Retail Sales Rebound

Discussion in 'Business & Economics' started by sandy, Feb 13, 2008.

  1. iceaura Valued Senior Member

    Messages:
    30,994
    To ornament Billy's points, recall that several states tried to pass and enforce state level laws to restrict what they had spotted the Feds allowing, and the Feds actually fought them - prevented them from taking over what had been a Federal function, using "interstate commerce" as the justification.

    So it wasn't just that the Feds were slacking or overlooking - they were actively cooperating, and knew what was happening. The states had told them what was going on.

    And while it is true that the SEC and the like are not turned over every administration, it is also true that the administration has a lot of influence over how they do their jobs - look at the difference in the treatment of union-busting and labor law violations under Carter and then under Reagan (and since). Besides, the SEC is already staffed with supporters of W&Co in general - going back to W's Harken Energy days and Cheney's corporate rise.
     
  2. Google AdSense Guest Advertisement



    to hide all adverts.
  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    Thanks. I did not know that. I do not get much "state level" news in Brazil.
    Now my turn to augument your point:

    "W" was CEO of Harken Energy, as I recall the name of small oil company the Saudis bought and gave to him (He was not yet with much power, but his father was running for POTUS, and won.)

    It is not easy to bankrupt an oil company, but W was able to do that. (Developed his "bankrupting skills" for the job he has now done to the USA, I guess.) Then a strange thing happen - Harken stock began to soar up! - It was being bought up by Tom Hicks, owner of about 300 small radio stations in US south west, called "clear channel network," CCN, but soon CCN was expanding - expanding with new FCC license grants - CCN topped out at slightly more than 1000 stations, while grateful W's father was POTUS.

    This unusual behavior (company going bankrupt but stock soaring) was automatically flagged for examination by the SEC's computers and an investigation was started; but W's father was then POTUS, so quietly the order came down to SEC not to waste the tax payers money on such small affairs and the investigation was archived. - I hope it gets re-opened, and justice is done, which may happen if the Democrates do get control of the government again.
     
    Last edited by a moderator: Feb 23, 2008
  4. Google AdSense Guest Advertisement



    to hide all adverts.
  5. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    Hi Sandy and welcome back. Your optimistic POV has been missed. I just learned you were banned. If you care to tell why, I would be interested.

    I was deservedly banded for 3 days as I spammed about 20 threads with a request that readers contact their Congressional reps and point out why Paulson's stimulus plan would fail (as it did) and should not be approved.

    I used my three days to pretend to about 30 Congressmen and 10 Senators that I was a voter in their district. (Not easy as they have a zip code filter you must get by with a valid zip code in their district.) Told them what the plan should be, etc. (I made thread here on it too.)

    Part of OP this thread:
    Well obviously "W" was wrong. The recession came as I predicted, while W still had more than a year of his term to go.

    I based my prediction on W's miss-management of the economy. Things like trickle down economics that gave tax relief to the already rich, who of course invested their extra money where the growth and prospects for earnings were greatest. I.e. invested in China with a GDP growth more than three times greater than the US. For example, Warren Buffett paid for 10% the building of the BYD electric car company, which as now put 200,000 electric hybrid cars on the road whitch cost half the price of the GM volt and travel further on full charge than the Volt will. (They look better too, IMHO.) Those trickle down investment built the more modern factories in Asia that made older US factories non-competitive and US official unemployment be 9.7% now or greater than 17% if the underemployed and the “ceased to even look” out of work were included. Unfortunately, those modern factories will still be woking after Obama is gone to keep many a Joe American jobless.

    W also started needless wars and followed a go-it-alone foreign policy that made many not want to buy American products. (My Brazilian wife will not drink coke, even at parties when it is free.) However, his greatest mistake was to cause the purchasing power of Joe American to decrease for first time in living memory throughout his term. Thus, Joe went deeper into debt just to hold a static living standard and now cannot support the economy with its prior 72% being consumer based.

    Obama cannot indefinitely borrow from China to make up the missing purchases Joe can no longer buy. Thus, even though I predicted, and posted in 2005 well prior to W's second election even, that these foolish policies of W and the "trickle down Republicans" would lead to US collapse - later (At Barron Max's request) I made it more specific as to what and when - A run on the dollar converting into depression in US and EU during the six year window that closes on Halloween 2014, I still see no reason to modify that prediction.

    You, Sandy, had firm predictions also. No recession, GWB would be the best POTUS ever, - You just "loved W" etc.

    I am wondering are still so found of W? Or during your absence, in view of what has happen, have you modified your POV? What about US car makers - do you think any will be in business at end of 2010? (I’d give Ford a 50/50 chance.) GM and Ford are doing very well in China and Brazil - setting new sales records - about 30% more cars will be sold in China than in the US in 2009 but I expect both will cease US operations by 1/1/2011.

    Is your optimism as strong as ever? Do you still see a rosy future ahead for the US?
     
    Last edited by a moderator: Sep 22, 2009
  6. Google AdSense Guest Advertisement



    to hide all adverts.
  7. sandy Banned Banned

    Messages:
    7,926
    Hi. I wasn't banned. I still love W. I still think he was the best POTUS ever. I think the recession would have been prevented if we let capitalism fix the problems like it always does . No bailouts. Not for anyone--especially not for the banks. Let investors buy up the distressed real estate. American cars are mostly cr@p. Americans spoke and stopped buying them. Things were just fine until liberals took CONgress. By the end of 07 we were f-d. Most of W's accomplishments: record-high DOW/employment/housing etc were falling. Yes, I am still optomistic. I always will be.

    Please Register or Log in to view the hidden image!

     
    Last edited: Sep 22, 2009
  8. John99 Banned Banned

    Messages:
    22,046
    obama bacame president at a very tough time. you cannot attribute these things to him. bush approved the bailouts for the banks.
     
  9. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    Good for you. One should note on the level of the DOW, that it is expressed in dollars. So it will double as the dollar loses half its value. For example in the last 7 months the dollar has fallen a lot. The Euro was buing only 1.25 dollars but now buys 1.5, so if you express the value of the DOW in Euros, it has risen little or actually dropped.

    To make my point clear: In Zimbabwe money, the DOW stands at ~20,000,000,000 now.

    There is another effect to be noted: For Europeans, everything in the US is getting cheaper. So recently when a big Texas bank failed The FDIC, which is running out of money, was able to arrange for it to be sold to foreigners. Part of the recovery in home sales is due to Europeans etc. buying vacation home in Florida etc. (Other part is due to banks dumping foreclosed homes at distress prices.)

    SUMMARY: Yes, the US's free enterprise system is still working - making it possible for foreigners to buy up our factories and farms. GWB & the Republican "trickle down dollars" of tax relief for the already wealthy are now returning to transfer ownership of the US to foreigners. For example: A joint venture of Canada & Russia just bought GM's Opel division. China bought the Hummer plant. Fiat of Italy bought Chrysler, etc. Joe American is lossing his job. (His factory closed as could not compete with the more modern ones trickle down dollars built in China.)

    Wonderful legacy GWB has left to Obama.

    Please Register or Log in to view the hidden image!

     
    Last edited by a moderator: Sep 22, 2009
  10. sandy Banned Banned

    Messages:
    7,926
    I don't blame W for any of it. American cars are cr@p. Let the foreign countries have them. We don't care. Bottom line is that the country was in amazing shape until democrats took over CONgress in 07. You can not dispute that. By the end of their first year we were screwed.
     
  11. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    Thread title is old, but with the cash for clunckers , it may have been true for one month.

    Here is more durable effect (More modern factories for China as US's close, thanks to "TRICKLE DOWN" economic thinking building them.):

    "... Ford Motor Co. will build a third car factory in China as the nation’s economic growth spurs auto demand. The new plant in Chongqing, southern China, will have a capacity of at least 150,000 vehicles a year, one of the {Ford} people said. They asked not to be identified as they aren’t authorized to reveal the information, due to be announced on Sept. 25.

    ...Ford and partner Chongqing Changan Automobile Co. already have a plant in Chongqing that can build 267,000 vehicles a year and another in Nanjing that can produce 180,000. The factories make Fiesta, Mondeo, Focus and S-MAX autos for Dearborn, Michigan-based Ford as well as models for Mazda Motor Corp.

    Craig von Essen, a Ford spokesman, declined to comment. ..."

    From: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aViIwS4iTqsM

    IMHO, US should have given scholarships to tech interested students instead of granting tax relief to the already rich for it to "trickle down" into China.

    E.g. Warren Buffett used his to buy 10% of BYD motors, maker of electric hybird cars with about 200,000 on the roads in China now. BYD motors is part of world's largest maker of Li-ion batteries. (A very good chance the one in your portable computer came from them if Chinese made.) Their four door electric hybrid car looks great, goes further than the promised GM Volt will on electric only, and cost about half the price of GM's Volt. (I.e the GM Volt will be still born - even if GM lives long enough to try to introduce it in late 2010 or early 2011.)

    SUMMARY: GWB's tax relief did Trickle Down - but the net effect was to close US factories and put Joe Americans out of work. Thus, Joe will not be buying like he once did. Sales will never recover to be 72% of the US economy until that economy is much smaller in depression.
     
    Last edited by a moderator: Sep 23, 2009
  12. sandy Banned Banned

    Messages:
    7,926
    I think retail sales may have jumped up a few times since the OP.
    I read a story that said retail sales were up despite the Cash for Clunkers program:
    http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=784
     
  13. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    Here is a quote from your link with less optimistic twist on it:

    "... retail industry sales (which exclude automobiles, gas stations, and restaurants) saw their first gain in six months, with sales rising 0.7 percent from July, though dipping 4.3 percent year-over-year. ..."

    Yes, on a month to month basis, one can expect sales to bounce up and down. Perhaps even three times greater than that 0.7%.

    Sales data will not be a straight line down, I but I am surprised that in half a year they have only gone down - Not one “up bounce,” (due to statistical and weather variations etc.)

    PS post 48 is longer than you quoted - perhaps you posted before I had finished my edit? If so read the summary etc.
     
    Last edited by a moderator: Sep 23, 2009
  14. sandy Banned Banned

    Messages:
    7,926
    Agree with the first part.
    I disagree with this: "GWB's tax relief did Trickle Down but the net effect was to close US factories and put Joe Americans out of work."
    Trickle down works. It worked under Reagan. It worked under Bush. Factories moved out of the country for cheaper labor. That was about greed. And if Joe American/his company would have built a better car, Americans wouldn't be flocking to Japanese cars. If Obama raises taxes on US companies you can expect to see even more flee.
     
  15. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    If that were the case then it would not have worked under Regan and Bush I as then China’s wages were about half what they were under Bush II. – Your logic is backwards from / in conflict with / the facts. Back then China was very much poorer and workers paid much less than under Bush II.

    I can however agree that US car makers were in partnership with the oil companies to offer mainly gas-hog cars that had higher profit margins for both and not really meeting the public's needs. Both Republicans and Democrats aided that with low gas prices (less taxes) by about half what the rest of the world had - but again this is more of a Republican idea that government should not interfere and force the market as it does more in Europe to guide the automotive industry to make smaller, more efficient cars.

    However China is not the low cost labor market it once was - China must now import from Vietnam, Malaysia, etc. the components it once made for incorporation into its higher value exports like cars, computers, digital camera, cell phones, etc.

    If US factories left for the lower labor cost they would not have gone to China, but to where the labor costs were lower. They went to China in spite of China not being the lowest labor cost area, mainly because of China's population is 1.3 billion and rapidly growing (in percentage terms) rapidly very richer. Note that China has had extreme "government interference" in the economy - until recently owned all the means of production in SOE (State Owned Enterprises) and grew GDP for 30 years at average double digit rates.

    In contrast, the US did not interfere much in the economy and allowed it to deliver gas hogs, inefficient suburban infrastructure (very badly designed for the high cost energy era) etc. and the current global recession with short term performance and greed as the guiding and driving forces.
     
  16. 2inquisitive The Devil is in the details Registered Senior Member

    Messages:
    3,181
    Billy T,
    Your logic is shit, Billy T. One buys and sells DOW stocks in dollars, it makes no difference whether a foreign currency is rising or falling, with the exception that if the foreign investor is selling Euros to buy the dollars for investing in the American DOW. What makes you think the DOW will double if the dollar losses half its value? You do realize currency fluctuations are not the same thing as inflation, don't you? You do realize only the naive will be confused by your cherry picking data points, don't you? 7 months ago, the financial crisis was in full swing and most of the world's currencies had gone to shit, except huge demand for the dollar. A year or two ago, the Euro was more valuable than it is now, and so was the "Real".
    Yes, the US program only lasted about a month, but China's program is still going strong. China gives all kinds of incentives and tax breaks for car buyers since the crisis began.

    BYD builds all kinds of cars, including a few hybrids.
    I got a letter from HP telling me that my battery may blow up, to remove it from my HP Pavillion immediately. Wonder how long it takes to remove those chinese batteries from that chinese car???
    I see you are still fantasizing about BYD. Maybe some day they will be a competitive auto manufacturer, but you distort the facts as always when speaking of their GLORY.

    Please Register or Log in to view the hidden image!

    For instance, that F3DM you seem to think will take the world by storm has been a flop in China. BYD sold 60 (sixty) of them in the first 7 months they were on sale. You quote prices as if that would be the selling price in the other country. The Volt would not cost $40,000 if made in a cheap-to-build chinese factory by cheap chinese labor and minus many of the expensive US-mandated safety features. The F3DM could not be made for US emission and safety standards, shipping half-way around the world, and then import duties imposed on the vehicle, as they are on all imported vehicles, and then sold for anything even remotely close to $22,000. Did you even know that the standard gas-only version of the F3DM was a good seller in China ad starts at only $7,500? Making the electric hybrid version is as costly as it is in the US, doubling the selling price of a comparable gasoline version. So far, those types of vehicles are for consumers with strong ideals and even stronger bank accounts.
     
  17. sandy Banned Banned

    Messages:
    7,926
    I disagree with Billy, too, but don't feel like arguing/researching a decent response. I can see both sides of this discussion, though.
     
  18. quadraphonics Bloodthirsty Barbarian Valued Senior Member

    Messages:
    9,391
    That's an important point. Billy is given to eliding between the two concepts.
     
  19. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    On (1): No my logic is OK*, as you slightly note in your exception, that big investors, such as mutual finds invest GLOBALY where the risk adjusted returns are expected to be the greatest. Yes there is a difference between inflation and FX exchange rates - a great difference if trade is large part of GDP and very little or no difference in a closed economy. The US is far from a closed economy. In fact most (Or at least half) of US debt Treasury paper is held by foreigners.

    There has been in the last few weeks an upsurge in foreign buying of Treasury Paper, not because it is paying the highest interest, but because the dollar is falling (Bloomberg had this as main point of an article a few days ago - I will try a little to find and link to it.) I.e. if you have Euros or most any other currency to convert into weak dollars (now at about 0.75 on the index to a standard basket) that treasury paper is cheap for you and compenstates for the lower US interest rate so you buy it. That is helping keep interest rates low in the US.

    Like the US, Brazil is well connected to RoW, not an isolated economy. When in Dec2008 the crisis hit, many global investors sold stocks in Brazil, (They got Realis,R$, for them and converted R$ into dollars or Euros.) There was larged demand for dollar but many R$, so on 4Dec2008 it took 2.536R$ to buy a dollar. (Yesterday only 1.798R$ bought a dollar.) That panic has strongly reversed with intense buying of Brazilain stocks now. In fact from 1/1/09 until yesterday, the "Brazilain Dow" called the Bovespa index, is up 111%!

    Not much has changed in the real economy of Brazil in these 9 months, Exports and domestic sales are roughly the same. but the Dollar is down (vs R$) 30% from recent peak (22.96% from 1/1/09) and Bovespa is up much more.

    If the dollar were to fall to half its present value probably the Dow would not exactly double but as it represents real assets (factories and businesses which would be able to export more with a weaker dollar), these assets would be worth more in real terms (to both Americans and foriegners) so the Dow in weaker dollars would approximately double, at least. Like the treasury bonds, foreigners would find the US stocks cheap and buy more than they had been. - Why I said "at least double" with the increased demand. But of course as the Dow doubles the typical stock is no longer especially cheap to the foreigner whose Euro only buys twice as many dollars. That is to say, until the Dow doubles, US stocks are cheap and very attractive to foreigners who can buy twice as many dollars with their Euros.

    SUMMARY: to simply and directly answer "What makes you think the DOW will double if the dollar losses half its value?" Foreigners will bid up the Dow until it is no longer cheap for them to do so. That is economic logic and historical fact. Why Treasuries are selling to foreigners despite their low interest rates and a large part of the recent rise in the Dow. (Americans, sitting on the side lines with dollars, seeing them drop in value and the Dow rising are buying too. Others are buying gold. Few except those with the "Bear market rally" POV want to just hold their cash.)

    On(2): If you can support that Claim with good reference, I will agree to it as my 200,000 E-cars is about a year old estimate in Forbes article about Warren Buffett buying 10% of BYD motors - They must be doing better than your data indicates as Warren want to increase his share of BYD to between 15 and 20 percent now. In the tread on the "clever car of the future" there is photo of BYD's E-car and a link to that Forbes article. If you insist, I will dig my reference up, but ask you for yours first.

    -------------------
    *For my logic to be false, you must close the US economy or in some other way stop foreigners from buying bargans (for them) in it. They bid up the Dow so long as it is a bargan for them. They are now buying vacation homes in Florida too, in huge numbers compared to last year. Every thing in US is cheap and getting cheaper now to foreigners. Only Joe American is having trouble making ends meet. My wife's daughter (famly of 4) just returned from vist to Chicago last week - they were in NYC earlier this year and had been there several times before, so wanted to see a new to them city.
     
    Last edited by a moderator: Sep 24, 2009
  20. pjdude1219 The biscuit has risen Valued Senior Member

    Messages:
    16,479
    because its crap like anything coming out of news corp.
     
  21. pjdude1219 The biscuit has risen Valued Senior Member

    Messages:
    16,479
    so what was it that worked about trickle down that worked under reagan and w? Was it the 8 trillion dollars in debt accrued under them(1trill to 3.5 trill for 2.5trill for reagan and 5.5 trill to 11 trill for 5.5 trill under bush) an amount more than twice as much as what was accrued under ever other president combined that worked? was it the increase in taxes on the lower and middle income people that reagan passed to help deal with his huge deficits that worked? was it the general increasing of income disparity that worked? was it the I believe 2.5% decrease( all i know is it decreased i cannot remember the exact percentage) in the median income of americans under W that worked?
     
  22. 2inquisitive The Devil is in the details Registered Senior Member

    Messages:
    3,181
    Billy T,
    You said that the DOW (paraphrasing) would almost double if the dollar lost half its value. I remember you cheering when the Real gained to around 1.65R$ per dollar a little over a year ago. When the Real lost so much value falling to 2.53R$ per dollar, why didn't Americans convert their dollars into Reial and buy in the Bovespa? The Bovespa fell when the Real fell, the Bovespa gained when the Real gained, but you claim the DOW will gain when the dollar falls, and I assume, the DOW will fall when the dollar gains. Billy T, overall market prices (not Treasuries which are not equities) have little to do with currency valuations. Currency exchange rates can move specific stocks that are heavly dependent upon imports/exports.

    Have you thought about how exchange rate shifts actually affect US importers and businesses that have foreign (China mostly) factories to build their products? If the dollar were to lose half its exchange value, that would not have a large effect on the US selling price of the product. Most of the Retail price of a chinese made product in the US is due to profits US retailers, importers, distributors make on the product, not the manufacturing cost. For instance, a designer-brand of blue jeans were made in China for the designer at a cost of $14 per pair. The Retail price for the jeans in high class department and clothing stores was over $130 per pair. So what if the designer has to pay $21 per pair for the jeans due to a de-valued dollar? He can eat the $7 increase in cost, or raise the retail price to $137, a small inflationary increase.
    I thought you read Bloombergs regularly? I didn't have a problem finding one of the articles from Bloombergs. A cut & paste plus link:
    My memory must be failing. I was thinking I read 60 F3DM's were sold when it was only 31. Maybe I read a different article.
     
  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    First thanks for correcting my very false information on the number of E-car on Chain's roads. I probably mis read the original Forbes estimate or 200,000 BYDs were to be sold in 2009 as being only E-cars when in fact very few were. (I did not know that BYD sold gas powered cars - I knew them as world's largest maker of Li-ion batteries.)

    I do read Bloomberg typically 6 or more times each day, but of course not all their articles even once. I use MS's Vista in my computer. It (perhaps others like my older XP also, but I did not know how) permits more than one "home page." I have five, bloomberg is one of them that is always immediately available by just clicki9ng on that tab. Furthermore, it alone of the five automatically updates. - I see the little blue spinning circle in the tab when it does so, and if I notice it, I normally immediately switch that tap to be the full screen display. - If something has just gone public of importance to my stocks (67 now) I may click on the TD Ameritrade tab and act on it.

    Not often, but I have several times sold a stock I was already thinking of selling in less than a minute after new adverse to it was up on bloomberg. (I tend not to trade much as am inclined to the "efficient market" theory. - I.e. I investigate in depth my buys, more than half of which are early stage drug developers and buy if I think they have unique solution to serious (& big market) medical problem. I really do not need to make profits, can wait to see how it goes, so mainly like the motivation to learn about the exciting new cellular level advances in man's understanding of what takes place in the body.

    Now on the economic points: You make a good point about the cost of improting being often a small part of the final price and only it must change with FX changes. The final sales price will approxiamte track inflation, not FX, as seller tries to keep his real profits constant (and with some lag, his store rent, cost of sales people will be going up with inflation too).

    I admit that stock prices in Brazil tend to go up with the value of the real and conversely. Yet I still contend that in the US there is an inverse relationship. The US is not Brazil and conversely. Brazilian stocks are more volitle than US stocks as most Brazilian stocks are owned by foreigners and funds. When investors in Brazil grow fearful, (or need cash and can not borrow it in US) they sell Brazilain stocks. This makes the local market drop and as they are also then selling the Real they got from stock sale, the Real drop too. I.e. Unlike the US, the fortunes of Brazilian stocks strongly drive the fortune of the Real, at least short term.

    In the US even a drop in the dow by 50% would not make (by itself) much change in the value of the dollar as the dollar is used globally. Further more, even if this global use were not dominate in setting the FX rate of the dollar even the total value traded in US stocks is relative unimportant compared to the bond market volume. (I forget the actual ratio but think / guess / the buying an selling of stocks is less then 10% of the buying and selling of bonds in value.) This is why there is a direct relation ship between Brazilian Real and stock value and yet an inverse relationship between US stocks and dollar. US stocks tend to reflect real future earnings expectations not FX rates, except it is the FX rate that converts the Nominal Dow into the real value Dow.

    Also one must understand that Brazilians do not invest in stocks - they buy rental property instead as their preferred investments. (I think there is a huge bubble in over built apartment buildings in Sao Paulo, just about to burst. It is hard to walk a full block without seeing a new one in construction!) That preference for reale state stems from the rapid inflation era. Every rental contract was indexed (as were salaries) to the inflation index. Thus, inflation hurt company profits (higher salaries for sure, higher sales and customer willing to pay inflated prices not so sure). After the real estate bubble bursts and they see the market is not only up 111% in 2009 only and everyone sees Brazil is a very sound economy (not one bank has failed) I predict there will be a great shift in Brazilian thnking about the relative merits of stocks vs. real estate as an investment. If that happens, then the Brazilain stocks will not be so volitile - Not mainly owned by foreigners; Even the Real will be less voilitile.

    I hope the above explains why US has and inverse and Brazil has a direct link between stocks prices and FX.
     
    Last edited by a moderator: Sep 25, 2009

Share This Page