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Morning CC! Retail may hold the key to unemployment
Posted Jan 12th 2009 4:10AM by Douglas McIntyre
Filed under: Analyst reports, Industry, Employees, Economic data, Financial Crisis
Two weeks ago several analysts speculated that over 70,000 stores could close in the first half of the year and that bankruptcies could force many retail chains to close.
The pessimism about the industry is only growing and it raise the question of whether saving retail is akin to keeping unemployment at reasonable levels. If retail collapses much further, a million jobs could be lost fairly fast.
Adding to the concern about the sector, The Wall Street Journal reports that "Drained by the worst consumer-spending slump in decades and burdened by debt, U.S. retailers are expected to begin a wave of post-holiday bankruptcy filings." That is old news. The way the ripple effect works is not.
Unemployment is rising at over 500,000 jobs a month across all parts of the economy. If a typical store employs ten people, closing 70,000 stores increases the pool of the jobless by 700,000 people all by itself, That does not include the failing of businesses that support retail whether they be in the real estate industry or in the parts of the economy that supply stores with everything from clothing to hardware, books to consumer electronics. Looked at that way, the retail industry could touch the jobs of one million people before the middle of the year.
One thing that the Obama plan does not address is how to keep stores open. There are no tax credits for people to move back to shopping. There are no programs to keep store leases from default the way there probably will be for home mortgages.
A failure to address the retail cries may end up being remarkably expensive.
BWNR. KYLG. EOM.
Morning Traders! BWNR(momo)>KYLG (low float play). Keep em on tap this week.
GM SSB and Loungers! Stocks in Europe, Asia Decline; MSCI World Slumps for 4th Day
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By Alexis Xydias and Sarah Jones
Jan. 12 (Bloomberg) -- Stocks in Europe and Asia fell, sending the MSCI World Index lower for a fourth day, on concern the global recession is snuffing out profit growth and curbing demand for commodities. U.S. index futures were little changed.
STMicroelectronics NV declined for a third day after UBS AG advised selling shares of Europe’s largest computer-chip maker. UBS slid the most in a month after SonntagsZeitung said the Swiss bank will post an 8 billion-franc ($7.2 billion) loss for the fourth quarter. PetroChina Co. retreated 3.9 percent as crude slumped for a fifth day.
The MSCI World Index fell 0.6 percent to 917.15 at 11:20 a.m. in London. The index of 23 developed nations has lost 3.4 percent in the past four days as companies from Alcoa Inc. to Intel Corp. spurred concern the profit outlook is worsening, while the unemployment rate in the U.S. climbed to the highest in almost 16 years.
“It will be a rather lackluster earnings season,” said Christian Gattiker, Zurich-based head of equity research and strategy at Bank Julius Baer & Co., which oversees about $307.6 billion. “If you look at economic data in the fourth quarter then there is not much indication of any positive surprises, especially if you look at some of the pre-announcements of some of the big ones like Alcoa and the Intel last week,” he said in a Bloomberg Television interview.
Campaign Promises
Futures on the Standard & Poor’s 500 Index slipped 0.2 percent after President-elect Barack Obama said in an ABC interview that reviving the economy will require scaling back on campaign promises and personal sacrifice from all Americans.
Europe’s Dow Jones Stoxx 600 Index fell 0.9 percent as European Aeronautic, Defence & Space Co. and Alfa Laval AB declined. The MSCI AC Asia Pacific excluding Japan Index slid 3.1 percent.
The Stoxx 600 has slumped 43 percent since the start of last year as $1 trillion in losses at financial companies eroded profits and sent Europe, the U.S. and Japan into the first simultaneous recessions since World War II.
The International Monetary Fund’s Managing Director Dominique Strauss-Kahn said in a Jan. 9 interview that governments in Western Europe are “behind the curve” in implementing stimulus packages and are “underestimating the needs.” He said the full impact of the slump hasn’t hit the region, where “shops are still full.”
Earnings Season
The European companies tracked by Bloomberg that announced earnings since the MSCI World began to rebound from its 2008 low in November posted a 73 percent decline in average profit, missing analysts’ estimates by 77 percent. American companies have posted a 54 percent drop in earnings, trailing forecasts by 44 percent.
Alcoa will unofficially kick off the earnings reporting season in the U.S. today as the first Dow Jones Industrial Average company to report results. The largest U.S. aluminum producer said last week it will reduce its global workforce by 13,500 and cut production by 135,000 metric tons.
STMicroelectronics slid 3.6 percent to 4.76 euros. The company was cut to “sell” from “neutral” by UBS, which said “there is a risk of revenues coming in lower than revised guidance.”
UBS fell 5.8 percent to 15.90 Swiss francs. The bank may post an 8 billion-franc loss for the final quarter of 2008, SonntagsZeitung reported yesterday, without saying where it got the information. Such a result would take the bank’s full-year deficit to more than 20 billion francs, making it the biggest Swiss corporate loss, the Zurich-based newspaper wrote. UBS spokeswoman Rebeca Garcia declined to comment on the report.
‘Investors’ Tension’
“We’ve had economic data which has driven the stock market and now we’ve arrived at a point at which profits may reflect the slowdown,” said Alexandre Iatrides, a fund manager at KBL Richelieu, which oversees $5.3 billion in Paris. “Earnings will set the tone for stocks. That explains investors’ tension.”
Oil producers in Asia slumped as crude fell for a fifth day in New York, extending last week’s 12 percent drop, on concern demand will decline more rapidly than the Organization of Petroleum Exporting Countries cuts output. Crude for February delivery lost as much as 4.9 percent to $38.83 a barrel in after-hours trading in New York.
PetroChina, China’s largest oil company, lost 3.9 percent to HK$6.75. China Oilfield Services Ltd., a unit of the nation’s largest offshore oil producer, slumped 6.2 percent to HK$5.87.
EADS Falls
EADS dropped 3.1 percent to 13.27 euros after Europe’s biggest aircraft manufacturer said it won’t deliver its A400M military transport until three years after the plane’s first flight. The additional delays to the military transport, already more than a year behind schedule, could mean as much as $6 billion in cost overruns, aerospace analyst Nick Cunningham of Evolution Securities said.
Alfa Laval retreated 2 percent to 64.75 kronor. The world’s biggest maker of heat exchangers said it will cut 1,000 jobs in the first half of 2009 as shipmaking customers canceled orders.
The company’s marine and diesel business lost 7 percent of its order backlog to cancellations in the last three months of the year, Alfa Laval said.
The MSCI World Index has rebounded 19 percent since Nov. 20 as investors speculated that Obama will boost the world’s biggest economy with tax cuts. The Federal Reserve has slashed interest rates to as low as zero percent, while the deepening economic contraction in the U.K. spurred the Bank of England last week to reduce borrowing costs to the lowest since the central bank was founded in 1694.
Global Equities Rebound?
Global stocks will gain 25 percent this year as government measures revive the economy and investors move from cash into equities, Nomura Holdings Inc. strategist Ian Scott wrote in a note to clients dated Jan. 9.
Concern that stock losses will deepen remains elevated even after falling from record levels in October and November.
The benchmark index for European options, the VStoxx Index, today climbed 4.4 percent to 43.11, the biggest advance this year. The gauge, which measures the cost of using options as insurance against declines in the Euro Stoxx 50 Index, surged to 87.51 in October, the highest since at least 2001, data compiled by Bloomberg show.
Morning GA!
Nothing a little Louisville slugger to the head couldn't take care of!
Some fool just had to get that 0.0115 in didn't they?
How about just Greed is Good!
Screw NITE! We got this puppy now!!
I love that greed Million!!!
That 20% looks so much sweeter!
0.012! BOOOOOYAAAA!!!
Hahahaha! Can I light the match?
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Let em get what they can, resistance is FUTILE!!!
Come say hello on the "rock" and you'll see what pull means! hahaha!
Z can you call my broker? I've only got three calls a day in lock up! lol.
Its poppin!!!
It sure has my friend, it sure has!
And to you as well j!No luck needed here though! :)
Afternoon Joanneg! Z speaks highly of you! :)
No haven for shorts here!!
BWNR. Its gonna pop! 0.011 x 0.0115!
EEEELLLLLEEEECCCCTTTRRRIIICCC BRO!!
Comin up on 800K!!
Fancy seeing you here Doog! :)
Feline Feeding Frenzy!!!
Thanks bro. On it.
Now thats news I'm eagerly awaiting!
Gotta furball lodged up in ya feline? lol.
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She won't tell me sh#$! lol.
patiently waiting my friend!
Who the F#$$ would bring this back to 0.011???
657k push that puppy!!!
Bye-bye ETMM!
You don't gotta tell me twice!!! :)
Comin bro! Its on!
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Trip ZZZ!!!!!!