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Opposite Day!

Tuesday, April 7

I spent the better part of last week listening to everyone on television and the newspapers telling me "we have reached the bottom!"

Since I was juggling so much over the past 10 days or so, I had no opportunity to ensure that the people that dwell in reality remain firmly grounded in the facts.

It seems that whenever the Dow Jones goes up, and it went up plenty last week, the bobble heads all start talking the "everything is alright" crap!

The reality is, as Nassim Taleb so brilliantly points out in The Black Swan, the stock market is not a snapshot of American economic health. Besides, I don't know very many "common" people that are still in the market these days, beyond your (required) 401k, I mean.

Here are a few of the Headlines you may have missed while collective noise from the Wall Street cheerleaders overwhelmed you:

  1. Retailer Gottschalks is starting it's liquidation.
  2. Ritz Camera starts liquidation on this Saturday.
  3. General Growth Properties, the nations largest shopping center developer, is nearing bankruptcy.
  4. Bankruptcy filings are up across the country by anywhere from 27% to some 86%, year over year, during MARCH!
  5. 10% of the nation is NOW ON FOOD STAMPS! That's over 32 million people, and there is evidence of another 6-7 million being refused due to barely being above the poverty threshold.
  6. Pier 1 announced it will close an additional 20 stores by the end of the month.
  7. The City of Chicago is closing all it's mental health facilities due to budget shortfalls (Hey it worked for Reagan).
  8. Blockbuster Video is near insolvency, with many (self included) seeing them fold before 2010.
  9. Nevada based casino Bally's closed their Sports Book (operation for taking sports bets) last Tuesday, March 31, without warning...even to employees.
Now on a much more local note, Ethel's Chocolate is closing 5 of 6 "boutique's" BY THE END OF APRIL! With plans to close the last by the end of the year.

Lot's of bad news, I know, but it is only to ensure you keep your nose to the grindstone. The economy is literally just starting to reveal how far away we are from the bottom, not the bottom itself.

April began the "Period of Revelation", a three-month period of time, in which how badly scarred (or healthy) retailers are after a tough Holiday period and the worst 1st Quarter in roughly 40 years. Those that are in trouble will no longer be able to hide, as there is massive debt repayments due at the end of April and lots of capital needed for 4th Quarter purchases. Non-performers are not going to be able to secure loans and will summarily have to take a bow.

As earnings start rolling in at the end of the week, I will try to keep you abreast of the score.

Maybe I have had one too many "crabby-patties", but I think this is only the beginning.



2009 ·clean needles by TNB