Retail Heading Towards Biggest Wreck in 17 Years

Just a brief reminder: there have been numerous idiots insisting that the consumer was just fine, and this holiday season was free from problems.

As it turns out, that view is, um, slightly off:

"The retail industry appears to be skidding toward its first big wreck in 17 years.

Chains are slamming the brakes on store openings, cutting back on inventory and girding for leaner times as consumer spending chills. The speed with which sales slowed during the holidays caught even cautious retailers off-guard, prompting a flurry of profit warnings.

And while data on December consumer spending won’t be released until the end of the month, plummeting sales suggest consumers are snapping shut their pocketbooks."

Please note who these data-free, reality-challenged, no-nothing money-losing pinheads are. You’ll see them spouting the same bullshit next cycle, too. How wrong do you have to be before you get banned from TV?

Sources:
Retailers Sink Into the Doldrums
GARY MCWILLIAMS and AMY MERRICK
January 18, 2008; Page B1   
http://online.wsj.com/article/SB120061830348699259.html

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  1. VoiceFromtheWilderness commented on Jan 18

    Looks like the gloves are off at Big Picture.

    That is not a complaint. :)

  2. SINGER commented on Jan 18

    The RETAIL stocks have/are definitely crashed/ing.

    How Right Do You Have To Be Before You Get Invited On TV???

  3. Ross commented on Jan 18

    Looks like the collective mood of this group is souring somewhat.

    Guess we are herding mammals after all.

    Glad I’m in the right herd!

    This is truely a great blog. A lot of common sense but opportunistic as well…

  4. Andrew G. commented on Jan 18

    perhaps you need to make a prediction like, oh, for example, Dow 6800 in 2006?

    Would that get you banned from TV? Oh yeah, it didn’t get you banned Barry!

    How much money would you have lost following that advice?

  5. michael schumacher commented on Jan 18

    It’s about time…..^^^

    for too long most MSM and blog authors have spent too much time cautiously patting each other on the back so they appear to not rub anyone the wrong way. I think the last two weeks has shown that when animals are cornered (not you BR) they start to fight back (art Laffer comes to mind, as well as most of the “crew” at CNBC).

    The lying about the condition of the economy has been quite well documented but it never made it’s way to an out and out mud slinging, finger pointing, smack down of the various financial pundits amongst themselves

    That is going to change rather quickly IMO. If it doesn’t then we will regress back to what we have now which is nothing more than talking points issued by those who have no idea what it’s like to actually have a consequence for poor risk mgmt. It will need to change because, at some point, the retail people (the uninformed ones) that got handed a bloated market will be needed to start any recovery. The only way they will return after being burned (yet again) is by having confidence in what is being presented to them. There is none at the present.

    A good lesson in this is the calls at C and Merril this week. The market was ready to give MER a pass (at least it was until all that selling in the overall market came in) simply because a few people thought that John Thain had confidence….it boiled down to who the market thought was a more confident liar.

    Bottom line is that while these pundits and analysts are busy screwing over retail they are completely unaware that they will need them before any real recovery can start.

    Ciao
    MS

  6. michael schumacher commented on Jan 18

    and yes I realize the post is about retailers and not retail investors……..

    Ciao
    MS

  7. Wayne commented on Jan 18

    One thing that Bush, Bernanke, Congress et al could do to stimulate spending is to send out $800 Visa/Mastercard gift cards instead of rebate checks.

  8. donna commented on Jan 18

    I am frequenting smaller retailers and attempting to encourage those offering unique creative products rather than cheap crap from China. I would suggest others might do the same if you have any interest in rebuilding this economy.

    We have to quite playing the big box/China import game….

  9. Ross commented on Jan 18

    Now playing on TCM, “Pocket full of Miricles” Peter Falk is Great!

    The retailers need a few of Annie’s lucky apples to get through the season.

    Hoard sugar and bring back prohibition!

  10. Eric Davis commented on Jan 18

    You realize that tons of MSM are starting to pull their news straight off the blogs. I guarantee half of CNBC read Calculated risk every day…

    Next on CNBC, Morning Call… Blog Watch.

  11. jake commented on Jan 18

    cnbc just dug up some technician proclaiming the 75 yr old bull market in stocks and commodities has topped out.robert prechter will be brought out next.

  12. michael schumacher commented on Jan 18

    I see that Paulson thinks this money will create “500k” jobs……..are they planning to change the BLS stats to show all of this later in the year?? Another revamp of how we “report” is coming so that we all “see” it.

    I love that this administration wants us all to believe that it all went to hell and a hand basket in less than three weeks time…..

    Some actually believe that though…which is the sad part.

    Ciao
    MS

  13. michael commented on Jan 18

    judging by pundits who were wrong about Iraq, tv will keep them on forever. no blame. (no shame.)

  14. Bob A commented on Jan 18

    They will never be banned from tv because after all, tv is all about selling crap to people who don’t care to know better.

  15. Michael C. commented on Jan 18

    When is a major homebuilder like SPF, or MBIA or Ambac going to fail?

    It’s gonna happen, what are they waiting for?

  16. D H commented on Jan 18

    good question. ask whoever produces Kudlow and pays Ben Stein …

  17. v commented on Jan 18

    This blog and a few others (CR, RGE, etc) are invaluable reading!

    My sincere thanks. It has been an incredible (and ongoing) education. Thank you.

  18. F. Frederson commented on Jan 18

    How wrong do you have to be before you get banned from TV?

    Never, if you suck another retail investor into losing his shirt. Just look at Kudlow.

  19. pmorrisonfl commented on Jan 18

    Anecdotal: We live pretty close to the Sawgrass Mills mall, in South Florida. It’s the kind of mall you can see from orbit. They recently built an expansion (not quite vsible from orbit), full of ‘luxury’ clothes shops, Burberry, Hugo Boss, that kind of thing. Last night, every single shop in the extension had X%-off signs, ranging from 20-60% off. This may be typical for the season, but I suspect there’s more to it than that. Some of the signs were hand-made, which suggests it’s not so much corporate plan as survival-of-the-fittest.

  20. Rob Dawg commented on Jan 18

    Dateline Jan 2011- Tonight on “The BR Report” Host Barry R has back on the air for the first time since the correction to end all corrections in 2008 former media personality Larry Goldilocks Kudlow. Tonight’s topic: the shows’ byline “We aren’t right on America we are just all that’s left.” Programming note; Mr. K will be appearing via remote due to the permanent 5000 foot restraining order issued by the NYSE in 2009.

  21. Pat Gorup commented on Jan 18

    You know, I want to buy a new vehicle this year. Timing is everything.

  22. Eric Davis commented on Jan 18

    I liked that technician.. 75 Mega cycle is possible.. he was calling for a 3 week rally.( I think ) Hopefully it’s more mild than the last, and we learned something.

    of course they call that every 10 years. one of these times they will be right.

  23. michael schumacher commented on Jan 18

    Michael C.

    I’ve been waiting for that to happen too however I think that the next mess to become unglued will do just that. CFC being bought by BofA kept CFC out of filing for insolvency which would have caused massive amounts of CDS’ to be paid out. Afterall if you insured against a default of debt (which CFC still may have to do)you would expect to be paid from that event.

    Right now CFC is flirting with defaulting it’s debt covenants because of it’s share price. If it falls ,and stays below 5, I believe they will be in breach. That will trigger a massive amount of default payments that these companies (those who wrote the CDS’) are all on record as saying they cannot make.

    My guess is that ALOT of money will be spent keeping CFC above 5 if just only for the psychological reasons of keeping that event from happening.

    Ciao
    MS

  24. The Dirty Mac commented on Jan 18

    F. Frederson – Kudlow primarily advises to invest in stocks for the long term. Given the propensity of most people to buy high and sell low, that’s decent advice. The shtick is another matter, but the CNBC evening line-up is about entertainment first, just like every other news program outside of C-Span.

  25. Tom B commented on Jan 18

    So Barry– how long do YOU think this recession is going to last? summer ’09?

  26. Al Czervik commented on Jan 18

    BR:”How wrong do you have to be before you get banned from TV?”

    As far as I can tell, being wrong has nothing to do with it. It seems that the only way to get banned from TV is to be John Edwards, Ron Paul or Dennis Kucinich.

  27. Ross commented on Jan 18

    I have fun with a little game I play with credit card companies. When I get an unsolicited offer for VISA, MC, AMEX etc, I write ‘no thanks’ on the information section, stick it back in the postage paid envelope and send it back. Just trying to be polite and @ 41 cents helps out my postal people.

    Today I received a genuine AMEX BLUE in the mail. I cancelled my AMEX card 7 or 8 years ago when they decided to charge interest. I did not apply for this card. I signed nothing nor did I fill out ANY information. All I can figure is that some genious decided to use old computer stored data on me to reactivate my account.

    I’m going to post it on Ebay and sell it. I’m not liable, am I? ;-)

    Point being, everything is so sloppy in business these days. It has been 3 months since the parts arrived to repair my recalled Maytag dishwasher yet no Maytag repairman. Guess he is busy fixing machinery in a toy factory…No service, no sale.

  28. scorpio commented on Jan 18

    where were the markets 17 years ago? what if we got only 1/2 the way back to those levels? how would you feel.

  29. Stuart commented on Jan 18

    one of the shoes has now dropped. Still ridiculously high.

    Fitch cuts Ambac rating to AA from AAA
    By Alistair Barr
    Last update: 2:39 p.m. EST Jan. 18, 2008
    Print RSS Disable Live Quotes
    SAN FRANCISCO (MarketWatch) — Fitch Ratings downgraded Ambac Financial (ABK:
    6.05, -0.19, -3.0%) to AA from AAA on Friday and warned that it could cut the bond insurer’s rating further. The agency said it took action after Ambac scrapped plans to raise new capital by selling equity. Ambac shares rose almost 2% to $6.34 during afternoon trading on Friday. The stock lost more than half its value on Thursday.

  30. Florida commented on Jan 18

    The chattering heads on CNBC are starting already to talk about how the government should step in and bail out the bond market. Sheesh!

  31. michael schumacher commented on Jan 18

    Lotsa games before the close. How bad would it look to have a negative close on the day that the village idiot came riding in to “save” us all from ourselves…

    Positive close……easy to see.

    Ciao
    MS

  32. New Yorker commented on Jan 18

    But the volume is overwhleming today- will approach 5.5 billion. It’s too much for any PPT (or whatever) to counter. Decliners solidly in the majority all day. 2-1 on the NYSE. A positive close would be near impossible to achieve.

  33. ECONOMISTA NON GRATA commented on Jan 18

    “Please note who these data-free, reality-challenged, no-nothing money-losing pinheads are. You’ll see them spouting the same bullshit next cycle, too. How wrong do you have to be before you get banned from TV?”

    I usually I don’t watch the “fi-vangellicals” on the tube. I would appreciate if you could de-nouce them for me.

    Another NUT…….

    From the Denver Post.

    “The subprime-mortgage crisis already is a thing of the past and should not affect the housing market going forward, Yun said. ‘The subprime mess is a Wall Street mess,’ Yun said. ‘They made a huge gamble, and they lost. Subprime is a past event that’s unrelated to homebuying.’”

    A regular Einstien, Eh….?

    Have a great weekend…

    Econolicious

  34. IwantToKnow commented on Jan 18

    Womp Womp Womp… someone tell Bowyer and Luskin to abandon ship!

    These two knuckleheads have way too much ego to give in.

  35. michael schumacher commented on Jan 18

    they almost got it green right after I posted that…..do not underestimate what can be achieved…..remember August 16th??? We were in a similar situation with breadth and volume and then Poof! outta nowhere came 30 handles in 28 minutes.

    or was it 31….

    Ciao
    MS

  36. New Yorker commented on Jan 18

    Wow. August 16th was the highest Vol. day ever- just short of 5.8 billion. Today looks hopeless though.

  37. michael schumacher commented on Jan 18

    Almost got it there twice except they didn’t get the follow on momo. that it requires….even set up a higher high (5 min chart) and still no one took the bait….

    Have a good weekend all….. as no mater if you are long or short we’ve all earned a three day holiday.

    Ciao
    MS

  38. Innocent Bystander commented on Jan 18

    Eric you are right about the MSNBC crowd reading this blog. Did you notice Dylan Ratigan has been trying to keep his trap shut and let his panel talk after the comments here last Friday. This works until 45 min into the show, and then his mouth explodes. Also the look at me cuteness has been toned down too. Just take him out and shoot him. He will never learn what his job is.

  39. New Yorker commented on Jan 18

    Nearly 5.9 billion. Looks like a new record and a hell of a lot of selling today.

  40. Steve commented on Jan 18

    I have an alternative hypothesis, which I believe is stating the obvious: the talking heads on the TV and pundits in print keep their jobs because they are actually doing successfully what their bosses and senior management want them to do! How unusual a concept! So, if it is nonsense and misleading crap that they spew, perhaps it is because their job is to spread misinformation. I posit that such misinformation, which can move into propaganda territory, is used to manipulate public opinion in ways thought useful to the big Corporate Boards that own these media cartels and to manage the direction of the “herd”…

  41. Peter Davis commented on Jan 18

    Do you mean to say that consumers – who are up to the A-double-S’s in debt; who have lost their ATMs as the value of the palaces they levered up to buy have finally come back into the stratosphere; who are faced with actually having to, you know, save money instead buying everything they see with the rabid energy of a crack addict – can no longer afford the big screen tv and GI Joe with the kung-fu grip?

    Say it ain’t say…

  42. Stav commented on Jan 18

    What do you mean? The wronger you are the more you get to be on TV….be 100% wrong, 100% of the time and you might even get a New York Times Op-Ed column!

  43. Francois commented on Jan 18

    Retail ought to be doing bad: How else could I explain the constant stream of internet coupons landing in my mailbox every freakin day of the week?

    I’ve had Internet for 9 years, and started online shopping very early. For the life of me, since the end of September, I’ve never seen so many promotions, specials and discount offers fro so many reputable retailers.

  44. Eric Davis commented on Jan 18

    Innocent,

    I’d not be narcissistic to specify this blog… since inflation hasn’t entered the vernacular… Well they still think inflation is “contained”… and they don’t understand that that is what “High prices” are. especially when it’s “Everything”.. except what is in the “basket” and until mac and cheese doubles, inflation will be contained… even though I paid 14 bucks for a Wheel bearing a week ago.

    It’s probably a good thing, maybe with the influence of blogs MSM will stop being stuck in such a Bubble of influence(Koolaid Drinking).

    Peter,

    I was so impressed with follow through about “Savings”, “Inflation”, and “Fiscal Responsibility” with our Fed Chairman…. Regardless of my comments about him being dick less and stupid.

    I just want him to look into the Camera and say “NO AMOUNT OF RATE CUTS WILL KEEP ECONOMEYS OUT OF RECESSION….Stop Drinking The Koo-laid”

  45. Doug Watts commented on Jan 18

    My wife co-owns with four others an upscale crafts and jewelry shop in Hallowell, Maine. Christmas sales were substantially lower for them than last year.

  46. NC Jim commented on Jan 18

    but the CNBC evening line-up is about entertainment first, just like every other news program

    I agree for commercial TV however PBS Evening News does an excellent job. Unbiased reporting and nobody shouts or talks over the top of another guest.

    A program for adults.

    Jim

  47. ef commented on Jan 18

    I bought a nice toothbrush, just a plain old toothbrush, for $0.50. I turned over the package and it said, Made In America. I was surprised by my emotion. I felt good about my purchase, and did a little homework. I’ve since used the toothbrush and I still like it a lot over all the much more expensive ones I’ve tried. In general, I think products have gotten really shoddy, we are weary and leery of the marketing tactics (over substance), and we have been incentivized to death to buy stuff that isn’t very good or has a short lifespan. So this is how we have been “trained”. Many bought into it, postponing the overall pain. But for example, rather than build a better vehicle, that is fuel efficient, or really revolutionary, they give us a new coffee cup holder. All stores have the same cheap stuff. We end up chasing the lowest price because the products and service are all the same. Retailers don’t respect their employees or customers. A happy employee makes a happy customer. And rather than bringing in better products, remodeling their stores so it was a better experience, they push us into a redundant claustrophobic dirty hellhole. And now, why buy anything Jan-Nov, if you can get it for nothing in Dec. They created their mess with no vision. It’s all about quantity.

    If credit card defaults are up, have the pay-day loan, vehicle title loan businesses seen an increase?

    It seems we have much to do, and could put people to work, but it requires the will of Congress and the people to hold them accountable. For example, rebuild our utility infrastructure, increase broadband, rebuild bridges, inner cities, schools, etc. The list seems to get longer all the time as we let our infrastructure age and decay.

  48. Steve commented on Jan 18

    The only place did I hear anyone say CFC was going to be dead was on PBS Business Nightly report.

    Not CNBC.

    I’m paying more attention to Bloomberg, CNBC World & PBS. When will CNBC understand that the “star” is the market not their ideology. Irrelevant if it’s up or down.

  49. bluestatedon commented on Jan 18

    Barry, it’s time you took a back seat to that acknowledged fiscal genius Sean Hannity, who said this in the midst of a back-and-forth with punching bag Alan Colmes

    HANNITY: “It is, Alan. The economy is phenomenal. Where have you been living?”

    Now that Sean has set my mind at rest, I’m going out shopping. Wasn’t that easy?

  50. Frank commented on Jan 18

    Here’s what I don’t understand. Of all the badrillion blogs and business websites out there, why isn’t there one actually tracking the winning percentage of these experts? Pit their predictions against a monkey throwing effluvia at tourists. See which one is more accurate.

  51. muckdog commented on Jan 18

    They are? I was just gathering up my Best Buy gift cards for some weekend shopping!

  52. Alex commented on Jan 19

    Apparently, Donald Luskin had a recent moment of clarity, and found out he was “wrong”:

    “Before I rant any further (about those pesky permabears that were on the right side of the trade), let me get one item out of the way. I admit that I’ve been very wrong. I’ve been saying to buy stocks all the way down since the October highs. I was wrong. I repeat: I was wrong. If nothing else I get the satisfaction of being unique. How many stock market pundits do you know who will admit when they’ve been wrong?

    So what do you do now if you’ve been wrong right along with me?”

    The rest of this stirring insight is here:
    http://www.smartmoney.com/aheadofthecurve/index.cfm?story=20080118-stock-market

    You know, try as I may, it is hard for me to say that this article (along with many others) really looks all that ahead of the curve.

    For years now, it was pretty easy to see that if Luskin’s lips were moving he was wrong. Anyway, I am glad that Donnie decided to catch up on that little thing.

    Anyway…thanks to YOU Barry, for being a big part of making good money off the market for the previous couple months.

  53. Movie Guy commented on Jan 19

    B,

    Did you look at Sam’s Club sales for the holiday period? You might…

    MG

  54. Todd commented on Jan 19

    The group of Polyannas on Kudlow’s show routinely make me want to throw bricks at the tv. Larry is the worst of all, of course. There will be,for me, a fair amount of schadenfreude when his show is cancelled. It’s just disgraceful to be so detached from reality, constantly telling the unwitting that things are just wonderful.

    All these supply-siders are so wedded to the idea that unfettered, unregulated free markets = prosperity (the greatest story never told ?!?!?). Here’s the truth Larry: unregulated free markets lead to bubbles, not to mention the enormous corruption that goes alone with it. Unfettered free markets gave us the deregulation of the telcom sector which led to the tech/internet bubble. And now unfettered free markets gave us the subprime problems and real estate bubble. Japan had a stock market and real estate bubble, and look how they fared.

    Wake up, you moronic supply siders. Some regulation is actually healthy. What if we actually would have had real regulation of who qualifies for a mortgage? Would we have had a housing bubble? Probably, thanks to Greenspan’s 1% fed funds for 1-2 years. But, it would have been far less severe and the banking system would be far healthier. And, supply side economics gives us monstrous amounts of national debt. Dick Cheney said that deficits don’t matter. Larry Kudlow has said he loves deficits.

    So, we have a brain-dead political system here to deal with these problems. Republicans who won’t face up to the flaws of supply side economics (borrow and spend being a major flaw), and Democrats who are still wedded to the idea of tax and spend. Is there a Republican candidate who isn’t sucking up to the memory of Ronald Reagan, who initiated the idea of monstrous national debt as a way to finance economic growth? I suppose Ron Paul, but he’s not really a Republican, rather a libertarian.

    And, there isn’t a really good centrist candidate for 2008 in the race to figure out some way to mitigate the mess. Mike Bloomberg, can you come to our rescue?

  55. Todd commented on Jan 19

    Oh, and while I’m ranting, let me add just one more thing.

    Why wouldn’t the mother of all recessions and stock market meltdown be part of George W. Bush’s legacy? This man has almost single-handedly (almost, but Dick Cheney is an equal partner) in leading this country down the road to disaster. With $9 trillion in national debt now thanks to W, how will we dig ourselves out of this huge mess? And we still have another year of Braindead Bush in office !

  56. Winston Munn commented on Jan 19

    I suspected retail might be in trouble when I noticed that the Good Housekeeping Seal of Approval had been replaced by the number to the Poison Control Center Hotline.

  57. Dave commented on Jan 20

    Lowe’s is opening stores for the first time here in Canada, and Home Depot is still expanding here as is Walmart. A Crate and Barrel is opening up in a megamall near me.

  58. badhaikuguy commented on Jan 20

    Trinket Merchants weep.
    WalMart dung gathers more dust.
    Tarnish on the bling.

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