Friday, April 17, 2009

The Christmas Bunny

I hope your Easter was a pleasant one - so onwards with Christmas..

I am not at all an expert in the retail/merchandising business, but I do know that consumption makes up 70% of GDP in the US (and the EU) and that Christmas is the single most important season. Last Christmas caught most retailers with bigger inventories than they could move, resulting in big discounts and losses. You can bet they're going to be very careful this year not to repeat the same mistake.

I am not sure when wholesalers and retailers start placing firm orders with manufacturers for the next holiday season. But whenever it is, it's going to be a pretty good early indicator - positive or negative - for the "real" economy, even if only of the Permagrowth variety.

Personally, I don't expect things to look good because inventories have swelled incredibly fast vs. sales. Inventory to sales ratios have jumped at the fastest rate in at least 17 years (see chart below - click to enlarge), so I presume order activity is going to be very guarded, to say the least.

Inventory to Sales Ratio - Total Business

If any readers are familiar with the order cycle and/or in possession of relevant data please share..

Another possible early indicator of international manufacturing and trade activity is charter rates for containerships. So far, they look downright awful (see chart below - click to enlarge).

HAX Index (see here for explanation)


  1. Retch, retch.
    I STOPPED celebrating Halloween over here after the temple merchants caught on to it.
    This post makes me feel like digging a hole and depositing my filthy lucre in it to avoid any temptation come next December 25.
    Got it !
    Only IMMATERIAL FREE gifts next year : like...
    one week of dishwashing between December 25 and January 1, for example.
    What are YOUR plans, guys ?

  2. Expect it depends on the industry. I used to place my orders in May and receive those goods during the 3rd quarter. I'm sure things have changed a bit so that the schedules have tightened up - orders placed later, goods arrive JIT. Container rates are a wonderful indicator of trade flows (and also currency rates). Last year's drop was in Oct if I'm not mistaken. Implication is that the goods that didn't ship didn't do so beginning Oct. Incidenally, I was talking to someone later who told me that intl. markets had "collapsed" at that time.

  3. Something else, I ran a retail business through the stag-flation recessions of the 70's & 80's. We didn't have anything like today's IT, but we knew how to be careful with inventory. Still, we had the advantage of knowing that any inventory which we were forced to carry over, and wouldn't go out of style, would likely increase in value giving us a 2nd chance. Today is different.

  4. I haven't read the full book on thermodynamics but with all the talent here I think we should be discussing deeper issues with regard to the crisis than the build up of inventory and shipping rates. There are site where you can get detailed data on both with regular updates.

    I don't know how many sites you guys visit but this one is distinguished by the extraordinary quality of the comments. The blogger isn't bad either but a little stubborn, perhaps.


  5. SS anonymous

    You haven't a clue and lack interpretive ability in your reading skills.

    Hellaious is one of the very best out there. And, he was one of the first.

    Apparently, he's over your head.

    PS, I rarely read the comments.

    Back to lurking for me

  6. "What are YOUR plans, guys ?"

    Sheeze that is a long time away! I haven't even thought about tomorrow night. I selfishly haven't thought at all of this year's "giving" strategy... I usually make a contribution to my hospital's endearment/charity fund as well as as towards a free clinic my group staffs periodically.

    Now that you remind me, I need to ask for Halloween off to take the kids trick or treating (I like Halloween regardless of what you say)... Though I always hate leaving >1/2 at home to man the candy while I go out with my boys as the nastiest rapes I have ever seen always occur on Halloween (perfect chance for a stranger in a gorilla costume to enter your home). Trust me, I have seen some bad bad things.

    SS I agree (even Marcus's comments). Though I kind of agree with "Lurker" in that I really think your are missing Hell's influence (did I just agree with the idea that fish rot from the head first ???)... Hell is exceptionally tolerant of diverse opinions in his saloon as well as personal attack.

  7. Did you guys see this?

    (OK, I have a soft spot for Scots. Always will.)

  8. Well, I discovered Susan Boyle's performance of last saturday about 3 days ago, when her video was seen only about 1 million times (today about 50 million).

    IMO there are lots of things which can be said about this phenomenon.

    One of my comments is that it is both encouraging and frightening.

    Indeed it is an example of non linear output to input applied to us, human beings, similar to the well known butterfly in Japan/hurricane in the US effect. There are comments from all over the world, and not only the english speaking part of it. Thus it proves that we, human species, are capable to overreact to small events, certainly because we built the tools that allow this.

    In the case of Susan it is for the best, but IMO she proves that it could also be for the worst.

    Arnould, France

    PS. She is stunning.

  9. I agree that Hell is EXCEPTIONALLY tolerant of diverging opinions and this is all to his credit, because otherwise I wouldn't be here, and I wouldn't stay either. And if he didn't have these qualities, he wouldn't be so interesting either...
    I only flourish in an extremely DEMOCRATIC context with as little prejudice as possible, (even if I have a secret admiration for the aristocracy and am constantly looking for new ways to bring back its SPIRIT, at least...)
    So... Thai, it is really too bad all this news about rapes and being scared of trick or treating in the U.S., because our collective FEAR is one of the major problems with our economic situation too. I saw it in the U.S. this summer, this fear everywhere. You can ALMOST smell it, it is that strong.
    Very bad for American business, you guys... You really can't do business well if you are paralyzed by fear. And fear has a tendency to make other people afraid, to provoke attacks, and to make everything much much WORSE. (After all, we are STILL animals, and you must know that animals that are afraid ATTACK.)
    Arnould, I heard about Susan Boyle's performance on France Musique's revue de presse at 9h02 (excellent revue de presse, by the way...)
    The story reinforces my (re)newfound convictions that you can't separate the bad from the good.
    If you want the one (what you PERCEIVE to be good, at least...), you HAVE to take the other, too.
    Goethe knew this. He was the guy who refused to wear glasses, because he was SUCH a genius he knew EXACTLY where the eugenic path would lead us. Perhaps his position was a little EXTREME, but, he certainly was TRUE to his convictions...
    Hell, I actually think that we have been collectively telling ourselves BIG LIES for a long time.
    Of course, the question of VALUE can be separated from the question of MONEY. And time is NOT money, either.
    These are ideological LIES. (And we secretly know this, too, even if we pretend the contrary...)
    We need to refocus our attention on this to challenge these lies.

    I loved "banksties".
    That is language at its very best.
    MY new contribution is "adultose" (for Arnould, and other Frenchies on this blog, in particular...)
    A chronic condition (careful, I did not say "illness"...) caracterized by a terminal propensity to take oneself serious at ALL times. In France it leads to such symptoms as can be seen in local parks on the weekends where batallions of parents descend with their offspring, and proceed to rabidly explain the principles of aerodynamics (not thermodynamics...) to Junior while he flies his kite.
    (Need I add that NO self-respecting French adult (afflicted with adultose) will EVER admit having read Harry Potter, or gone to see EVEN ONE of the movies ?)
    You get the point.

  10. My company is a garment factory that export to the US market. For Christmas season, orders are normally confirmed in the early to middle of May and goods will be shipped to US starting from Oct onwards and will arrive in US port around early Nov.

  11. @ Anon, do you have any early indication of what those orders might look like this year?

    @Arnould RE: butterfly effect. Well said! You rightfully remind us of the paradox (yet again) that while the fish does rot from its head, it just as readily rots from any other part of its body... Oh well, back to personal responsibility.

    @SS- By the way, I came across your comments on "economist's view" the other re:social justice. FWIW I think Arnould's point is the one I most missed in that discussion.

    Deb- please don't misunderstand. I have developed this "anxiety" of Halloween over 17+ years in Emergency Medicine (think of "full moon" superstitions and you would be closer to my mind's ballpark). I have no sense whatsoever things are deteriorating (actually last year was quite mild).

    Halloween is still a wonderful hullabaloo in my neighborhood.

  12. Hey, I'm sure that Marco Polo is on to something when he says that in the 70's and 80's he was sure that some of the leftover "classic" stuff would increase in value over time, while today is different.
    Why is today different ?
    Because we no longer have ANY IDEA of how to attribute value (and I'm not talking about "values"...), and because our younger generations have no idea of what a "valuable" belonging, or object, is ?
    Because we are drowning in SO MUCH "cheap" STUFF ?
    How can retail survive with all the cheap STUFF floating around ?
    When are we going to get back to DOING BUSINESS ?

  13. Holiday consuming-
    Do any of you recall a movie about 20 yrs ago called "Hope and Glory"? Its about a British boy's experiences during WWII; great comedy, great tragedy. Instead of new dresses, the women did giant swap meets of their used dresses. They agreed that "Poor was Patriotic". I think environmentalism was already starting us down the path of less consumerism, but the econ crash is adding....encouragement.

    Halloween (and Dia de los Muertos)-
    Best. Day. EVER! Creativity, high frutose corn syrup, and annoyed orthodox monotheists. Bring it!
    Hadn't realized that there was so much crime. Rat bastard criminals.

    They're some of history's best maniacs ;) I've read the Romans thought the Picts were wizards.

    Hell's tolerance-
    Hellium. Like Helium, it rises above and does not react with the lesser elements. Even when you desperately wish it would ban Chlorine (chlor=green) when it rants about peak oil agendas ;)

    I'm feeling chatty so I'm going to talk about WWZ, but I'll add it to the previous post's comment section.

  14. There will not be a Christmas this year, at least not like in the previous sense. Conspicuous consumption will become taboo. In fact the only question people will be asking themselves is this, do I have food/water TODAY.

    Sorry peoples, but this is the reality that awaits us as US Empire collapses over Summer/Fall.

    Joe M.

  15. Thai, thank you for the link to Susan Boyle's performance.

    I cried...

  16. This should boost consumer sentiment:

  17. The crying has not even started yet.

    Get ready for a totally, completely new world.

    The next 3 biggest shoes to drop are as follows:

    1. CRE
    2. CC Industry
    3. Prime Mortages

    These drarf all else by an order of magnitude!!!

    To put it very bluntly, the USG/Fed has shot its wad.

    What comes now is un-containable. Period and Case Closed.

    Joe M.

  18. Joe, nothing is any different today than it was yesterday except peoples perception of the future, people's perception of reality.

    Keynes may not have understood thermodynamics, but he did understand social networks.

    The future is what we make it

  19. Applying Gresham's law to the following comment

    "Because we are drowning in SO MUCH "cheap" STUFF ?
    How can retail survive with all the cheap STUFF floating around ?"

    means that bad retail has driven out good retail.

  20. All,

    If the best you guys can say about Hell is that he is very "tolerant" that is, I find, rather insulting for a blogger. I actually said better than that I thought, when I said "the blogger is not bad either," which was tongue in cheek for good, or even very good. Apparently I stretched the interpretive skills a little with that round about compliment.

    For the record, and I believe I've said it before, I think Hell is great. His insights on the crisis have been had by only a few others like Roubini who is now famous as a result, so I congratulate him wholeheartedly on a tremendous service to the community.

    However, your reaction to my criticisms reminds me of the social interactions I've witnessed since I left New York and Europe for greater contact with the South and Heartland. You are so afraid of saying anything that might be interpreted as even mildly critical, even if it is in view of improving something that you generally like and praise, that you wind up nodding at each other in mindless affirmation and saying nothing at all. Isn't this social attitude one of the many at the root of "group think?"

    As for me I like Hell and what he has done. I humbly submit though that we are past knowing that a crisis exists and its not all that necessary to continue measuring its monthly ups and downs. For me it is time to discuss what can be done about it . There are many able minds at this site who could contribute and I am happy to let Hell be the arbiter of which guest posters he invites. I for one though am tired waiting a week to visit a site I like only to hear about pigs flying and 1970s inventory policy.

    Sorry to be a little harsh, its the New Yorker and European in me but I would like to discuss a little more and still value you all immensly.


  21. Well...
    It's true that the word TOLERANT is not exactly one of my favorites, because I don't really consider myself to be a great fan of Enlightenment thought, or should I say, the heritage of Enlightenment thought.
    But there is criticism going on on this blog, and things are getting discussed in a very democratic, poetic way, I feel.
    I cried too when watching Susan Boyle's performance. She reminds me so much of my grandmother, yoyomo.
    And I see a lot of hope in the fact that so many people have been watching that video.
    It's about time we started finding something to live for, and some dignity in our human condition.
    And Susan Boyle embodies this quest, and this spirit very well (dixit the words to the song she sang...).

  22. @Deb- What is your problem with us puritans? We built a country I am quite proud of.

    @SS RE: solutions. The solutions are simple- stop chopping "trees" down (I mean this figuratively as well as literally).

    The political agreement around those solutions is where the rubber meets the road. What "sacred cows" are you willing to sacrifice in order to reach compromise in our tragedy of the commons?

    ... And the "Coom baa yah" criticisms seem a bit of a stretch imho. I think Hell has taken punches from many of us many many times... And Dink's reminder of Hell's Helium state (totally his choice) is spot on.

  23. Thai,
    orders are expected to drop by at least 30% - 40% as compare to last year for the chrismas season. Prices are also expected to drop by at least 15% - 20% as compare to last year. Supply is simply way too much than the demand.