Ask Rande

Top 1749. Aug 12, 1999 6:26 AM

» KirkL - Retail Sales Stronger Than Expected

Retail Sales Stronger Than Expected
Full Article

The total value of retail sales climbed a stronger-than-expected 0.7 percent to a seasonally adjusted $248.69 billion after a revised 0.2 percent fall in June. The July figure was more than double the 0.3 percent increase forecast by Wall Street economists and was likely to fuel concerns the Federal Reserve may raise interest rates again later this month.

Sales of both costly durable goods like new cars and building materials and of nondurables like food and gasoline picked up last month from June's pace. New-car dealers' sales surged 2.3 percent to $62.63 billion following a 0.8 percent dip in June.

Even excluding automobiles, July retail sales were up 0.3 percent after a 0.1 percent rise in June.

-- posted by KirkL

Top 1750. Aug 12, 1999 6:28 AM

» RandeS - Kirk,

Kirk,

And since the numbers rightfully failed to spook the bond market, stocks should love the good retail numbers.

-- posted by RandeS

Top 1751. Aug 12, 1999 6:37 AM

» KirkL - Perhaps the higher sales are due to people taking some profits?

Perhaps the higher sales are due to people taking some profits in the stock market and investing in upgrades for their homes and toy chest? Explains the market going down a bit (10%) for profit taking and explains the higher retail sales.

New A/C and furnace for me plus a new, custom sailboard, new Lexus Urban Assault Vehicle for you.... My upgrades and toys are bought with Stock Market Profits already taken. My installation work kept two plus installers busy for three days - lower unemployment and higher wages. Funny how that works! Too bad the bond ghouls can't enjoy good news and associated prosperity like the rest of us!

-- posted by KirkL

Top 1752. Aug 12, 1999 6:54 AM

» RandeS - Kirk,

Kirk,

You are not alone in your recent spending pattern -- the retail numbers showed strong buying of building materials. Must be a lot of home improvement going on.

-- posted by RandeS

Top 1753. Aug 12, 1999 7:04 AM

» KirkL - Traffic Jams confirm it

Traffic Jams confirm it

Rande, there are traffic jams in my neighborhood from all the construction worker vehicles when it is quitting time. I don't think there is a place in Los Altos that you can stand and not see someone having some work done on their home with the trucks parked out front.

When I read some of Roger's doom-n-gloom posts and then saw the prosperity and how it was spreading to many outside the stock option crowd, I just couldn't take the bear scenario seriously.

I wonder if Roger has spoken to these workers? I did. Many bought some nut stocks and got burned and are now on a more conservative investment plan. Most didn't bet the farm on the net stocks, having most of their investments going into 401Ks that go into funds, but they did put some personal money into internet stocks and got burned and learned why they install A/C rather than manage a mutual fund and why they pay a management fee to a mutual fund to invest their money.

Again, the net meltdown has had quite a bit of health restoration as I have said that you only really need to clean out unhealthy sectors to cure a disease, you don't have to correct the whole market to remove excesses.

-- posted by KirkL

Top 1754. Aug 12, 1999 7:45 AM

» RandeS - Kirk,

Kirk,

Goes to show that even anecdotal evidence can be compelling sometimes (the Peter Lynch method, I guess). As for Roger's theories, they're interesting but agree should be taken with a grain of salt. The discussion on another thread here about 70s-style inflation and high rates (in simplistic summary form, to be sure), followed by the ongoing 17-year decline in both, points out how fundamentals and specific circumstances can lead to logical outcomes. Demographics are important, but cannot wholly explain nor predict on their own (i.e., wouldn't want to hang my hat on this one factor to the dismissal of all other factors). As for those more mysterious (and metaphysical) repetitious cycles that come and go over the centuries, that's a little too far out for me. Still, it's all interesting and the more knowledge about these things the better.

-- posted by RandeS

Top 1755. Aug 12, 1999 8:25 AM

» KirkL - Demographics

They make for interesting reading, but they rely on a closed society. Perhaps Japan but even Roger says the Large Korean population there distorted things a bit. Also, Japanese travel when times are good and import almost all raw materials so they really are not a closed system.

Today, you have to think globally. Roger discounts with wealth being created in the rest of the World, but I think you need to look at the small numbers, for sure, given for annual income and then multiply it by the total global population. Demographics here are compelling as the total World population is still growing and is much larger today than 25 yrs ago. You can say, "Oh, their income ONLY went from $600 to $700 a yr" but you then realize that the USA is ONLY a small percentage of the total world population (5% perhps?) so the total increase in spendable dollars is HUGE even in comparison to our mamoth economy.

Oh well, the whole discussion sure has been interesting even if not everyone agrees! Hopefully, I can stay on the profitable side of the debate. 8)

Shameless Click Thanks!

-- posted by KirkL

Top 1756. Aug 12, 1999 11:34 AM

» RandeS - Long bond auction not great, but not bad.

Long bond auction not great, but not bad. The high yield 6.144% (68% of the bonds went at this rate), a little higher than expected. The bid-to-cover ratio, was 2.22 compared to a 2.05 level at the previous sale. Anyway, looks like the bond market is backing up a bit now that the auctions are done. Likely, there's some positioning ahead of the PPI tomorrow.

-- posted by RandeS

Top 1757. Aug 12, 1999 12:03 PM

» Phish - US pop %

> then realize that the USA is ONLY a small percentage
> of the total world population (5% perhps?)

I believe the actual number is 12%

-Randy

-- posted by Phish