luni, 11 noiembrie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Black Friday Becomes Black Thursday; Thanksgiving Just Another Shopping Day; More Temporary Part-Time Jobs

Posted: 11 Nov 2013 04:38 PM PST

The competition to see which store can open the earliest on "Black Friday" is essentially moot.

Why? As increasing numbers of real stores are opening on Thanksgiving, simply to keep up with online stores open for shopping every day.

MarketWatch reports Real reason stores are opening on Thanksgiving
It used to be the only consumption that took place on Thanksgiving happened around the dinner table. But retailers are changing the game. Target (TGT) announced Monday that it will open at 8 p.m. on Thanksgiving, Best Buy (BBY) announced Friday that it will open at 6 p.m., and Kmart (SHLD) announced last week that it will open at 6 a.m. on Thanksgiving and not close until 11 p.m. on Black Friday. They're some of the dozens of other retailers, including Macy's (M) and Walmart (WMT) that over the past few years have chosen to open on Thanksgiving. The message is clear: Turkey Day is now just another shopping day.

According to data from comScore, online spending on Thanksgiving Day increased 32% from 2011 to 2012 (and over the past five years has increased 132%). Meanwhile Black Friday online spending increased just 28% over last year and 96% over the past five years and Cyber Monday spending increased 17% over last year and 100% over five years. "Thanksgiving has become a marquee day for online shopping," says Keith Mercier, associate partner with IBM's Retail Center of Competence.
Cyber Monday

In case you re not familiar with the term Cyber Monday, Wikipedia explains:
Cyber Monday is a marketing term for the Monday after Thanksgiving in the United States. The term "Cyber Monday" was created by marketing companies to persuade people to shop online. The term made its debut on November 28, 2005 in a Shop.org press release entitled "'Cyber Monday Quickly Becoming One of the Biggest Online Shopping Days of the Year".

Cyber Monday has become an international marketing term used by online retailers in Canada, the United Kingdom, Portugal, Germany, Chile, Colombia, and Japan.
Black Friday Becomes Black Thursday

Macy's says the doors will be unlocked "in response to interest from customers who prefer to start their shopping early." Target said the move to open its doors at 8 p.m. on Thanksgiving gives its shoppers "easier-than ever access to Black Friday doorbuster deals."

More Temporary Part-Time Jobs

As Black Friday morphs into Black Thursday, one can only wonder where the silliness stops. In the meantime, expanded store hours means more seasonal, low-wage, part-time jobs, inflating the monthly jobs reports.

Hooray!

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Amazon Offers Sunday Delivery Via US Post Office; Google, Six Other Companies Offer Same-Day Delivery; Who Is the Winner?

Posted: 11 Nov 2013 09:59 AM PST

The US post office was contemplating stopping Saturday delivery to reduce costs. Instead, the post office has gone the other way, at least for packages.

The LA Times reports U.S. Postal Service to deliver Amazon packages on Sundays.
Giant online retailer Amazon.com Inc. is turning up the heat on rivals this holiday season and beyond under a new deal with the U.S. Postal Service for delivering packages on Sundays.

Starting this week, the postal service will bring Amazon packages on Sundays to shoppers' doors in the Los Angeles and New York metropolitan areas at no extra charge. Next year, it plans to roll out year-round Sunday delivery to Dallas, New Orleans, Phoenix and other cities.

To pull off Sunday delivery for Amazon, the postal service plans to use its flexible scheduling of employees, Brennan said. It doesn't plan to add employees, she said.

Members of Amazon's Prime program have free two-day shipping and, under the new deal, can order items Friday and receive them Sunday. Customers without Prime will pay the standard shipping costs associated with business day delivery.

As consumers increasingly move online to shop, retailers are finding that their shipping policies can be a bellwether of customer loyalty. Though not necessarily offering Sunday delivery, many are testing same-day service.

Wal-Mart Stores Inc. is testing same-day delivery service in northern Virginia, Philadelphia, Minneapolis, Denver and the San Francisco and San Jose region. Last month, EBay Inc. agreed to acquire Shutl, a London start-up that uses a network of same-day couriers to deliver goods ordered online in hours, even minutes.

In March, Google Inc. said it would test a same-day delivery service called Google Shopping Express for online purchases in the Bay Area. Specialty sporting goods store Sport Chalet Inc. began offering a similar service in April.

But adding Sunday service takes the competition to a new level.
Why Go to the Mall?

Competition favors those with a vast array of merchandise and a way to deliver it quickly. Amazon and Walmart are in that class.

If you know what you want, or find what you want online, why go to the mall?

The answer seems to be tradition, or perhaps just to get out of the house. And for some, the walk in the mall is about the only exercise they get.

Same-Day Delivery Options

Why wait two days when you can get it in one?

SEJ reports Google and 6 Other Same-Day Delivery Services.
If you live in the Bay Area, you might be relaxing at home in your pajamas ordering all sorts of goodies and waiting until Google drops it off within the same day. If you haven't heard, the tech giant is making life all that more instantly gratifying by expanding its same-day delivery service. Google is by no means the only company offering this kind of service, but it's Google, so this makes it kind of a big deal.

For now, people in the Bay Area can order products from businesses like Walgreens, Nob Hill Foods, Staples, Blue Bottle Coffee, Target and Palo Alto Sport Shop and Toy World and have everything shipped by Google for $5. If this works out for Google, expect the following 6 companies to expand their same-day delivery service.

6. Wal-Mart

The behemoth launched its own same-day delivery service just in time to the holiday season in 2012. Costumers can order products from Wal-Mart and have them delivered to their home for between $7 and $10. The service is available in northern Virginia, Philadelphia, Minneapolis, Denver and the San Jose-San Francisco-area.

5. Shutl

Shutl was a startup that originated in the UK and is similar to Google's service, meaning you shop online and Shutl handles the delivery. The company claims that they're "the world's fastest, most convenient and best-loved same-day and same-hour delivery service." Shutl is only available in Manhatten, but there are plans to expand to San Francisco, Atlanta, Boston, Denver, Detroit, Houston, Los Angeles, Miami, Minneapolis, Philadelphia, Phoenix, San Diego, Seattle, Washington, Montreal and Toronto.

4. eBay

The auction giant launched its delivery service, eBay Now, last year and charges $5 per store. What makes eBay's service standout, besides the one-hour delivery time, is that the company focuses on local stores, however, you can still get stuff from major retailers. eBay Now is available in San Francisco and New York.

3. TaskRabbit

TaskRabbit was designed specifically for people who don't have the time, or capability, to do their shopping. But, this service offers so much more than just having your groceries brought home. Businesses can use TaskRabbit to order and have supplies delivered to the office. There's also the ability to find house-cleaners or handymen to do those things around the house that you just can't get to.

2. Amazon

Amazon are no strangers to same-day delivery service. The online shopping titan has offered Local Express Delivery Option since 2009 and can be found in Baltimore, Boston, Chicago, Indianapolis, Las Vegas, New York, Philadelphia, Phoenix, San Bernardino Area, Seattle and Washington, D.C. The service costs $8.99 plus plus 99 cents an item.

1. Postmates

This startup takes the same-day delivery service to a whole new level. For example, after placing an order, you're sent a photo and bio of your delivery person, aka you 'Postmate'. Postmates also will inform you if a product is right around the corner, because that would be pointless for everyone, and they'll also hook you up with all kinds of stores and restaurants in your neighborhood via Foursquare.
Is Same-Day Delivery What People Want?

In most cases it's not same-day delivery that people want, but rather, free-delivery and lower prices.
According to a study conducted by Boston Consulting Group, only 9% of the 1,500 U.S. consumers surveyed "cited same-day delivery as a top factor that would improve their online shopping experience, while 74% cited free delivery and 50% cited lower prices." With the exception of some city dwellers with a little extra cash, same-day service isn't a priority.
Who Is the Winner?

Competition is here, on multiple levels. Companies that offer the fastest deliveries at the lowest cost will have a huge advantage over their competition.

The winner is the consumer who gets faster service at cheaper prices. The loser is big-box retailers with huge shopping areas with little traffic.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Japanese Households With Zero Savings Hits 31%, Most Since 1963; Sexless Youth; Currency Crisis Awaits

Posted: 11 Nov 2013 08:45 AM PST

Japanese citizens are starting to complain Abenomics is not helping them. Here are a few reasons:

  1. Prices in Japan are rising, but wages aren't.
  2. Taxes have risen massively and Prime Minister Shinzo Abe wants even more tax hikes.
  3. Interest on savings accounts does not keep up with price increases

As a direct result of Abenomics, Japanese Households Without Savings Climb to Most Since '63
The share of Japanese households with no financial assets rose to a record as falling incomes forced people to dig into their savings, highlighting the potential for widening disparities under Abenomics.

The proportion reached 31 percent, according to a Bank of Japan survey released in Tokyo yesterday, up from 26 percent a year earlier and the highest since the poll began in 1963.

Already facing declines in wages, households will be hit in April by a consumption-tax increase intended to shore up Japan's finances.

"It's critical that Abe succeed in convincing corporates to raise wages," said Izumi Devalier, a Hong Kong-based economist at HSBC Holdings Plc. "Lower-income households may come to feel they're getting the short end of the stick from Abenomics."

Japan's salaries extended the longest slide since 2010 in September, with regular wages excluding overtime and bonuses falling 0.3 percent from a year earlier, a 16th straight drop.
Tax Hike Deal

On August 31, I wrote Japan Seeks to Hike Taxes then Waste Money on Stimulus to Make Up for Decline in Spending; Currency Crisis Awaits

When Japan last hiked the sales tax from 3 percent to 5 percent in 1997, consumer spending tumbled by 13 percent in the quarter after the higher tax went into effect. That was followed by a recession.

In October, Abe got his tax hike. It's the first tax increase since 1997. Sales taxes will rise from 5% to 8%, a tax rate increase of 60%.

To ease the blow of the tax hikes, Abe will announce a fiscal stimulus package in December.

The deal is not a good one for the average Japanese citizen: Tax rates will go up 3 percentage points, but Abe will announce a spending package in December to waste some of the increased collection on useless projects.

Consumers would have been far better off with no tax hike, falling prices, and stable (-0.3%) wages.

Japan's Sexless Youth

In case you missed it, please consider my October 22, 2013 report on Japan's Sexless Youth

Here are some stats according to the Japan Family Planning Association (JFPA)

  • 45% of women aged 16-24 "were not interested in or despised sexual contact". More than a quarter of men felt the same way.
  • Population of 126 million has been shrinking for the past decade
  • Population projected to plunge additional one-third by 2060
  • Survey in 2011 found that 61% of unmarried men and 49% of women aged 18-34 were not in any kind of romantic relationship
  • Fewer babies were born in 2012 than any year on record.
  • Of the estimated 13 million unmarried people in Japan who currently live with their parents, around three million are over the age of 35.
  • Married working women are sometimes demonised as oniyome, or "devil wives".
  • Japan's Institute of Population and Social Security reports an astonishing 90% of young women believe that staying single is "preferable to what they imagine marriage to be like".

This is what I wrote in response ...

Fighting Demographics

Those wondering why prime minister Abe is having such a hard time stimulating inflation can now stop wondering.

Until Japanese attitudes towards child-bearing, jobs, and relationships change, Abe will continue to struggle.

Abe seeks to stimulate inflation, but that is likely to encourage more saving, not more spending.
With the bulk of Japanese pensions tied up in bonds yielding next to nothing, higher taxes and higher cost of goods and services will decrease demand from aging retirees.

Record Service in Interest on National Debt

On August 27, I pondered Japan Finance Minister Seeks Record Debt Servicing on Interest on National Debt; What's Next?

Abe Tells Companies to Ignore Customers

Inquiring minds may also wish to consider my July 19 article Japan Tells Firms "Stop Sitting on Cash", Ignore the Lack of Customers

That headline is correct. Abe wants companies to spend money whether or not they have customers. I asked a very simple question in response "What happens to prices when more products are produced in the face of falling or static demand?"

The Abenomics story goes on and on.

"Virtuous Circle" of Inflation

In November, Abe was promoting the "virtuous circle" of inflation while simultaneously whining that wages did not keep up.

Japan's prime minister Shinzo Abe managed to get prices to rise. He did that with his policy to destroy the Yen even though Japan is heavily dependent on foreign oil and food imports.

Interestingly, Abe is not quite pleased with the results. Abe now complains that wages are not keeping up with prices. He wants a wage-price spiral on top of it all.

For more details, please see Prime Minister Abe Calls for Wage-Price Spiral to Create "Virtuous Circle"; Shame Shame

Things Can Only Get Worse

Wages declining .3% annually is hardly a problem if prices are falling as much. Instead, enter Abenomics. Abe wants 2% inflation, more fiscal stimulus, higher taxes, rising wages.

He also wants the impossible: Inflation to bail out the government and savers alike, while interest rates remain near 0%.

Crisis Awaits

Expect the percentage of households with no savings to soar.

Hiking taxes is about the silliest thing a country hoping to escape deflation can possibly do. Telling businesses to produce goods that no one wants to buy is perhaps even sillier.

Economic illiterates sing the praises of Abenomics because the stock market and prices are rising.

But attitudes, "sexless youth", increasing households with zero percent savings, rising debt levels, and falling real wages tell a far different story.

Without a doubt, a currency crisis awaits Japan.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
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