Retail Sales Softer (Ignore the Surveys)

If you want to know:

– What people think, ask them questions.

– What people are doing, look at the data.

– What they are going to do, watch their behavior.

That simple lesson gets lost in the various annual Holiday Shopping surveys. Each year, some group or another — National Retail Federation (NRF), CNBC, Mall Stores Association, etc. —  goes out and surveys shoppers. This survey then leads to grand pronouncements about future shopping data.

There is one small problem with this methodology: Us.

Humans are notoriously bad at a variety of things: We are poor judges of our own future behavior; We often over-estimate our present circumstances (Most people cannot accurately tell you how much they spent ALREADY for the holidays). Hell, we barely understand our own belief systems. Is it any surprise that we cannot accurately forecast how much money we might spend overall for the holidays? 

Asking people to tell you how much they believe for Christmas is actually an OPINION POLL. The answers may be well-intentioned, but as we have seen time and again, they typically bear little correlation to subsequent consumer behavior. Over the past few years, these surveys have over-estimated consumer spending; In recent months, ordinary consumer sentiment survey under-estimate spending. People say sentiment is poor, and then they go to the mall and shop.

The latest survey silliness comes to us via CNBC:

"Easing fears the Economic Grinch will steal Christmas, the CNBC Holiday Central Survey finds that Americans appear ready to up their holiday spending a healthy 6% over last year to $782. But downbeat views on housing and the economy are sapping some of the holiday cheer."

To give you an idea of just how bad us Humans are at forecasting our own behavior, the same survey about future spending plans had declined 16%
from when it was done last in October. Some parts of the survey — the parts that  ask about current behavior and spending patterns — have value (see below).

So much for the surveys, let’s check out what’s going on in Retail so far this holiday season. The NYT reports:

"Sales of women’s clothing, a traditional pillar of the holiday shopping season, are unusually bleak so far this year, according to a major credit card company, an ominous sign for the retail industry.

From high-end dresses to bargain coats, spending on women’s apparel dropped nearly 6 percent during the first half of the Christmas season, compared with the same period last year, according to MasterCard Advisors, a division of the credit card company.

Analysts blamed a rough economy, which has discouraged women — and mothers, in particular — from splurging on clothing for themselves and a lack of compelling fashions this winter. The drop-off, which the credit card company described Sunday as “surprising,” bodes poorly for chains like Chico’s FAS and Ann Taylor, which specialize in women’s clothing, and could result in steeper-than-expected discounts on their merchandise in the final week before Christmas.

The slowdown is worrisome because women make the vast majority of purchases in retailing, and their spending is a closely watched barometer of the industry’s health. "(emphasis added)

Abreast_20071216_shop_onNote that Fortune is blaming "Ho-hum fashion" for the sales drop off. "A shaky economy and expensive gas may keep consumers from seasonal splurging, but there’s another factor: no big fashion trends."

When it comes to Retail stocks, investors have already discerned the trend: Discretionary spending is slowing, while consumer Staples have maintained sales. The WSJ reports:

"This year, the consumer-discretionary sector has been
the second-weakest in the broad Standard & Poor’s 500-stock index,
after financials. The sector is off 13.6%, compared with a 20.8% drop
for financials, because of the turmoil in the housing market and a raft
of bad mortgage bets on Wall Street. The overall S&P is up 3.5% in
2007. . . [T]he consumer-staples sector, which includes supermarkets, discount
retailers and other sellers of nonluxury items, has held up far better
than the discretionary sector, posting a 12.5% gain."

As we noted last week, when you adjust for inflation and calendar anomalies, Retail Sales have been rather lackluster. For those people who are counting on a robust holiday sales season, you are very likely to be disappointed . . . 


CNBC Survey:

CNBC’s Starbucks Indicator: 1 in 9 polled say
they’re cutting back on their high-priced coffee purchases. A whopping
two-thirds of Americans say they don’t drink premium coffee drinks at
all. [BR: no surprise given our $4.55 Caramel Macchiato last week]

Discounts Matter: 3 out of every 4 Americans say discount and holiday sales are critical in determining where to shop and what to buy. [BR: quelle surprise!]

Big Boxes Rule, Online Is Cool: Big Box stores like Wal-Mart
are still the prime destination for holiday shopping, but they’ve lost
some ground to online shopping.

Holiday Payback: While nearly half of Americans won’t have
leftover debt following their shopping when the Christmas Season, a
full 23% will still be in debt more than two months after the holidays. [BR: I would be surprised if this were accurate]

Wii Nation: Last holiday season, Americans were split as to
which console they wanted: Wii, XBox360 of PlayStation3. They’re split
no longer…  Amongst consumers who have a specific video game console
in mind, nearly 80% are looking for a Wii.

UPDATE: December 18, 2007 3:03 pm


U.S. Retailers Post Smallest Sales Gain in Two Months 

Retailers in the U.S., mired in the worst holiday season since 2002, posted their smallest weekly sales gain in two months as discounts failed to entice consumers faced with $3-a-gallon gasoline.

Sales at stores open more than a year increased 2.1 percent in the week through Dec. 15, the International Council of Shopping Centers and UBS Securities LLC said today in a joint statement. December sales at stores open more than 12 months may grow 1.5 percent from a year earlier, the group said, matching an earlier forecast.    


Retailers Face an Ominous Holiday Sign   
NYT, December 17, 2007

Will Americans Shop On?
The Answer May Foretell A Stock-Market Upturn Or Economic Downturn
WSJ, December 17, 2007

Consumers Say No to Economic Bah Humbug
Steve Liesman
CNBC | 16 Dec 2007 | 08:56 PM ET

Inflation, Retail Depress Wall Street | 17 Dec 2007 | 06:07 AM ET

Ho-hum fashion hinders holiday sales
Suzanne Kapner
Fortune, December 14 2007: 3:50 AM EST

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What's been said:

Discussions found on the web:
  1. craig commented on Dec 17

    There is often a very wide gap between Revealed Preferences (answers to a survey) and Observed Actions (what we actually do). I learned about that phenomenon in an Economics course in Grad school and it’s helped me interpret survey data a little better ever since. Looks like a classic case of it right now.

  2. dblwyo commented on Dec 17

    Here, here. Keep banging that drum. Maybe it’ll get wider awareness and acceptance. To an earlier post’s point real retail sales was hardly good.
    Reality Bites-Real Retail Sales:

    And as you’ve pointed out repeatedly that’s because of inflation which is both accelerating and spreading from supply costs to producers and now into producers,largely because energy costs are the driver.
    More Reality Bites-Inflation !:

    Analyst Dick Bove argued that everybody expected the consumer to tank in ’07 and they didn’t and he was/is correct. BUT this year we won’t have the sudden drop in energy prices we had last year which helped prop it up. Now energy and inflation are major headwinds. And the Housing impacts are just started and are going to be much worse than anticipated if you believe CalculatedRisk.

    Skirting a recession indeed !?

  3. Francois Theberge commented on Dec 17

    I’d like to remind Mr. Bove that 07 ain’t over yet.

    As for the discounts, they’re getting steeper and steeper as X-Mas is approaching.

    To wit, I received no less than 5 emails offers of 40% off merchandise from Borders during the weekend alone.

    At these prices, I’m beginning to feel interested.

    Not only won’t there be any skirting of recession, but the social climate is bound to change rather dramatically in the next few years. Every day, I talk with people and a constant emerges regularly: “this (“this” being anything from income gaps, rising costs of health care, political polarization, constant official lying and spinning etc.) can’t continue like that. Something’s gotta give and FAST!”

    The rank and file is getting mightily fed up. And that does not bode well for the powers that be.


  4. spencer commented on Dec 17

    The year over year change in the CPI for women’s and girls’ apparel is now down around 3% so I would not put that much weight on a 6% drop in nominal sales.

  5. Ross commented on Dec 17

    Bait and switch? Another way to encourage traffic? Slim slim inventories?

    I am a lousy shopper. I try real hard to come up with servicable practical gifts I believe someone would appreciate. The wife still gets at least one bling….maybe two.

    Last year BBBY had a sale on food serving pieces,warming trays etc. I trudged to the store, none for sale…Not to be undone, this year Linens and Things had similar items for sale. You guessed it! Of the 6 pieces advertized, only one available. I was sent to another store. The manager became angry. Not at me but at the other store manager for as he put it continuing to send people to HIS store when he knows there is no inventory. NOT IN ALL NORTH TEXAS…

    I think retailers are shooting themselves in the foot by not stocking their stores. Or maybe just another gimmick to encourage foot traffic. Wal Mart had a 7am to 9am secret but advertized sale on certain items. The catch was they did not tell you what was on sale. You had to show up to find out!

    This is truely a bizzare situation. Sorry for the Grinching but I hate to waste gasoline trying to buy something that doesn’t exist. The smell of desparation is in the air.

  6. Bridget commented on Dec 17

    I love you, but as an English teacher I have to say, watch the subjunctive!

    I would be surprised if this was accurate.

    I would be surprised if this were accurate.


    BR: Fixed!

  7. michael schumacher commented on Dec 17

    Most people I have come into contact with have said that business has sucked throughout the entire summer. SOme blue collar workers have been saying that since last November…

    BTW here’ the latest of over subscribe the repo.

    In addition to all the bullshit that the gov’t has made over a piddly auction of $20 billion…they just added almost 50% MORE money so that today’s total will equal almost $30 Billion.

    Wrapping it in a “touchy and feely” press release doesn’t mean it will work either.

    Bet they do another whopper tomorrow morning to make everyone feel good about GS’s distresed profits…


  8. Josh commented on Dec 17

    The CNBC survey found shoppers expected to increase holiday spending by 6%; but was that real or nominal? I suspect it was nominal. If you adjust it for inflation using November’s year-over-year CPI-U, the real increase in holiday spending is a not-so-impressive 1.7% (6%-4.3%).

  9. strasser commented on Dec 17


    Over the last week we traveled south in Oregon and CA. We continue to be amazed at the amount of ongoing road work as well as repair and new construction of bridges and overpasses. As we drove passed some of the malls on CA I-5, parking lots were full, but I guess areas like LA seem to be “unaffected” by what may be going on in the rest of the country.

    For a lot of years now, malls and shopping have been out of the question for us (the aging demographics ;)), and our children (adult) know that the only gift we accept is one which they have made themselves. We’re trying to get rid of “stuff”, not accumulate more. Seems no one speaks much about this consumer. Additionally, our gift to our grandchildren is generally money designated for their educational funds, not more crap and clutter.

    FWIW, just a different perspective on holiday sales and this consumer.

  10. Florida commented on Dec 17

    Could it be that there are no new fashion trends, because the industry senses that the consumer is in the tank? Hemline indicator type of thing?

  11. cinefoz commented on Dec 17

    Regarding retail shopping:

    1) I planned to buy 2 LCD HD televisions, but decided against it until 2009 when the technology, hopefully, standardizes. Satellite HD costs more than Satellite SD and has a pitiful selection of channels. In 2009 they will probably be one in the same. Also, the newest rage is 120Hz 4 ms, which is said to correct defects at 60Hz. Great. Why would I want to drop maybe 2 grand each, just to see artifacts, stretched out SD images, and know that my tv will be technically obsolete in a couple of months.

    2) I am probably the last person to discover Ebay. I got 15 pairs of banana plugs for 99 cents each pair. Go to Best Buy and pay 5X to 10X more. Casablanca intellitouch ceiling fans – new – for $135 each including shipping. Tommy Bahama, Nat Nast, and Indigo Palms shirts in new or nearly new condition for as little as $10 or less, plus a couple of bucks for shipping.

    3) Amazon has it’s secondary vendor selections. Books can be had for a fraction of new book prices.

    4) If you like classical music or old jazz, Berkshire Record Outlet, online, has only excellent overstocks and closeouts at fractional prices. This is the BEST place to look first for classical or jazz. Master artists, master composers, master orchestras, the best labels.

    If you have hunter instincts, retail is only for fools and those who need something that can’t be found elsewhere.

  12. cinefoz commented on Dec 17

    Regarding the Casablanca intellitouch fans I mentioned above from Ebay, they have the XLP-2000 motor, in case you are a ceiling fan wonk. This is the best, most quiet, and most reliable ceiling fan motor ever made. Absolutely NO 60Hz hum. Go to a real store and pay at least $400 plus the cost of fan blades.

  13. michael schumacher commented on Dec 17

    Anyone else get the feeling that the “invisable hand” is at work today. I mean the rest of the world tanked yesterday into today and we’re only down less than .5 %

    This market should be a lot lower….futures were off almost 160 pts last night(on the Dow)…and that was BEFORE the opening on the Nikkei…

    Paulson et al. are hard at work keeping the banks solvent.


  14. michael schumacher commented on Dec 17

    Find the “money” quote….

    Fitch Ratings in a report Monday said recent actions banks have taken to support their structured investments vehicles, or SIVs, have “in several cases” been positive for investors with senior SIV exposure.
    The ratings agency said actions taken to “deleverage” SIV portfolios are positive for senior investors despite shrinking SIV portfolio sizes and values.
    Fitch is referring to moves like Citigroup Inc.’s (C) announcement last week that it would provide emergency support to its seven SIVs, moving $49 billion of the troubled investment vehicles’ assets onto its balance sheet. The SIVs held assets worth $87 billion in August.
    Many SIVs have come into trouble amid the liquidity crunch, in which debt investors have balked at buying short-term notes known as commercial paper that fund the vehicles.
    Fitch noted the credit quality and composition of SIV portfolios has remained largely unchanged in the past month. It added, “Commercial paper issuance continues to be severely limited and SIVs have been deleveraging their portfolios and relying on alternative sources of funding.”
    Citigroup’s action last week ignited controversy among analysts. Bear Stearns said the move was positive and should have little impact, while CIBC said the exposure would be a “toxic cocktail” for Citigroup’s capital ratios.
    Credit rating agency Moody’s Investor Service said there would be “no negative rating impact,” adding that it assumes Citigroup “will not take any losses due to the quality of its assets.”
    Fitch continues to rate its the three Citigroup SIVs it follows as AAA/F1+.
    -Andrew Edwards, Dow Jones Newswires; 201-938-5973;
    (END) Dow Jones Newswires
    December 17, 2007 10:19 ET (15:19 GMT)

  15. cinefoz commented on Dec 17

    michael schumacher said …

    Anyone else get the feeling that the “invisable hand” is at work today.

    reply: Not here. I think the institutional investors are playing with end of the year returns to report. A game of strategy is going on to maximize the minimum gain while minimizing the maximum loss. Add Joe Investor who still thinks that a new high is just over the horizon and wants to buy low.

    Me, I think there is still going to be a reversion to long term mean. It will probably occur shortly after January 1. Most markets need to drop another 8%, more or less, to hit the bottom range of the long term mean.

    Then, it will be time to buy quickly … and go away in May.

  16. cinefoz commented on Dec 17

    Here is the only leading indicator you need to know about.

    On 11-1, when the market drop started in full, copper fell about 10 cents from its high. That, plus a strengthening yen, told me to sell immediately. It’s fun being right.

    When copper looks like it is bottoming or starts rising with conviction, then it is time to turn optimistic.

  17. Mike G. commented on Dec 17

    michael schumacher said …

    Anyone else get the feeling that the “invisable hand” is at work today.

    I just figured it was their reaction to our crappy Friday. No?

  18. Al Czervik commented on Dec 17

    Invisible Hand? Maybe. We’re back near the morning lows right now but it’s still early. Just an impression but it seems to me that they are often more aggressive when foreign markets have been bad overnight which, as you pointed out, is the case today.

  19. Jeremiah commented on Dec 17

    Anecdotes from my weekend:

    Safeway’s is selling its discounted house-brand products at a rapid clip. Most of the shelves were empty of the house brand, but there was plenty of Nabisco to go around. Consumers are down-branding.

    The carpool lane is becoming congested during our morning commute. Three months ago it was still smooth sailing.

    The Salvation Army’s thrift store is doing a booming business – both in donations and sales.

    Local music stores are HURTING. Lower county and state tax revenues mean less money to spend on the arts (always the first to be cut), and that means less music sales/rentals in August and January (when most kids return from vacations.) Big gift sellers are anything under $25.

    A major music instrument manufacturer has a dire outlook over the next 30-40 months as sales of their high-end products (pianos and music production stations) fall off a cliff. Musical instruments are apparently a luxury.


    Love the blog. :)

  20. 2and20 commented on Dec 17

    cinefoz, thanks for the link, for ages i’ve been after the ability to get good graphs of futures!

    also yes it’s interesting that copper is getting hit over the last few days, usually a good signal of a coming slowdown. Check out Copper prices compared to the S&P500 over the last 6 months or so…closely correlated and now copper falling fast…S&P to fall 4% or so?×300&d=medium&b=LINE&st=

  21. michael schumacher commented on Dec 17

    the Asian market(s) had it’s own share of bad news to go with ours from friday. japan is really screwed now… if they weren’t already LOL

    This is something else…….I would expect that the powers that be are interested in showing off “all that extra liquidity” from today.

    Market to close flat to up a few points….can’t have a down day as the gov’t rides to the rescue !!!!!


  22. ef commented on Dec 17

    I prefer Ben Stein’s CBS Sunday Morning Commentary I, asshat.

  23. michael schumacher commented on Dec 17

    Ben stein…yes there’s a bastion of bullshit if there ever was one.

    Can’t find it now but I recall an article he wrote saying the whole sub-prime “mess” was a fabrication designed to take down the market going into an election year.

    And the same Ben Stein who defends Karl Rove almost all the time.

    Yes Please let us listen to Ben Stein’s latest rant.

    No thanks…


  24. anonymous commented on Dec 17

    In choice modeling there is the “stated” vs. the “revealed”…

    Anecdote: Tried to get some shopping done over the weekend (Eastern MA), brick-and-mortar and online. Big Boxes (TGT, for example) have many empty shelves and online retailers sold out of many items (though online not as bad). Books seem to be cheap and available. Small brick-and-mortar shops doing brisk business (yes, higher-end and specialties).

  25. donna commented on Dec 17

    Maybe if Chicos would stop sucking and filling their stores with rayon crap made in China, I would shop there.

    Rayon is a nasty fabric that is either too hot or won’t keep you warm. Why stores don’t get this and why many women still buy it is beyond me.

    I’m sitting here right now in a nice cotton shirt I bought from Chicos a few years ago. Did they bother having anything wearable this year? No. The cotton shirts they do have are in patterns so bright they make my eyes hurt.

    I’ve bought holiday outfits there in the past, too. This year, all rayon crap. Not buying it, sorry.

    That’s why their sales suck.

  26. halbhh commented on Dec 17

    StoryTime: …
    Let’s focus on the Story — “weak” sales, etc. (while sales pace inflation, or basically stay flat)….and the market is with the Story today. If sales are up 3-4%, for instance, we’ll call it “dissapointing” or something like that, next week. Stories are more comfortable that unpredictability.

  27. halbhh commented on Dec 17

    Great example here just above: …”If you adjust it for inflation using November’s year-over-year CPI-U, the real increase in holiday spending is a not-so-impressive 1.7% ”

    Consider all the reasons for sales to slow, then if they hold up in spite of all those reasons, it’s frankly surprising and damned impressive. But it’s Storytime, so we’ll call it “not-so-impressive”, etc. I get it.

  28. wunsacon commented on Dec 17


    >> … change rather dramatically in the next few years. … The rank and file is getting mightily fed up.

    Seems so. But, in what direction will the crowd(s) move? I’m afraid of what will come… For instance, what kinds of “dramatic” policy decisions can we expect from the intelligent design crowd?

    Donna, thanks for the woman-on-the-street rant!

    MS, sorry to ask you to repeat yourself. But, what do you say to people who say “yes, MS, but don’t these injections have a term and why don’t you specify ‘net’ injections instead?” (Of course, that’s more work for you and laziness on the interrogator.) I think I’ve seen people ask you this. But, I don’t recall the answer.

  29. dblwyo commented on Dec 17

    Actually when you look at the data real retail sales had been flat for the last two months at 1.8% YOY and 1.7% for the quarter. And it IS very unimpressive. The last time we hit these numbers was in late ’00/ early ’01 headed down to negative numbers in ’01. The downtrend isn’t as steep right now but if you eyeball the charts (URL posted above)our slowmotion slowdown, or growth recession, seems well underway.

  30. wunsacon commented on Dec 17

    MS, also, what *is* your “money quote” from that article? I’m not knowledgeable enough to pick it myself.

    My best guess:
    “Fitch is referring to moves like Citigroup Inc.’s (C) announcement last week that it would provide emergency support to its seven SIVs, moving $49 billion of the troubled investment vehicles’ assets onto its balance sheet. The SIVs held assets worth $87 billion in August.”

  31. halbhh commented on Dec 17

    dblwyo, frankly, and for many reasons, I expected nominal sales to *decline* 2%-5%. They are much better than expected.

    A reasonably accurate headline would be “Retail Sales Hold Flat”, or “Consumer Still Buying”, etc. In other words, for the headline to adhere to the facts.

  32. DoubtingThomas commented on Dec 17

    Only anecdotal, but Friday evening I had to stop at our local Bed, Bath, Beyond with my 20% of any item certificate to pick up a gift for a Christmas party I was attending that night. I dreaded the visit as I hate the crowds this time of year. Much to my surprise, at 7pm on a Friday 10 days before Christmas I got a parking space right up front and entered the store to find about 6 shoppers plus myself. The extra sales help outnumbered us. I don’t think I’ve ever seen it so slow at Christmas as it is this year. By the way, I calculated what I’m spending this year: $225.35 total on gifts. I’m afraid that won’t please Wall Street.

  33. michael schumacher commented on Dec 17

    Been away for a few hours.

    Here’s my money quote from the above:

    “Credit rating agency Moody’s Investor Service said there would be “no negative rating impact,” adding that it assumes Citigroup “will not take any losses due to the quality of its assets.”….

    and this follows a close-second

    “Bear Stearns said the move was positive and should have little impact, while CIBC said the exposure would be a “toxic cocktail” for Citigroup’s capital ratios.”

    Pick ’em


  34. michael schumacher commented on Dec 17


    Money is money regardless if it is temporary or permanent. arguments that have been made are that they are temporary however the overall market makes no provisions for temporary as opposed to permanent money injections.

    It’s all the same color and instead of having an open-ended arrangement (permanent) they do it as a temporary action (term dates). You can use it for whatever you want as long as the money is returned by the term date maturation (along with that premium for having access to it-LOL)

    IMO there is nothing temporary about what the Fed is doing.


  35. Eric Davis commented on Dec 17


    I have my “invisible hand” moments. I just think there is only so much they can do. In my imaginings, of it’s workings(makes it sound stupid, doesn’t it).

    Honestly, they can only moderate a panic.

    I would find it super funny if they got stuck with a few billion in stocks and futures…..

    They just can’t force me to own Crox, and that is the truth of it. And what they “may have” set up on wednesday, only made today worse.

  36. dblwyo commented on Dec 17

    halbhh – point made and taken; also agreed. Could you expand a bit ?

    If you look at the charts flat is accurate description but in actual fact over the last several months there’s a slight uptick in real sales.

    Hence slowmotion slowdown – if it tips a)earlier indicator on overall consumption and b) watch out below.

    In context it’s not that a recession is imminent but at these growth rates the economy is fragile and easier to tip over.

    If you believe the Fed outlook ’til ’10 with sub-par growth that’s three years of sustained fragility.

    One can hope but personally I don’t sail small boats into gales.

  37. wunsacon commented on Dec 17


    I would like to understand as you. Every day, I read your posts about these auctions. But, I don’t see how we can look at injections alone and conclude that’s the root cause of intraday reversals (pushing the market back up). What am I missing?

    – there’s water in the bathtub and
    – the water flows out the drain at the same rate new water comes in from the tap
    – there’s no “net add” of liquidity.

    The terms on these daily auctions are typically 1 to 3 days. Every day, the government subtracts liquidity and then essentially reauctions it. If there’s no “net add”, how can this tap-and-drain mechanism push equities higher?

    Or, do you object to the granularity? In my example above, I think of the tap water and the drain pipe flows as being fairly uniform and consistent, resulting in high granularity. But, let’s say we replace the tap-and-drain mechanism with dumping-and-scooping-buckets-of-water-at-a-time, into and out of the tub. Then, we have low granularity (larger blocks less often). That could create larger daily swings (both up and down). Is that what you see? I.e., do you see these events as insufficiently granular? Is that what you object to?

    Maybe what happens is:
    – the firms have to sell in the morning to repay the govt but
    – deploy the new capital later in the day.
    If it’s that predictable, why don’t we all front-run this?

    Seeking Clues

  38. David commented on Dec 17

    I know and hope the market will rise! Soon it will be Christmas and we have help from our new friends from the east. “And Lo, A Star Shone In The East…”

  39. RM commented on Dec 17

    The CNBC survey is moot. The sample is not representative of the average American because CNBC viewers and website readers are typically wealthier than the norm.

  40. Winston Munn commented on Dec 17


    Don’t be misled by Fed repo agreements. To know the total amount of increase on any one day you also have to know the expirations – usually it is a wash or very near to it. Your analogy of the bathtub is quite accurate. A $40B repo day means nothing if expirations were $42B – its actually a net drain.

    The sole purpose of the repo is to inject money into the banking system to keep the FFR close to the target – end of story.

    The FFR rate is the overnight lending rate between banks.

    A bigger drain on the markets is coming now from the treasury and its shortfalls of tax receipts – meaning the treasury has to go to the markets and borrow more than expected – a slowing economy will only exacerbate this drain.

  41. Yurik commented on Mar 23

    In my site you will found large free list of surveys and paid focus groups,work from home opportunities,scam list of sites and free games:

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