sales.

Thousands of bargain hunters queued at Big W stores for the start of its two-week toy sale, which ended last week.

One Gold Coast shopper complained of a four-hour wait at her local Big W store, and of being hit in the ankles with shopping trolleys in the stampede.

Target will follow with its toy sale from July 22 to August 4, having already released its 72-page catalogue offering 120 half-price bargains.

But Australian Retailers Association director Russell Zimmerman said retailers generally were finding it difficult to clear stock, even at hefty discounts. "It’s tough out there and retailers are finding it harder


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CITI: RETAILERS LOOK “WORRISOME”

CITI: RETAILERS LOOK “WORRISOME”

Courtesy of The Pragmatic Capitalist 

Neon sign for caf? and market at dusk

Retail stocks continue to hit new 52 week highs just about every day.  As we noted last week, the discrepancy between the retail stocks and reality appears to be growing with every uptick.  Citi recently issued a note expressing the same belief:

“The S&P 500 Consumer Discretionary sector’s Retailing industry group looks worrisome. While retailing stocks have been very powerful performers this year, up almost 2x the S&P 500’s gain year to date, there are several reasons to become concerned about the group’s potential trading trends in the next year, ranging from fundamentals, to earnings revision momentum and to valuation. Moreover, potential equity market weakness mid-year could generate meaningful near-term profit-taking as portfolio manager conviction seems shallow. Therefore, a “downgrade watch” alert from Market Weight is appropriate.”

Source: Citi Research


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Rosenberg: The Truth About Retail Sales Is That They Still Stink

If anyone can explain why the retail sales weren’t really that good, it would be David Rosenberg, over breakfast.  - Ilene 

Rosenberg: The Truth About Retail Sales Is That They Still Stink

Glass of milk with fruits

Courtesy of Vince Veneziani at Clusterstock 

In this morning’s Breakfast With Dave newsletter, analyst David Rosenberg talks last week’s retail sales report.

Don’t believe everything that you read, says Rosie. According to "raw data," retail sales actually FELL1.6% month-over-month in February, and you can’t just blame seasonality for this.

Breakfast With Dave: “It’s always best to look at what consumers do rather than what they think or say. They’re spending — that’s the main thing”. That goes down as the glib remark of the weekend — front page of the Investors Business Daily (Shoppers Perk Up, Lifting Retail Sales, By A Surprise 0.3%). Another pundit said pretty well the same thing in Barron’s and following the data on Friday there was an economist on CNBC who said that you never win by betting against the U.S. consumer.

What a load of you-know-what.

Let’s more closely examine that retail sales report.

First, the raw data actually showed that sales fell 1.6% MoM in February. Now it would be meaningful if February was usually a weak month for sales compared to January so that it would make perfect sense for the seasonal adjustment factor to give the raw data an upward skew. But in fact, retail sales rise over half the time in February. And while, on average, the not seasonally adjusted retail sales data are down 0.4% in each February over the past decade, the reality is that this past February was four times as bad as the norm — not to mention tied for the third worst February since 1998. Really good result, eh?

Second, here we have the greatest stimulus experience in seven decades and retail sales are still down 5% from the pre-recession peak and on a per capital basis are down 8%. Sales are actually lower today than they were in January 2006 — four years ago — even though the population has risen 4.3% over this time. And on a per capita basis, retail sales are no…
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Credit Card Charge-Offs Rise In November, Breaking Two-Month Streak

Credit Card Charge-Offs Rise In November, Breaking Two-Month Streak

Courtesy of Vince Veneziani at The Business Insider/Clusterstock

credit card sticker amex visa discoverDisappointing news on the consumer front, courtesy of the latest charge-off numbers:

WSJ: The rate of charge-offs on U.S. credit cards rose more than a half-percentage point in November, snapping a two-month run of drops from an all-time high in August, and delinquencies rose for the fourth consecutive month, Moody’s Investors Service said.

Charge-offs, which are those loans a credit-card company doesn’t think it will be able to collect, were 10.6% for November, compared with 10% in October. The ratings firm also said the delinquency rate, which gives a glimpse of issuers’ potential losses and how much they may need to set aside in reserves, rose to 6.2% in November.

Read the whole story — >

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Small Business Bankruptcies Shoot Up 81% In California

Continued divergence in the two different worlds, the stock market world and the other one that most people live in… Ilene

Small Business Bankruptcies Shoot Up 81% In California

arnold schwarzenegger knifeCourtesy of Vince Veneziani at The Business Insider

Owning a small business in this economy is tough, but it’s a whole different ballgame in California:

LA Times: As credit lines have shrunk and consumers have cut back on spending, thousands of small businesses have closed their doors over the last year. The plight of struggling firms has been aggravated by the reluctance of banks to lend money, said Brian Headd, an economist at the Small Business Administration’s office of advocacy.

California has been particularly hard hit. The latest data show small-business bankruptcies up 81% in the state for the 12 months ended Sept. 30, compared with the previous year. Filings nationwide were up 44%, according to the credit analysis firm Equifax Inc.

Read the rest of this story ->


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The Christmas Retail Rally Could Be Toast

The Christmas Retail Rally Could Be Toast (WMT, BBY, RTH)

Courtesy of Vincent Fernando at Clusterstock/business Insider

Shown below is a retail proxy, the Retail HLDRs Exchange Traded Fund (RTH). It’s outperformed the S&P500 on a three month basis. Yet Best Buy’s (BBY) warning today, that revenue will be driven by lower-ticket items in the fourth quarter, could mean that the pre-Christmas retail rally shown below is toast.

Note how Best Buy dropped a nasty 7% on just these decent earnings. A lot of holiday cheer is already priced-in.

bby

 


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Gallup: Spending Down Across Incomes; WSJ: Stores Face Discount Dilemma

Gallup: Spending Down Across Incomes; WSJ: Stores Face Discount Dilemma

Sale tags attached to hanging clothes, close-up

Courtesy of Mish

Retailers hoping for strong sales after a rebound in the stock market and housing are out of luck according to the latest Gallup Poll on shopping habits. Please consider Upper-Income Spending Reverts to New Normal

In a sign that the new normal in consumer spending continues unabated, upper-income Americans’ self-reported average daily spending in stores, restaurants, gas stations, and online fell 14% in November, reverting to its relatively tight ($107 to $121) pre-October 2009 average monthly range. Middle- and lower-income consumer discretionary spending increased by 7% last month but remained in its tight 2009 average monthly range of $52 to $61. Still, consumer spending by both income groups continues to trail year-ago levels by 20%, even as those comparables have gotten easier to match — possibly dashing hopes that upscale retailers and big-ticket-item sales will do better this year.
[click on charts to enlarge]

Spending By Income Level

Spending vs. Year Ago

The hope was that the surge on Wall Street and the seeming stabilization of housing values had encouraged some upper-income consumers to abandon the 2009 spending new normal. November’s results dashed these hopes, as upper-income consumers joined their middle- and lower-income counterparts in spending 20% less than they had during the financial crisis days of 2008 and returning to the relatively tight 2009 daily spending range for this group prior to October.

Spending New Normal

The year-over-year differences have declined somewhat during recent months, but much of this closure in the 2008-2009 spending gap is a result of the easier spending comparables from last year’s financial crisis.

On a national level, the spending new normal suggests slower economic growth than otherwise might be expected in the years ahead.

Supermarket shopping trolley piled high with bags of shopping

While the spending "new normal" may not be good for the larger economy in the short-term, it may be seen as a strong positive for individual consumer households. Consumers, like their business and banking counterparts, would be well-served to de-leverage by spending less, saving more, reducing their use of credit, and thereby strengthening their personal balance sheets. While this may not provide the immediate-term returns to the economy of the over-leveraging of recent years, a financially stronger U.S. consumer implies only good things for the longer-term


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Consumers Cherry Pick Black Friday Sales

Consumers Cherry Pick Black Friday Sales

Courtesy of Michael Panzner at Financial Armageddon

Nrfblackfriday 
The good news, according to the National Retail Federation, is that 195 million U.S. shoppers visited stores and websites this past weekend, an impressive 13% jump over last year.

The bad news: average spending fell nearly 8% to $343.31 per person, the lowest level in four years, while overall sales were up only 0.5% versus last year’s total.

In sum, it looks like a lot more people came out to cherry pick the biggest bargains — but not much else. That doesn’t seem to be a particularly encouraging sign, especially for retailers’ margins.

Brown shoots, anyone?

 


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Early Reports Point Toward A Nationwide Black Friday Shopping Frenzy

Early Reports Point Toward A Nationwide Black Friday Shopping Frenzy

Courtesy of John Carney of Clusterstock

Black Friday Shopping Line Led By Guy In Cowboy HatIf local media reports are accurate, shoppers have turned out in huge numbers across the country for Black Friday.

We did a survey of local news sites to gather the latest Black Frdiay news. And it looks very good for retailers.

Cincinnati, Ohio: "A long line of shoppers looking for the best priced toys for Christmas waited outside a Western Hills Toys R’ Us store on Glenway Avenue, since late Thursday night to be among the first in line. After the doors opened at 12 a.m., there were some reports that Cincinnati police had to be called to bring order to a disorderly line of shoppers. Some of them said an argument between several groups of shoppers got out of hand and forced the police to called for help…At the new Wal-Mart superstore in Fairfax on Red Bank Road, over a thousand people came early Friday morning, to be in the right line to get some of the doorbuster sales the chain was offering…Many retailers warn that they have severely cut back on what they have ordered."

Weston, Wisconsin: "The line leading to Target in Weston stretched at least three blocks as people got ready for Black Friday shopping Friday."
 
Framingham, Massachusetts: "Dondrae May, a manager at Best Buy’s Framingham, Mass., store, said shoppers started lining up at 4 p.m. Thursday for the 5 a.m. opening for the limited early morning specials like the $299 32-inch Dynex flat-panel TV.

He noted that crowds were larger than last year and that shoppers were filling their basket with more items than a year ago, when they were shellshocked following the ballooning of the financial meltdown. The biggest draws were laptops, TVs and GPS systems, he said."

Aurora, Illinois: "Black Friday shoppers got an early start this year, causing a 2-mile traffic back-up near Chicago Premium Outlets in Aurora…Starting about 11 p.m. Thursday, cars began lining up to get into the mall, according to Illinois State Police…The mall opened at midnight, and the heavy traffic remained for several hours, State Police said."

Somewhere In Middle Georgia: "400 early birds waited in the dark for Belk to open this morning at 4:00 am.

"There


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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743"

Thank you for you time!

 
 

Zero Hedge

Legal Tender Renders Planning Impossible

Courtesy of ZeroHedge. View original post here.

Submitted by Gold Standard Institute.

by Keith Weiner

 

There is much confusion over what the legal tender law does. I have read articles, written by people who are otherwise knowledgeable about economics, claiming that legal tender forces merchants to accept dollars under threat of imprisonment. Recently, I wrote a short article for Forbes clarifying how legal tender law works in the US.

Legal tender law has nothing to do with merchants. If you want to sell steak dinners in your restaurant for silver, you may legally have at it. Unfortunately, the tax code discourages your would-be customers as I wrote in ...



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Phil's Favorites

EU "Red Tape Hell"; Dust Settles on Appointment of Juncker; Time for an Up-Down Vote

Courtesy of Mish.

Jean Claude Juncker (Mr. "Lie When It's Serious") is already accused of sending the UK down the drain.

Please consider British firms fear red tape hell as EU orders equality and green energy reports.
British companies will be forced to publish details of their environmental impact and efforts to improve “gender equality” under a diktat from Brussels.

Bureaucrats want all large firms in the European Union to include details of their policies on “environment, diversity and human rights” in their annual financial statements, it emerged last night.

The “corporate g...



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Insider Scoop

ArcelorMittal Completes Sale of ATIC Stake to HES Beheer - Analyst Blog

Courtesy of Benzinga.

Steel giant ArcelorMittal (NYSE: MT) has completed the divestment of its 78% stake in European port handling and logistics company ATIC Services S.A. (ATIC) to HES Beheer for €155.4 million (roughly $213 million).

With this transaction, HES Beheer now owns 100% stake in ATIC where it previously held 22% stake. The transaction reflects ArcelorMittal`s strategy of selective deposal of non-core assets.

ArcelorMittal posted a net loss of $0.2 billion or 12 cents per share in first-quarter 2014, narrower than a net loss of $0.3 billion or 21 cents a year ago.

Revenues inched up 0.2% year over year to $19.8 billion in the reported quarter. Sales were almost unchanged from the prior quarter as improved steel shipments were partly offset by lower...



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Chart School

Bulls Take Notice - Caution Suggested as Credit Markets and Equity Markets Diverge

Courtesy of Doug Short.

Summary
  • Divergence with small cap stocks and junk bonds persists.
  • Credit spreads widening suggests building short-term financial stress.
  • Markets oversold and how risk areas react will be telling.

One of the most widely followed market theories is Dow Theory, which has been around for more than 100 years. The essence of Dow Theory is to focus on confirmations or non-confirmations between the Dow Jones Transportation Average and the Dow Jones Industrial Average for assessing market trends and reversals. If one of the indexes breaks out to a new high while the other does not, we have a non-confirmation and the potential for a market reversal.

Similar to Dow Theory I like to look for confirmation between the stock market and the credit markets. When one market does not confirm the other, caution is ...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Option Review

Sizable Call Spread Trades On Orexigen

A large call spread initiated on Orexigen Therapeutics, Inc. (Ticker: OREX) on Monday morning looks for shares in the name to rally approximately 30% by September expiration. The September expiration is noteworthy as the company awaits the results of the FDA’s review of its resubmitted New Drug Application (NDA) for NB32, an investigational medication being evaluated for weight loss, after the review was extended for three months back in June. The upcoming Prescription Drug User Fee Act (PDUFA) date is September 11, 2014, according to a press release issued by the company. Shares in Orexigen today are up roughly 0.40% at $5.34 as of 2:15 p.m. ET.

...

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Sabrient

Sector Detector: Bulls remain unfazed by borderline Black Swans

Courtesy of Sabrient Systems and Gradient Analytics

Despite a highly eventful week in the news, not much has changed from a stock market perspective. No doubt, investors have grown immune to the daily reports of geopolitical turmoil, including Ukraine vs. Russia for control of the eastern regions, Japan’s dispute with China over territorial waters, Sunni vs. Shiite for control of Iraq, Christians being driven out by Islamists, and other religious conflicts in places like Nigeria and Central African Republic. But last Thursday’s news of the Malaysian airliner tragically getting shot down over Ukraine, coupled with Israel’s ground incursion into Gaza, had the makings of a potential Black Swan event, which in my view is the only thing that could derail the relentless bull march higher in stocks.

Nevertheless, when it became clear that the airline...



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OpTrader

Swing trading portfolio - week of July 21st, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's the latest Stock World Weekly. Please use your PSW user name and password to log in. (You may take a free trial here.)

#452331232 / gettyimages.com ...

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Market Shadows

Danger: Falling Prices

Danger: Falling Prices

By Dr. Paul Price of Market Shadows

 

We tried holding up stock prices but couldn’t get the job done. Market Shadows’ Virtual Value Portfolio dipped by 2% during the week but still holds on to a market-beating 8.45% gain YTD. There was no escaping the downdraft after a major Portuguese bank failed. Of all the triggers for a large selloff, I’d guess the Portuguese bank failure was pretty far down most people's list of "things to worry about." 

All three major indices gave up some ground with the Nasdaq composite taking the hardest hi...



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Digital Currencies

Bitcoin Vs Gold - The Infographic

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While Marc Faber has said "I will never sell my gold," he also noted "I like the idea of Bitcoin," and the battle between the 'alternative currencies' continues. The following infographic provides a succinct illustration of the similarities and differences between gold and bitcoin.

Please include attribution to www.jmbullion.com with this graphic.

...

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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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