Central Perk: 27 nov. 2010

sâmbătă, 27 noiembrie 2010

Mish's Global Economic Trend Analysis

"Seems Like Old Times" as Black Friday Shoppers Storm Malls, But Do They Buy Anything? In Black Friday Bust, Sales Increase .3%

Posted: 27 Nov 2010 03:58 PM PST

It's too early for actual store numbers, but the hoopla surrounding Black Friday has been enormous. Check out these headlines:

Shoppers Storm Malls

Shoppers Storm U.S. Malls as Black Friday Indicates Sales Jump

Shoppers snapped up 500 gift cards in 15 minutes yesterday at the Mall at Robinson, a shopping center about 10 miles outside Pittsburgh.

Last year, it took two hours to hand them out, said Shema Krinsky, the mall's marketing director, who added that the parking lot was 90 percent full by 8:30 a.m.

"We expect this to be what the rest of the holiday has in store," Krinsky said in a telephone interview.

Across the U.S., stores reported heavier traffic than last year as Black Friday, the biggest shopping day of the year, got off to its earliest start yet. Foot traffic at the Mall at Robinson increased the most in five years, Krinsky said. At Macy's Inc.'s flagship store in New York's Herald Square, many people were shopping for themselves for the first time in two years, Chief Executive Officer Terry Lundgren said.

After denying themselves in the wake of the recession, many American consumers seem ready to spend this holiday season, says Neil Stern, senior partner at Chicago-based consultancy McMillan Doolittle.

"There's no question that there is pent-up consumer demand that will drive retail growth this season," he said in an interview yesterday. "America is still a consumer-driven society, we just haven't had the means to indulge."

"Seems Like Old Times"

Yahoo!Finance says What recession? Shoppers eat up Black Friday deals

For one day at least, you could almost imagine the recession never happened. Millions of the nation's shoppers braved rain and cold to crowd stores while others grabbed online bargains on what could be the busiest Black Friday ever.

Early signs pointed to bigger crowds at many stores including Best Buy, Sears, Macy's and Toys R Us, some of which had earlier openings than past years or even round-the-clock hours. Minnesota's Mall of America and mall operators Taubman Centers Inc. and Macerich Co. also reported more customers than last year.

But the most encouraging sign for retailing and for the economy was what Americans were throwing in their carts. Shoppers still clutched lists and the buying frenzy was focused on the deals on TVs and toys, but many were treating themselves while they bought gifts for others, adding items like boots, sumptuous sweaters, jewelry and even dresses for special occasions.

Online Too!

MarketWatch says Black Friday shoppers spill over online as Bargain-hunters rely more on mobile devices and social networking

As malls and department stores overflowed with Black Friday shoppers, online retailers also saw a boost in sales as more Web-oriented bargain hunters avoided the crowds.

Online sales for possibly the biggest shopping day of the year jumped nearly 16% from a year ago with average order values up 12% to $190.80 from $170.19, according to a Saturday report from Coremetrics, an IBM unit that tracks online traffic.

Having the biggest impact were affluent shoppers, rebounding from last year's recession environment. Jewelers alone reported a 17.6% increase in Friday online sales.

"While the percentage of visitors arriving from social network sites is fairly small relative to all online visitors — nearly 1% — it is gaining momentum, with Facebook dominating the space," the research firm said.

Use of mobile devices on Black Friday as a shopping tool surged 26.7% compared to a year-ago, albeit off of low levels, Coremetrics said. Nearly 6% of people logging onto a retailers' Web sites did so with the use of a mobile device.

Black Friday Bust?

Stores overflowing, online sales up 16%, people loading carts, and with all the images of people camping out overnight floating about all over the internet, one might have thought sales would 5%, 6%, or even 8%.

I suspect we will not really know until next week but this Wall Street Headline sure caught my eye:

Black Friday Sales Rise .3 Percent

Please consider Black Friday Sales Rise, But Only Slightly

Black Friday sales rose only slightly from a year ago even though more shoppers visited stores, retail traffic monitor ShopperTrak said Saturday, setting the stage for another uncertain holiday season for retailers.

Sales increased 0.3% to $10.7 billion, according to ShopperTrak, which installs monitoring devices in stores to gauge traffic. Traffic rose by 2.2%, ShopperTrak said.

The smaller than expected increase is due in part to discounts offered earlier in November as well as online-only promotions, ShopperTrak founder Bill Martin said.

"The reality is we have a deal-driven consumer in 2010," Mr. Martin said in a release. "The American shopper has adapted to the economic climate over the last couple of years and is possibly spending more wisely as the holiday season begins."

Although much has been made about the role of cell phones in the new retail landscape, the share of people who use those devices to shop remains small. Only 5.6% of people logged onto a retailer's website using a mobile device, according to Coremetrics.

According to ShopperTrak, the Northeast and the Midwest regions of the country showed the strongest gains in sales, with 1.7% and 0.4% increases, respectively, over last year. The West posted no increase, while the South saw sales fall 0.3%.

Black Friday Bust May Be Caused By Earlier Discounts

24/7 Wall Street suggests Black Friday Bust May Be Caused By Earlier Discounts

Huge discounts offered to consumers in early November may have hurt Black Friday sales, and the trouble may not be over. Research from ShopperTrak shows that Black Friday retail sales at the store level rose so little over 2009 that the increase is barely perceptible.

Sales per purchase appear to have dropped because total "U.S. foot traffic increased 2.2 percent on Black Friday which points to a shopper driven by various sales and promotions." The increases in store visits is larger than overall sales growth.
The reality is we have a deal driven consumer in 2010 and that consumer responded to some of the earliest deep discounts we've even seen for the holidays."

Once again I caution we need actual sales numbers, but for all the hoopla, even +2% would be a disappointment. Right now, it appears sales were flat.

Should that prove to be the case, it's a good thing. Consumers need to improve their balance sheets.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

S&P Rating vs. CDS Implied Rating of European Sovereign Credit; Huge Flaws in the Bond Rating Methodology

Posted: 27 Nov 2010 09:03 AM PST

An interesting article by Index Universe shows how Ratings Differences Highlight Eurozone Risk.

The article compares risk as measured by a Standard and Poor's rating vs. a CDS rating that is calculated based on credit market derivatives. A table highlights the differences.

Where the CDS-implied rating is better than that given by S&P, the difference is a positive number. When the CDS-implied rating is worse, a negative number is the outcome.

Some of the differences are enormous.

For those interested in various Bond ETFs, there's much more information in the three page article. Here is the table from page two.

Ratings Key			CDS-implied rating	S&P Domestic rating	Difference
AAA	1	Denmark	AAA	AAA	0
AA+	2	Finland	AAA	AAA	0
AA	3	Germany	AAA	AAA	0
AA-	4	Norway	AAA	AAA	0
A+	5	Sweden	AAA	AAA	0
A	6	Switzerland	AAA	AAA	0
A-	7	Austria	AA+	A	-1
BBB+	8	Czech Rep.	AA+	A+	3
BBB	9	Slovakia	AA+	A+	3
BBB -	10	Slovenia	AA+	AA	1
BB+	11	Netherlands	AA+	AAA	-1
BB	12	Estonia	AA+	A	4
BB-	13	UK	AA+	AAA	-1
B+	14	Poland	AA	A	3
B	15	Turkey	AA	BB+	8
B-	16	France	AA	AAA	-2
CCC+	17	Russia	AA-	BBB+	4
CCC	18	Belgium	BBB	AA+	-7
CCC-	19	Bulgaria	BB+	BBB	-2
		Croatia	BB+	BBB	-2
		Italy	BB+	A+	-6
		Lithuania	BB+	BBB	-2
		Iceland	BB	BBB	-3
		Romania	BB	BB+	-1
		Latvia	BB	BB	0
		Hungary	BB-	BBB-	-3
		Spain	BB-	AA	-10
		Ukraine	B+	BB-	-1
		Portugal	B	A-	-8
		Ireland	B-	A	-10
		Greece	CCC-	BB+	-8

Huge Flaws in the Bond Rating Methodology

In Steer Clear Of Bond Ratings Paul Amery for Index Universe writes ...

Ratings agencies are too slow to react to deteriorating creditworthiness, and when they do react, cuts tend to come in one fell swoop. In Greece's case, the ratings cut to junk by Moody's in June was one of four "notches" in one go, for example (from A3 to Ba1).

With Ireland's rating brought down yesterday by Standard and Poor's from AA- to A (two notches on the scale), the issuer is now only four grades above junk status (Moody's, by the way, still has Ireland at Aa2, three levels above the equivalent S&P rating). Since pressure on government finances is increasing everywhere, you can expect several other issuers to face downgrades, risking the sudden removal of more bonds from ratings-based benchmarks.

Finally, and perhaps worst, ratings methodologies are not consistent across the markets. It's easy to find lower-rated issuers with bonds offering a higher yield (and higher risk, theoretically) than higher-rated ones, something that doesn't make sense.

The worst abuse of the ratings system, of course, was the widespread grade inflation in structured finance securities during the credit bubble, with the AAA label incorrectly attached to bonds that both risked and then produced a severe loss of capital.

Even though the structured finance market is now comatose, contradictions abound in the way simpler (bullet) bonds are rated. For example, Russia (rated Ba2 by Moody's) is paying a yield of around 4.75% on its ten-year dollar debt, while Aa2-rated Ireland (that's nine credit ratings better than Russia, according to Moody's) has a current yield of 9.15% on its ten year euro-denominated bonds. Something's badly wrong here. You need to adjust (slightly) from a dollar yield curve to one in euro when making this comparison, but a glaring inconsistency remains.

I have pointed out many times before that Moody's, Fitch, and the S&P are horrendously slow in modifying debt ratings.

Moreover, enormous discrepancies between Russia and Ireland bond yields shows political bias by the ratings agencies.

Inconsistencies between the "Big Three" make matters even worse.

Break Up the Credit Rating Cartel

The current rating process is fatally flawed and the only way to fix this mess is something I bring up at every opportunity: It's Time To Break Up The Credit Rating Cartel

The rating agencies were originally research firms. They were paid by those looking to buy bonds or make loans to a company. If a rating company did poorly it lost business. If it did poorly too often it went out of business.

Low and behold the SEC came along in 1975 and ruined a perfectly viable business construct by mandating that debt be rated by a Nationally Recognized Statistical Rating Organization (NRSRO). It originally named seven such rating companies but the number fluctuated between 5 and 7 over the years.

Establishment of the NRSRO did three things (all bad):

1) It made it extremely difficult to become "nationally recognized" as a rating agency yet all debt had to be rated by someone who was already nationally recognized.
2) In effect it created a nice monopoly for those in the designated group.
3) It turned upside down the model of who had to pay. Previously debt buyers would go to the ratings companies to know what they were buying. The new model was issuers of debt had to pay to get it rated or they couldn't sell it. Of course this led to shopping around to see who would give the debt the highest rating.

Government sponsorship of organizations and intervention into free markets always creates these kinds of problems. The cure is not an executive shuffle, third party verification or half-measures and more regulation that mask over the issues by splitting functions within an organization.

The SEC created this problem by creating the NRSRO. The problem is easily fixable. It's time to break up the cartel by eliminating the rules that created it. Moody's, Fitch, and the S&P should have to sink or swim by the accuracy of their ratings just like everyone else. Ratings would be a lot better if corporations had to live or die by them. Free market competition, not additional regulation is the cure.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

SEOmoz Daily SEO Blog

How Google's New Local SERP Affected Your Ranking

Posted: 27 Nov 2010 12:20 AM PST

Posted by number1george

This post was originally in YOUmoz, and was promoted to the main blog because it provides great value and interest to our community. The author's views are entirely his or her own and may not reflect the views of SEOmoz, Inc.

As you probably noticed, last week Google did a pretty big makeover of its local search results page, incorporating the local results directly within the organic results. In some cases it appeared that the old “7-Pack” was just given larger real estate on the SERP. In others, it just looked like the websites were just given links to their Places page. And sometimes, it just looked like an entirely new SERP, different than both the original organic rankings and the lettered, local results. But what was the real effect this change had on local search results?

How I Got My Data

Visually, the new local search results page includes information from the both website and the business's Places page. The title and description are taken from the website but select information from the Places page is also included as well as a direct link to the Places page in Maps. Here we see an example of a search for "tanning salon seattle wa" and how the combined results are displayed.

An example of a new local SERP in Google

To find out the effects of combining the results, I grabbed the rankings of 50 somewhat random websites we’ve been tracking. As an initial criteria, I tried to use sites we’d been tracking for at least 2 months. I also eliminated sites with substantial fluctuations in their rankings within the prior few weeks since there would be no way to attribute those changes to any particular factor. Lastly, though I originally intended to use a completely random sampling, I eventually skipped over several sites that had no change since several of these were in non-competitive areas where they pretty much dominated all other websites for their searches.

After I had my sample, I did some quick research, comparing the organic rankings of several websites prior to the change to their rankings after the change. I then performed the same search in Google Maps in order to determine how their Places pages were ranking individually.

Example of Google Maps SERP

With a few exceptions, the top 7 ranked results in Maps are what were displayed in the old 7-pack for the same search. These listings were ranked independently of the organic results beneath them. By comparing their former organic ranking to their current organic ranking, I was able to see if a change could be correlated to their Places page's ranking in Maps.

So, Was There Any Change?

Of the 50 websites examined, 30 of them had an improvement in the new, “combined” results while 6 of them dropped. In most cases, this shift in their ranking could definitely be attributed to the performance of their local listings.

The Good

First, let’s look at the ones that improved. I did eliminate 4 outliers but, for the most part, you can see a direct correlation between the sites’ improved ranking and their local ranking in Maps. Obviously, I can’t publish any actual websites or keyword searches, but the searches all used a typical local query consisting of “business/service city st”.

Local searches with a positive change

Generally, it can be said that sites performing well in both organic and local perform even better in the new consolidated SERP. In several cases you can directly see how a well-performing Google Places listing now pulls up your organic ranking.

In some instances, the combined performance of a business with both a decently ranking website and Places page was enough to push it up a rank or two in the new results. In others, it appears that a well-optimized Places page was able to significantly improve a decently performing website and increase its ranking by several spots. Basically, your local listing’s performance appears to be a significant ranking factor in the new organic results.

The Bad

Since a business’s local listing has the ability to positively affect its website’s performance organic results, let’s look at the ones that dropped in ranking to determine if there is a negative factor associated with the new SERP.

Example of searches with a negative change

First, the fact that the sample size I was able to obtain was so small already implies that a poorly performing business listing doesn’t seem to have much of an effect on a website’s performance. Looking at the original rankings, you can also see that 3 of these sites weren’t doing that great to begin with. In fact, it would probably be fair to assume that their drop was due to an already negative trend. But what about the websites that were doing well but dropped after the update?

Digging deeper into these, I soon discovered that this wasn’t really a direct result of the poorly performing business listings dragging the websites down, but rather that, due to the local results being buried so deep in Maps, Google didn’t associate a business’s Places page with their website. As a result, other websites that did have strong Places pages were ranking higher. So, while having a poorly ranked local listing didn’t penalize the website, it was a whole category of optimization that the website was lacking. Almost like having a great inbound linking strategy but no content structure.

Other Observations

While going through dozens of various local searches, there were a few things that stood out:

Directory listings appear to be showing up more frequently in local results, in some cases taking up the top 3 spots in results.
The 7-Pack, or rather one-line business listings similar to the old 7-Pack, aren’t gone entirely. Lettered results still tend to show up when Google isn’t entirely sure you’re trying to do a local search. Typically, this happens in searches for smaller cities or regions.
When using rank-checking tools, the one-lined, lettered listings won’t be counted - just like before. The larger results being discussed here, however, are treated just as normal organic results prior to the change, completely disregarding the letter and local information assigned to it.
Lastly, while I encountered plenty of websites on the first page without a Places page, I encountered very few Places page ranking on the first page without a website. Prior to the change, it was not uncommon to regularly see local listings with no associated website ranking in the 7-pack. Now it appears that, without a website, it is nearly impossible to be in the first page of Google’s general SERP for most searches.

What Does This Mean?

So what can we learn from all this? Basically, it’s just what Google said all along - everything is important. Your best bet is to have both a terrifically optimized website and an optimized, claimed Places page to associate with it.

Not only does Google seem to use a Places page as an organic ranking factor, but having one also gives you nearly twice the real estate devoted to your business in the results. Instead of just having a few words in your title tag and meta description to sell your business, you now have your address, phone number, reviews, lists of other websites that mention you, and even a picture to draw attention to your website.

Bottom line: all those old debates about whether it was better to have the top-ranking website in organic or have your business at the top of the 7-pack are over. Even if this isn’t the final layout, it’s clear that Google intends to make both count.

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Seth's Blog : Your noise is still noise

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Your noise is still noise

I was talking to a colleague about all the noise out there in the world, all the messages, ads, announcements, pitches and friend requests. "And you're sending even more every day into that maelstrom."

"No we're not," she said. "Ours isn't noise."

Yes it is.