Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in the METAVERSE Stocks Universe - 8th Dec 21
Stock Market Sentiment Speaks: I Expect 15-20% Returns For 2022 - 8th Dec 21
US Dollar Still Has the Green Light - 8th Dec 21
Stock Market Topping Process Roadmap - 8th Dec 21
The Lithium Breakthrough That Could Transform The Mining Industry - 8th Dec 21
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

This Black Friday Will Be More Important Than Most!

Economics / US Economy Nov 20, 2009 - 01:57 PM GMT

By: Sy_Harding

Economics

Best Financial Markets Analysis ArticleThe day after the Thanksgiving holiday in the U.S., known as Black Friday, traditionally marks the beginning of the holiday shopping season in the U.S.


It’s said to be the biggest day of the year for retail sales. It isn’t. As far as actual sales go that honor usually goes to the day before Christmas. But Black Friday is the busiest day for store ‘traffic’. Retailers open early, sometimes several hours early. Prices are slashed on popular items. Crowds line up early, sometimes camped out all night to be among the first in line to get at the bargains.

The term ‘Black Friday’ originated in the 1960’s in Philadelphia, and referred to the traffic jams on the streets. But over the last 20 years it has come to mean the day when many retailers see their profits move into the black for the year, after struggling in the red through the summer.

Black Friday is important as one of the earliest indications of how the overall holiday shopping season is going to turn out. And with consumers now accounting for 70% of the nation’s economy, this holiday shopping season will be particularly important. It will go a long way toward either confirming that the economy is recovering nicely from the recession, or will support concerns that the recovery in the third quarter was only temporary, and a slide back into recession is possible.

Meanwhile, trying to obtain guidance from the economic reports for October and the first half of November has not been very fruitful, given the mixed picture they paint.

For instance, on the positive side, the Conference Board reported on Thursday that its Leading Economic Indicators rose 0.3% in October, not as large as the 1% improvement in September, but still the seventh consecutive positive month. The LEI are designed to try to forecast the economy six months out. Also, the Philadelphia Mfg Index, often seen as a precursor of the national report to come out later, rose to 16.7 in the first half of November from 11.5 in October, its fourth consecutive month of improvement.

But manufacturing contributes only fractionally to the economy compared to consumer spending. And much of the improvement in manufacturing activity was reported to be inventory building for the holiday shopping season. That merchandise will have to move off the shelves.

On the consumer spending side of the picture, retail sales rose 1.4% in October, but with auto sales removed, rose only 0.2%. And they were not signing up for new homes as evidenced by the 10.6% plunge in new home starts in October and 4% decline in permits for future starts.

So the mixed picture has markets nervous and looking to Black Friday for guidance.

I suspect though that the elephant in the retail sector, WalMart, has skewed how the results will come out. WalMart announced a week ago that it was pulling its Black Friday big-ticket item pricing ahead by a week (creating a Black Week?). And from the number of flyers in my mailbox from its big-box competitors a few days later announcing “Black Friday NOW”, its competitors had no choice but to follow the leader.

It’s hard to say what spreading a portion of the sales over the prior week might do to the Black Friday indicator that traders and investors are waiting to see.

However, on the positive side, the market is now in its traditional favorable season when it makes most of its gains each year.

This has been a rare year in which the market’s seasonality didn’t show up. The market continued to rally right through the summer, when it typically experiences most of its corrections, especially when it is in an overbought condition, as was the situation this summer.
It’s very interesting, and informative, that the same thing happened in 2003, and probably for the same reason; massive excess liquidity flooded into the financial system in an economic stimulus effort.

Looking back at 2003, in 2002, the prior year, Washington had launched what was then a record super-sized economic stimulus package in an effort to pull the economy out of the 2001 recession, a recession that had been exacerbated by the 9/11 terrorist attacks.

In late 2002 and early 2003 the stock market had serious concerns about whether those stimulus efforts were going to work, since the economy seemed to still be in trouble. So exactly as it did this year, in 2003 the stock market declined in what is typically its favorable season, to a low in early March.

Also exactly identical to this year, the market then launched off that early March low in 2003 into an impressive rally that continued through the summer, typically the market’s unfavorable season.

It will be interesting to see if the similarities continue, since once November, 2003 arrived, the beginning of the market’s next favorable season, the stock market rally actually accelerated, and didn’t end until March of the following year.

Sy Harding is president of Asset Management Research Corp, publishers of the financial website www.StreetSmartReport.com, and the free daily market blog, www.SyHardingblog.com.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in