Blue state Americans line up to pay 2018 tax bill and are not shopping

The post-Christmas retail sale receipts will be much lower this year in many blue states as homeowners line up to prepay their 2018 real estate taxes.

These lines in many municipal offices seem to rival those on Black Friday before the stores open are a result of President Trump signing the new tax law last week. Continue reading


Retailers won’t move into the black on Friday

Today is the so-called Black Friday, but that is not the case this year for retailers.

The term Black Friday came about as the day that retailers turn a profit for the year. Moving out of the red and into the black. Continue reading

Going hiking with Yellen can be dangerous

To no surprise to anyone on the Street, Janet Yellen raised rates Wednesday by 0.25% to a range between 0.75% to 1.0%.

I will not address the two or perhaps three more rate hikes for this year that Yellen spoke of since we do not deal with fantasies here.

I had been writing that while the stock market was riding high, the underlining economy was not and I thought a hike now would be ill-advised.

But I was not the only one. The Atlanta Fed’s GDPNow — three hours before the Yellen announcement — lowered its projection for Q1 2017 GDP to 0.9%. Remember at the end of Feb. it had the projection at 2.5%.

That’s a huge move in two weeks, but all you need to look at is the data released over those two weeks to understand the problem.

Consumer spending — 70% of GDP — has fallen to decade lows off of the holiday spending numbers, which were dubiously high when released by retail trade organizations. Bankruptcies and store closures across the board tell of a different environment, with big name stores closing by the hundreds. It can’t be long before mall operators like Simon Properties join the fray.

Washington gridlock is putting a damper on the post-election market enthusiasm. While President Trump speaks about “tremendous” opportunities, his agenda is looking more like a 2018 opportunity than 2017. So the markets may run out of hopium very soon.

Hiring appears to have turned a corner, but as the Trump tax-plan agenda is pushed off the funds to pay for the new hires may not be allocated and positions left unfilled.

Yellen in her press conference afterwards said that the Fed would not be paring down its balance sheet anytime soon, which tells me that it is still rolling over debt as it matures back into the markets to keep the wheels spinning. This means that bonds — and equities indirectly — still need a safety net under them.

So the Fed raises into this maelstrom but the saving grace is that Yellen & Co. will have one extra move down should the economy need to be more accommodative with credit.

Can’t fault the Fed for that.

A letter bomb exploded at the IMF offices in central ParisĀ  Thursday and one person was slightly injured, police sources said.

The Paris police department said an operation was ongoing at the offices of the IMF and World Bank after a person was hurt following the apparent explosion of a suspect package.

“An envelope exploded after it was opened and one person was slightly injured in the offices of the IMF,” one police source said.

IMF chief Christine Lagarde called the blast a “cowardly act of violence.”

The incident, just six weeks before a presidential election, comes as a militant Greek group Conspiracy of Fire Cells claimed responsibility for a parcel bomb mailed to German Finance Minister Wolfgang Schaeuble on Wednesday.

Inflation numbers doesn't mean the consumer is back

Let’s look at the Consumer Price Index that was released Wednesday by the Labor Department.

The report said inflation had its biggest monthly jump in almost four years for pricing. While the report said prices rose 2.5% annualized in January and is over the Federal Reserve’s 2% target level, this could lead to a March rate rise, which I still doubt given the reasons below.

Two quick points on this. Inflation for you and I is not good, although you would think it is since it’s the goal of the Fed. We should not strive or celebrate inflation. It cheapens our money, especially when wage growth is flat, like right now for most of America’s middle class.

Second point: This inflation is being imported because of the strong dollar. Crude oil prices are the major component to the inflation.

Look at it this way for the consumer. Retail sales climbed 0.4 percent, the Commerce Department also said on Wednesday. How can retail sales climb month over month in January with December being the holiday gift-giving month?

My take on this gem is that strapped consumers were giving gift cards to friends and family in order to take advantage of 70% off sales in January at many retailers.

Look at the news out of retail. Macy’s is closing stores and looking to sell the company. Bankruptcies in major chains are growing and major mall operators are buying struggling retail companies to keep their stores open a little longer.

No this inflation number is not to be celebrated for most Americans, since the stronger dollar had energy prices jump 4%, which was the largest jump of all the components measured in the CPI.

So your costs of heating your house and driving your car went up, while your wages stayed the same and this is a sign that the economy is doing well.

Don’t believe it for a second.

Holiday cheer seems to be sales jeers

The latest retail sales figures coming out say there was a 4.9% increase from 2015 levels.

Total sales are estimated to come in $637 billion, according to retail research firm Customer Growth Partners reported.

I think that number is way too high, but it plays out the narrative of “Trumpeuphoria” revitalizing the economy and increased consumer confidence.

If you follow the ploys used by government statistic releases, then you put out big numbers as an estimate, which makes the news, then walk it back with revisions that are not carried in the news.

This holiday shopping season differed from most since the Jewish holiday of Chanukah did not provide a lead-in to Christmas sales since the holidays align this year.

This lack of early buying caused margins to be squeezed as retailers cut prices leading into the last week or so before the holidays.

Online sales appeared to have a very good year with an early projection of 15% growth year-over-year, yet web sales still only account for roughly 10% of overall sales.

With the Trump Bump in sentiment put aside, the consumer has not had much to cheer since the election. This month’s rate hike has pinched their credit without the benefit of any movement for interest on savings. Also the consumer’s market participation is negligent and has little trickle-down benefits.

I believe in January the actual retail numbers will bear this out. Remember, many large retailers closed stores in Nov. and Dec. figuring it would cost more to keep them open for a couple of weeks than the revenue it would generate.

Go figure, since this is the time when retail makes its profit for the year. Hence the term Black Friday, which means the point when a store chain moves into the black or profit.

So let’s see how long the holiday cheer lasts.