Do you remember 2008? …and what led up to it? Do you especially remember all of the assurances made that “everything would be OK”?
It smells again like 2008 but this time much MUCH worse. Consumer debt levels have barely subsided from those back in 2008. Taxes are higher and now biting which is a definite factor suppressing retail sales. Gasoline prices are higher and unless you own oil stocks this is surely no benefit. Derivatives outstanding are higher than they were yet “banks say” they are less leveraged (how can this be?).
NOTHING has changed since 2008. Many ratios, balance sheets and financial standings are far worse now than entering that year, a crisis now can no longer be jawboned away by “don’t worry, we are the government and won’t let anything bad happen”. This is the classic reverse “Boy who cried wolf”. Credibility of the puppet-masters has been stained and lost, nothing could be worse in today’s monetary system. “Credibility”, trust, CONFIDENCE! was the only thing that held the system together during the dark days of 2008-09, and it’s waning fast. “Confidence” is also the key factor of “value” behind your currency…no matter where you live or who your central bank is.
Wal-Mart shares are plunging as the firm reports a ‘total disaster’ in its February sales. Bloomberg obtained internal emails that note:
“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal-Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.”
One senior executive summed it up perfectly – “Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?” The company notes the end of the payroll tax cut by Obama and asks ”We need to stop the stupid.”
Tax increases, catering to government employees, and inflation pose serious threats to the goal of growing the private sector.
In reality, private sector development should be at the forefront of the global economic policy agenda. Just look at the numbers for proof of this reality. Worldwide, there are two-billion working-age adults currently unemployed and no longer seeking jobs. Another 1.5 billion are only marginally employed.
Locations and sectors with strong potential for job growth must be honed in on so we can achieve a faster pace of sustainable job creation.
January’s historic fund flows may finally be starting to reverse.
This week, flows into equity mutual funds and ETFs around the world continued – but not in the United States.
Funds invested in U.S. stocks suffered $3.65 billion in outflows this week. The table above, via Jefferies, details the flows.