August 20th, 2014
by EconMatters, EconMatters.com
Antiquated Retail Sales Reports
It is obvious that retail sales numbers are going to be awful for eternity because they are antiquated reports that fail to adequately capture the changing consumer trend of shopping online. Practically nobody is going to waste their leisure time going to a physical store when they can save time, gasoline, and easily search for the best price in a matter of minutes versus spending hours driving all over town in search of the best price or deal with mall parking. The Physical store business is dead, unless one needs to get a haircut, or a good grocery delivery business hasn't yet arrived in your area.
Wall Street needs to move into this Century with Data Analytics
I hope investors are not naive enough to believe that the economy is in trouble due to weak retail sales numbers because trust me, US consumers never pull back spending, it is what we do as a nation. We don't even stop spending in recessions, let alone a decent job market with an economy growing at 2.5%. If shopping was an Olympic sport the US would win the Gold every year. The entire world supports the US shopping behavior, we are not a 'savings' culture, and never will be, it isn't in our DNA!
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Do you Shop Online More These Days?
If I look at my own consumer purchases in 2014, we have probably purchased ~ 85% spent so far this year online. The only purchases we go to physical stores for are groceries, a mountain bike for an event needed the next day due to a repair issue in the old bike, and hardware items like picking out a new kitchen faucet to fix a leak, or other home improvement matters. We have purchased things like big screen televisions, furniture, to computers, plant stands, artwork, nutrition products and clothes online in the past year. I haven't been to a mall in a year, although we live really close to an upscale mall, and that was for a haircut, due to a crowd at the usual barber shop.
Time is Money
Who would want to waste their valuable leisure time stuck in a physical store, when they could be out playing, and this goes for my significant other as well. Going to physical stores is a dying business, and the new retail sales and GDP component need to be adjusted to better reflect this changing dynamic in consumer behavior. We shop at Amazon (AMZN), Overstock (OSTK) and wholesale nutrition stores on the internet, we only go to physical stores for must-have's and emergency shopping. Entertainment does better because we still dine out at restaurants, go out to movies and theater on occassions, but frankly sports are better viewed on a big screen at home!
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Amazon & Overstock Economy
The Data Analytics in this country from an economic standpoint are outmoded and need to be revised drastically, there are a bunch of bad investment decisions made by Wall Street based upon old correlations in the economy as a result that are no longer valid, and the data reports haven't modernized to capture the changing consumer trends in this country. As we immediately go to Amazon and see the best price on an item offered by a multitude of suppliers, and it takes 5 minutes - talk about productivity gains and maximizing time efficiency, it is off the charts these days!
Bond Idiots Need to be Saved form Themselves
At any rate, all those people piling into bonds on bad retail sales numbers based upon antiquated retail correlations in the data analytics in an economy that has created more jobs since 1997 on an annual basis, and has more job opening than at any time since 2001, are in for one big surprise when they finally get their head wrapped around the new consumer world, and realize what is really going on in the data - it really should be common sense.
No Wonder 'Wall Street' continually gets it wrong!
But I never underestimate the herd mentality in this industry, it's not like finance gets the same talent that goes into theoretical physics. Financial markets have some of the most illogical people on the face of the earth, compared to the money floating around in the business. Most of the investment community are brain dead group thinkers, that couldn't analyze their way out of a paper bag if their life depended upon it. Their analysis of the retail sales numbers are atrocious and misses the entire real meaning of the data -- very few shops in physical stores anymore or traditional retail outlets!
4.7 Million Available Jobs - Most Since 2001
Yes the economy is doing just fine, focus on the job market and the most jobs available for anyone who wants them since 2001. That is all you need to focus on for a glimpse of the vibrancy of the US economy. There are 4.7 Million available job openings right now, even with the most jobs created so far this year since 1997, the Fed couldn't ask for a better employment environment. This is why they and the entire market are so drunk at the low interest rate punch bowl that they are seriously behind the curve. It isn't even calculable how mispriced many assets are that are going to move 4 and 5 standard deviations in such short time, when reality finally sets in, that they severally underestimated the strength of the US economy, and created a massive spike in wage inflation than blindsides the Fed & Markets when it turns all at once in the tracking data.
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Penny in front of Steamroller Analogy
In short, investors are going to lose a lot of money in the bond market bubble trying to pick up yield pennies, in front of the biggest principal reset steamroller in the history of financial markets all due to an overly dovish and massively irresponsible Federal Reserve.