We have started picking new companies for forensic analysis, along with the ongoing study of the Pan-European Debt Crisis. Below you will find a sneak peak of what we have unearthed but first, the obligatory romp through recent news…
Bankrupt Consumers LOVE iPads: WSJ
- Consumers are filing for Chapter 7 bankruptcy more than ever, choosing to liquidate their assets and be free of their debtors over signing debt repayment plans as encouraged under Chapter 13 bankruptcy
- Personal bankruptcies reached 1.41 million last year, up nearly a third from 2008 (but the recession is over, don’t worry – this particular stat is a non-issue in a jobless, V shaped recovery)
- Regulations that sought to keep consumers from liquidating at the expense of keeping some debt are not working, as the consumer is clearly rejecting the opportunity cost of having any debt
Consumers Deleverage: Reuters
- Consumer credit unexpectedly took a sharp turn lower, and revolving credit fell at a 13% annual rate
- Consumers are throwing away credit cards, yet retail sales data continues to rise, watch pending homes data on Monday for further development.
Those companies that serve and rely on these very same consumers’ ability to spend are quite sensitive to the macro environment. Notice, I said the companies, not necessarily the companies’ securities – at least not yet. So, what does the macro/fundamental outlook look like? Let’s glance at personal consumption over the 12 years or so…
Notice that the only real recovery is in the volatile energy sector, and that is not discretionary! Automobiles, clothing, furnishing, etc. are looking yucky!
This is an interesting development, for unemployment (real unemployment that is) is still rampant. The federal government is effectively funding and financing deficit state unemployment rolls (see below for more detail). With record bankruptcies, deleveraging consumers, and rampant unemployment combined with drastic drops in consumer expenditures, guess what retail stocks are doing??? Yep, you guessed it.
- According to retail stocks, the consumer is BOOMING! Credit issues are non-existent! They aren’t drowning in debt (that is both the vendors and the consumers), and employment is maxed out at an all time high. Hey, we can’t even spell Bankruptcy, and consumers are releveraging versus deleveraging since the banks are giving out all of those ultra low rate credit cards like candy! After all, if there is anything that the banks want to do now it is increase their credit card exposure at the same time they are allowing these Ipad-aholics to max out home equity lines in order to buy more worthless stuff consumer retail products!
All of this bad news virtually guarantees DOW 12,000 next week! The PPT has its work cut out for them.
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ReplyDeleteoh ive done some tech analysis.. ur absolutly right.. were about to see 1350 in the SnP. which equall about 12k-12,300 onthe dji. But this is the weird sorta BS Spending that will get us out of the recession.. facts are the economy is hardcore recovery mode and the poor and lower middle class(whatever is left of it) are royally screwed, but for the rest, the storm is over. Are we on a path to financial security... doubtful if u believe in the stock market.., but if u know how to profit from the market do it. if not, own a basket of currencies. 1000$ of euros, yauns, ect. gold and silver.. a portfolio of about 5-10k, and keep the rest in ur savings account not with bank of america. stock up on some MRE's. some food. first aid kit, doubtful u will ever need it as the world problems are somewhat over exagerated here or not well spelled out. i think we will blast past 14,5k on the dji within 2years if not sooner.. whatever happend to 8%/yr. 100%/yr i guess is fine.. 6500-14,k. 300%.. things are messed up.. there will be another and final crash.. When, i dont know.. if ever.. protect urself, dont be paranoid but be prepared.. u can prepare for failure, or fail to prepare. ur choice.. to fish in water, the fish doesnt know its wet. to human money is just what we use. gold is always the last standing man, but goodluck trying to buy a boat or a house with gold. there is demand fed researve notes. so stick to the dollar..
ReplyDelete11;10 you are living in a mythical delusional world. The fact is that you have been brainwashed into believing things last forever. Including the fake fiat buck, it is paper ,that many countries are ditching. Spending does NOT get us into recovery it gets us into DEBT! A stock market recovery it is not, this exact same thing was done in the 30's, did that turn into a RECOVERY? Use your noggin, this is NOT A RECOVERY but a slow painful cancerous death.
ReplyDelete11:57 absolutely correct.
ReplyDeleteCan a person ditch credit card debt through bankruptcy? I thought the banksters did away with that?
You have to hand it to the banksters. Remember they tightened up the bankruptcy laws right before the meltdown. All planned.
11:10 here... umm. i think i agreed with u.. i dont think total collapes is going to ever happen. i dont think the dollar will dissapeer for a while... but its not out of the question. i do advise u to stock up and prepare for collapes if u want to thrive in post collapes era.. but ultimately i dont think its ever going to happen.. i do think u should own gold, but as of today u cannot go trade gold bullion for goods or services.. atleast not with much ease. The rich are always better off.
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