Wednesday, November 23, 2011

Bunds; Stress; Groupon; MF; Tis the Season; Data Dump


German bunds. What are these to the average person? A special bun for wiener schnitzel? There's a good special going on at the Der Fun chain in the southwest ( Yet these bunds (for German bonds) are having an impact on the markets this morning. The 10 year auction of the bunds is being proclaimed by the Reuters news as the worst since the creation of the euro. Yes, now even Germany is setting off the alarm bells with funding problems. As Tyler Durden writes, one of our favorite market commentators, “welcome to fiat's greatest hits.” Coming auctions from other places will be interesting in the weeks and months ahead – this includes places like London, Tokyo and eventually here in the good old USofA.

With Thanksgiving looming – so much for the idea of a Turkey Day rally week, though you never know what kind of last minute trick will be pulled out of the sleeve to conjure up some sort of cheer amidst the fear. It almost goes without saying that we will see brisk volume into the midday today, but things should trail off as the Wall Street crowd leaves early for a brief break. And that lower volume could bring additional swing potential into the market today.Friday could be a sleeper of a day, but it will depend on global macro events not going haywire while everyone here in the US ODs on tryptofan, gravy, mashed potatoes, string beans, pie, etc.

Stress Tests
The Big Six U.S. banks are to be stress tested again. What silliness. Remember, these are the banks that OWN the Fed and they are now going to be tested by the Fed? Lol. We all know these banks are walking zombies already with two sets of books that enable them to hide their losses and the true reality of what they are, or really are not any more. Again, you have to look at this stuff and be humored. Oh, wasn't it Dexia that made it through the European stress tests with flying colors? Yes, the Dexia that is on the verge of disintegration and threatening to take the make believe French AAA credit with it. Lol. You can't make this stuff up.

This space told you that this would be the outcome. Groupon $GRPN IPO Is Officially a Bust I just see it as a lousy business model.

I am not going to let this MF thing go. I hope to have some sort of material everyday on this travesty. Even for the brazen and crooked Chiago commodities market, the MF collapse is an all time low point in the annals of financial history. Here's a good article from an important denizen of and an active futures trader and guru, Peter Brandt. Peter was once a guest of my Gold and Silver Radio show (

Commodity Customer Coalition forms to reclaim MF Global funds Chicago-based group says it represents more than 7,000 MF Global customers whose money is temporarily frozen during bankruptcy proceedings See story here. Follow the coalitions web site here. It is a … read more.

Tis the Season - Retail Wet Dreams
I promised to write on the coming holiday retail season and my impressions of winners and losers. No sooner had I published yesterday's blog, I received a note a few hours later from fellow blogger and former fellow broadcaster, Wes Richards, of the must read Wessays (

"I have some observations on the retail season ... stores, not their stocks. This is based on being married to a champion bargain magnet who loves to prowl aisles (she can spend 5 hours in a TJMaxx, come out with no purchases and tell you exactly what's there and how it stacks up with the competition,) and because I'm writing a book on same based on my own interest and research.

What hurts Best Buy: diminished customer service. Diminished need for expert floor help as people become more knowledgeable about electronics and shift to Costco and its siblings and to, and Newegg. BBY is not competitive on major appliance prices or selection.

Radio Shack: probably gets a boost from it's recently renewed affiliation with Verizon, especially where their other mobile phone products (ATT, Sprint) have inferior signals. But overall, they're in trouble from the same competitors as BBY and because there's no margin in some of the small stuff they sell.

What hurts mall Jewelers (Kay, Gordons, etc.) overpriced, complex conditions in their warranties. Increased competition from TV shopping channels (primarily the smaller ones, JTV and ShopNbc.)

Macy's: the last traditional mid-line department store chain standing. They have a pricing policy that seems completely unrelated to their costs, which means somethings there have to be overpriced to make up for all the cutting they do in clothing and accessories. They've recently ended their contract with the outfit that leased the better jewelry department and have started running it themselves.

I expect good holiday results from the high-end chains, Nordstrom, Bloomingdales, Saks, Lord & Taylor, Neiman marcus.

What hurts Walmart: bad front ends. Walmart is a store of last resort.

Target: trying to promote itself as low priced non-walmart walmart. People are attracted to logical displays and decent checkout. They're going big into groceries, an iffy, low-margin, high shrinkage area.

Costco benefits from consistently good Consumer Reports ratings on their house brands.

TJMaxx & Marshalls: TJs are better run than marshalls, and both are more upscale than prime compeitor Ross. Smaller space means more $$ per square foot, for what that's worth.

Bed Bath: overpriced, and a bad stop for claustrophobic shoppers. Sloppy front end.

Sears: Eddie Lampert hasn't killed it yet. But wait until there's a rebound in real estate and they and k-mart are gonzo. Lands' End probably will survive because of a huge loyal customer base. But they, too, are hurt by the Eddie connection and by regular free shipping from LLBean."

Data Dump Day
Today has been a big data dump day. None of the numbers have cheered Wall Street.

-Initial Jobless Claims 393K vs 390K Estimate. Yawn.

-October Durable Orders -0.7% vs -0.9% consensus; Prior revised to -1.5% from -0.6% . Capital Goods Fell 1.8%, vs. Cons. -1.0%. First, that revision stinks to high heaven and is typical of the faulty data that markets depend on. Secondly, what the heck is going on in the capital goods space? That is one ugly number. I suspect that the economist crowd is way to complacent about the chances for another official recession. Taking it deeper, if there is lacking capital goods investment, there is then little hope these same companies are further investing in human capital buy doing more hiring.

-Oct. Personal Income Up 0.4%, vs. Cons. 0.3%; Spending Up 0.1% . That spending number sure is shabby.

Have a great Thanksgiving.

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