The Long Term Investor

A mixed market today.....I was positive.....but many will be negative....just daily luck of the draw. DOW and SP500 finished in the red. the NASDAQ was in the green.

Dow falls sharply as Wall Street's big banks report profit drops

https://finance.yahoo.com/news/stock-market-news-live-updates-january-17-2023-115704146.html

(BOLD is my opinion OR what I consider important content)


"U.S. stocks closed mixed Tuesday as a shortened but busy week packed with corporate earnings got underway on Wall Street.

The Dow Jones Industrial Average (^DJI) shed nearly 400 points, or around 1.1%, weighed down by bank stocks after Goldman Sachs (GS) posted its largest earnings miss in a decade. The S&P 500 (^GSPC) capped the day down 0.2%, while the technology-heavy Nasdaq Composite (^IXIC) inched up a modest 0.1%.

Goldman Sachs recorded a larger-than-expected 69% decline in profit for the fourth quarter, taking a hit on a substantial fall in dealmaking revenue and a higher provision for credit losses. Shares fell 6.5%.

Morgan Stanley (MS), meanwhile, reported a smaller-than-expected decline in profit. Like its Wall Street peers, the firm's investment banking operations took a big hit, but higher net interest income and a record quarter for its wealth management business helped cushion overall numbers. Shares rose 5.8%."......

MY COMMENT

Etc, etc, etc. Nothing changed from this morning. Just the kind of day I like....really nothing going on to upset the current short term direction.

 

It was nice while I was gone for a few days to not have to do anything with my investments and account. it just goes on.....long term investor....automatic pilot. I could be gone for years and not miss out on anything since my portfolio will simply.....run itself. A BIG benefit of being a long term investor with a long term portfolio. Simplicity is beautiful.

 

Here is another earnings.....BEAT. Looks like the experts are going to have their hopes dashed for a poor earnings season. Oh well.....eventually they will be right and will be able to claim credit....assuming......you dont remember all their constant calls for poor earnings since about the third quarter of 2020......they were WRONG every quarter since.

United results top estimates as demand remains resilient despite high fares

https://www.cnbc.com/2023/01/17/united-airlines-ual-earnings-q4-2022.html

 

CONSUMERISM.......got to teach them at an early age. After all it is the basis for our economy and in the end our businesses. It is amazing the wealth that I see in younger people today.....at least the disposable income that they are willing to spend.....or the credit they are willing to use.

Gen Z is driving luxury sales as wealthy shoppers get younger

https://www.cnbc.com/2023/01/17/gen-z-is-driving-luxury-sales-as-wealthy-shoppers-get-younger.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• Generation Y, also known as millennials, and Generation Z accounted for all of the luxury market’s growth last year.
• Analysts and luxury executives say the appeal of luxury brands to ever-younger consumers is tied to a surge in wealth creation over the past few years, along with social media.
• Luxury sales have so far been largely immune to rising interest rates, a slowing economy and high inflation.

Luxury shoppers are getting wealthier and younger, with purchases by some of the newest consumers expected to grow three times faster than older generations over the next decade, according to a new report.

Generation Y, also known as millennials, and Generation Z accounted for all of the luxury market’s growth last year, according to a report from Bain & Co. Spending by Gen Z and the even younger Generation Alpha, or those under 13, is expected to make up a third of the luxury market through 2030, reflecting “a more precocious attitude toward luxury” among the younger ranks than older generations, the report said.

Gen Z consumers are starting to buy luxury goods — everything from designer handbags and shoes, to watches, jewelry, apparel and beauty products — at age 15, three to five years earlier than millennials did, the report said.

“By 2030, younger generations (Generations Y, Z, and Alpha) will become the biggest buyers of luxury by far, representing 80% of global purchases,” it said.

Luxury sales have so far been largely immune to rising interest rates, a slowing economy and high inflation. Bain estimates that global sales of personal luxury goods sales surged 22% in 2022, to 353 billion euros, or roughly $381 billion.

This year, luxury sales are expected to grow between 3% and 8%, depending on China’s recovery and the economies in the U.S. and Europe.

The U.S. regained the top spot for luxury sales in 2022, surpassing China, with 25% sales growth and total sales of 113 billion euros, or about $121 billion. China’s luxury sales dropped 1% due largely to Covid lockdowns. Europe also saw strong growth, at 27%, helped in large part by American tourists spending on luxury goods in Europe over the summer.

Accessories, led by handbags, led the growth in 2022 and are expected to continue driving luxury goods sales in the coming years.

Sales of leather goods soared 23% to 25% last year, and were up over 40% from pre-Covid levels. While new models and “hero products” accounted for some of that growth, the biggest driver of growth came from price increases — such as the Chanel small Classic Flap bag, which is now priced over 60% higher than before the pandemic. Bain estimates that 70% of sales growth in leather goods in 2022 came from price increases.

Analysts and luxury executives say the appeal of luxury brands to ever-younger consumers is tied to a surge in wealth creation over the past few years, along with social media.

“What has changed is the affluence level of the U.S. customer, and the prevalence of social media that tells the customer what is cool, ” said Jan Rogers Kniffen, CEO of retail consulting firm J Rogers Kniffen WWE. “The generation before the Z’s pushed the age of first luxury purchase to 18 to 20. Wasn’t 15 to 17 the next logical stop? Is that the bottom? Probably not.”

Buying luxury shoes and handbags online has become much more accessible in recent years as luxury companies have embraced online sales and a host of secondhand luxury good websites have emerged.

Bain said Web 3.0, including the metaverse and NFTs — a type of digital asset called nonfungible tokens — will help future luxury sales to younger consumers even further."

MY COMMENT

Thank goodness for the consumer. They are supporting the American economy. Much of the above appears to be driven by female consumers...driven by peer pressure and social media. The pursuit of luxury goods has definately trended earlier and earlier in age over the past 50 years.

 

I have been reading and siting and watching the markets since the open. A very nice open for the NASDAQ. SP500 a medium open. Dow.....green but at risk of slipping red. With the strength in the BIG CAP tech companies today and the NASDAQ looks like a very good opportunity for a strong close today.

The BIG factor that I see today......the significant drop in the yield of the Ten Year Treasury. At this moment down to 3.393%.

 

HERE are the other factors impacting the early markets today.

Stocks inch higher as earnings season picks up, econ data rolls in

https://finance.yahoo.com/news/stock-market-news-live-updates-january-18-2023-113839266.html

(BOLD is my opinion OR what i consider important content)

"U.S. stocks rose modestly at Wednesday's open as investors continued to parse through more corporate financial updates for signs of the “earnings recession” many analysts have warned about. Investors also assessed the release of more economic data, as retail sales slumped more than expected and producer prices came in cooler than expected.

The S&P 500 (^GSPC) edged 0.3% higher, while the Dow Jones Industrial Average (^DJI) added 55 points, or 0.2%. The technology-heavy Nasdaq Composite (^IXIC) advanced 0.6%.

The Commerce Department on Wednesday said retail sales in the U.S. drooped 1.1% last month, while November's reading was also revised downward. Economists had expected a 0.8% decline in December.

Meanwhile, the producer price index (PPI) decreased 0.5% last month in another sign of cooling inflation. The headline number represented a lower-than-expected reading of a 0.1% decline. On a year-over-year basis, the PPI increased 6.2%, down from 7.3% in November. The PPI print comes a week after the Consumer Price Index (CPI) came in at a cooler 6.5%.

In corporate news, Microsoft (MSFT) said Wednesday that it is laying off 10,000 workers as part of an effort to cut costs. The layoffs impact roughly 4.5% of the company's 221,000 total employees. Microsoft shares were around flat in early trading.

Shares of United Airlines (UAL) rose 2.1% early into trading after the company reported a better-than-expected profit for the last three months of 2022 and an upbeat outlook for the new year — underscoring resilient travel demand even despite high airfares.

Moderna (MRNA) shares soared 7.3% at the open after the biotech company said results from a late-stage clinical trial for its vaccine against RSV was effective and that it would seek approval for the shot from the Food and Drug Administration by the middle of the year.

Shares of International Business Machines Corporation (IBM) fell slightly following a downgrade from Morgan Stanley to Equal-Weight from Overweight.

Investors are approaching the thick of what's likely to be a challenging fourth-quarter earnings season. Analysts have been downwardly revising their forecasts for earnings growth. The S&P 500 is projected to report a year-over-year decline in earnings of 3.9% for the fourth quarter, according to data from FactSet Research — the first year-over-year decline in earnings reported by the index since late 2020 if realized.

DataTrek's Nicholas Colas notes that while near-term declines in sequential S&P earnings resemble those that have preceded the last four recessions, there is not enough evidence at this point to support an economic downturn or sizable drop-off in corporate results.

"What we don’t have – yet – is visibility into the catalyst which will drive the next set of larger negative quarterly comparisons," Colas said.

"Yes, last year’s aggressive Fed monetary policy may still bite the US economy in 2023 and take corporate earnings lower," he added. "As of right now, however, there are not enough economic data points to make an airtight case for a 2023 recession and/or substantially lower corporate earnings."

Investors were also watching a crucial central bank move overseas early Wednesday. The Bank of Japan kept monetary policy unchanged, maintaining its ultra-low interest rates and a cap on its bond yield, contrary to market expectations. The yen dropped against the dollar following the outcome.

In commodities markets, oil extended a streak of gains. West Texas Intermediate (WTI) crude futures rose 2% to $81.80 per barrel."

MY COMMENT

Could be a very bad year for all the......EXPERTS. I dont see any sign that we are going to have a recession this year. I also dont see any sign that earnings are going to be bad for the forth quarter......and....in fact they seem to be starting very nicely....but it is too early to draw any conclusions at the moment.

The Ten Year Treasury is helping as is the PPI data today which shows a lessening of inflation. We continue to have supply/demand disruptions rolling though the economy.....but.....we should be relatively back to normal from the pandemic economic issues over the next year or year and a half. The length of time these disruptions have lingered is a total warning of the dangers and idiocy of closing down the economy.

Lots of data out today....much of it good for investors that have the ability to look forward more than a few months.

 

Here is some of the economic data of the day.....although not really relevant to much since we have now simply moved on from last year.

U.S. retail sales tumble; monthly producer prices fall

https://finance.yahoo.com/news/u-retail-sales-drop-more-135048646.html

(BOLD is my opinion OR what I consider important content)

"WASHINGTON (Reuters) -U.S. retail sales fell more than expected in December, pulled down by declines in purchases of motor vehicles and a range of other goods, putting consumer spending and the overall economy on a weaker growth path heading into 2023.

The broad drop in sales reported by the Commerce Department on Wednesday, together with subsiding inflation, are likely to encourage the Federal Reserve to further scale back the pace of its interest rate increases next month. The U.S. central bank is engaged in its fastest rate hiking cycle since the 1980s.

"Weak retail sales in December shows consumers are likely retrenching during a time of economic uncertainty," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina. "The trajectory for the U.S. economy is weakening and recession risks are rising for 2023."

Retail sales fell 1.1% last month. Data for November was revised to show sales dropping 1.0% instead of 0.6% as previously reported. It was the second straight monthly decline. Economists polled by Reuters had forecast sales decreasing 0.8%. Retail sales rose 6.0% year-on-year in December.

Retail sales are mostly goods and are not adjusted for inflation. December's decline in sales was likely in part the result of goods prices falling during the month. Holiday shopping was also pulled forward into October as inflation-weary consumers took advantage of discounts offered by retailers.

Higher borrowing costs as the Federal Reserve battles inflation are also weighing on retail sales as goods tend to be financed on credit. Retail sales were also likely hurt by a cold snap in December as well as lower gasoline prices, which impacted on receipts at service stations.

In addition, spending is shifting back to services.

Sales at auto dealers fell 1.2%. Receipts at service stations tumbled 4.6%. Online retail sales dropped 1.1%. Furniture stores sales plummeted 2.5%. Receipts at food services and drinking places, the only services category in the retail sales report, fell 0.9%.

Electronics and appliance store sales declined 1.1%. Clothing stores sales fell 0.3%. There were also decreases in receipts at general merchandise stores.

But sales at sporting goods, hobby, musical instrument and book stores edged up 0.1%. Receipts at building material and garden equipment suppliers rose 0.3%.

The Fed last year raised its policy rate by 425 basis points from near zero to a 4.25%-4.50% range, the highest since late 2007. In December, it projected at least an additional 75 basis points of hikes in borrowing costs by the end of 2023.

Excluding automobiles, gasoline, building materials and food services, retail sales fell 0.7% last month. Data for November was unrevised to show these so-called core retail sales sliding 0.2% as previously reported.

Core retail sales correspond most closely with the consumer spending component of gross domestic product. The weakness in core retail sales is likely to be offset by anticipated gains in services spending. Consumer spending continues to be underpinned by labor market tightness, which is keeping wages elevated.

INFLATION SUBSIDING

With inflation adjusted consumer spending increasing 0.5% in October and being unchanged in November, economists believe growth in overall consumer spending in the fourth quarter would exceed the 2.3% annualized rate logged in the third quarter.

Gross domestic product growth estimates for the October-December quarter are as high as a 4.1% rate, also reflecting the sharpest contraction in the trade deficit in November since early 2009. The economy grew at a 3.2% rate in the third quarter.

Nevertheless, consumer spending and the overall economy are entering 2023 with less momentum. Savings are also dwindling.

Most economists expect the economy will slip into recession by the second half of the year, though there is cautious hope that moderating inflation could discourage the Fed from raising interest rates significantly higher. This would result in growth only slowing sharply rather than the economy contracting.

News on inflation continued to be encouraging. A separate report from the Labor Department on Wednesday showed the producer price index for final demand decreased 0.5% in December after rising 0.2% in November.

In the 12 months through December, the PPI increased 6.2% after climbing 7.3% in November. Economists had forecast the PPI dipping 0.1% on the month and gaining 6.8% year-on-year.

The report came on the heels of reports last week that monthly consumer prices fell for the first time in more than 2-1/2 years in December.

A 1.6% decline in the prices of goods accounted for the drop in the PPI. Goods, which gained 0.1% in November, were pulled down by a 7.9% plunge in energy and a 1.2% drop in food prices.

Services prices edged up 0.1% after rising 0.2% in November.

Excluding the volatile food, energy and trade services components, producer prices gained 0.1% in December. The core PPI advanced 0.3% in November.

In the 12 months through December, the core PPI rose 4.6% after increasing 4.9% in November."

MY COMMENT

ALL....of the above is good news in terms of the FED and inflation. I dont give much weight to the sales data above. First it is already in the past. Second....I would like to see ONLY the internet data for sales. We are in an era where simply reporting retail sales data is NOT accurate anymore. It is all about internet shopping.

 

HERE is more good news.....unless you are one of the people that loses their job.

Microsoft to cut 10,000 jobs, as PC sales, cloud growth decline

https://finance.yahoo.com/news/micr...-pc-sales-cloud-growth-decline-142207545.html

(BOLD is my opinion OR what I consider important content)

"Microsoft (MSFT) announced on Wednesday that it is laying off 10,000 workers as part of an effort to cut costs at the tech behemoth. The layoffs impact roughly 4.5% of Microsoft’s 221,000 total employees.

The cuts are expected to be completed by Microsoft's fiscal Q3, which ends March 31. Microsoft says the layoffs will result in a $1.2 billion charge, representing -$0.12 per share.

The Redmond-based company previously announced layoffs in October, shedding as many as 1,000 jobs, according to Axios. In July, Microsoft laid off approximately 1% of its workforce. In May, the company announced it was slowing hiring in its Windows, Office, and Teams divisions.

"As we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less," Microsoft CEO Satya Nadella said in a statement.

"We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one. At the same time, the next major wave of computing is being born with advances in AI, as we’re turning the world’s most advanced models into a new computing platform."

According to Nadella, Microsoft will continue to hire in strategic roles despite the layoffs.

"These are the kinds of hard choices we have made throughout our 47-year history to remain a consequential company in this industry that is unforgiving to anyone who doesn’t adapt to platform shifts," he said.

Microsoft is battling slowing PC sales compared to during the pandemic when consumers snatched up new desktops and laptops in droves to do everything from work and take remote classes to play games.

According to research firm Gartner, worldwide PC shipments declined a staggering 28.5% in the fourth quarter of 2022, the largest decline since the company began tracking shipments in the mid-1990s.

To that end, Microsoft says it will be making changes to its hardware offerings, though it hasn't gone into exactly what that will entail. Microsoft offers its own Surface line of laptops and desktops, as well as a dual-screen smartphone.

It’s not just PC sales, though. Microsoft and rival Amazon (AMZN) are also dealing with a slowdown in the cloud industry, as customers continue to work through high inflation and interest rates. In October, Microsoft reported it expects Q2 cloud growth to decrease. In Q1, cloud growth declined from 31% year-over-year in 2021 to 20% year-over-year.

Shares of Microsoft are down 22% over the last year.

Microsoft’s announcement follows similar moves by other Big Tech firms. Earlier this month, Amazon began laying off some 18,000 workers. Meta (META), meanwhile, cut 11,000 jobs in November."

MY COMMENT

It is way past time for these big tech companies to get lean....or....at least less fat. these companies need to get back to closely holding the line on excessive spending and excessive employee counts. They need to do more with less.

Employee cuts are good news for investors....they will drive increased productivity if handled properly.

 

Here is a little article on the Treasury Yields that I mentioned earlier.

10-year Treasury yield tumbles below 3.4% after producer prices decline by more than expected

https://www.cnbc.com/2023/01/18/treasury-yields-fall-as-traders-assess-data-fed-outlook.html

 

As we pass the one hour point in the market day......the DOW is now negative and the SP500 and the NASDAQ have backed off from their gains a bit. STILL......the vast majority of the significant news today is net positive for investors....especially long term investors.

My off the cuff prediction for the markets in 2023......SP500 GAINS 12%-16%....by year end. Of course NOT a straight line up during the year.

 

I got a call the other day that got me excited........briefly. I answered the phone and the person said they were from Schwab......and.....I had an old IRA that they had located. I was briefly thinking......WOW.....an old IRA.....free money I did not know about.

BUT......the amount in the account......21cents. BUMMER......no real free unexpected money for me. I told them I really dont want to deal with a 21cent distribution. So if possible simply give the money directly to the Schwab charity fund. They are going to get back to me with an answer to the question whether this will still be considered a distribution that will be reported to the IRS. I suspect it still will......but....at least I will avoid paying the taxes on this BIG distribution.

In the end this turned out to be an old IRA that belonged to my wife that had some dividend or income that happened to slip into the account at the time we liquidated this IRA long ago.

 

Markets are trying to turn negative.....with the SP500 now also in the red and the NASDAQ close.

Seems to match up......somewhat......with the announcement that FED Chairman has COVID. Who cares.

 

I dont see a single word about long term investing in my reading so far today. This is not a sexy topic for the financial media and is usually ignored.

The whole focus is on....trading, trading, trading. BUT......the reality is that the vast majority of investors are NOT traders or short term. They are the simple IRA or 401K investors that are investing for retirement.....far in the future.

 

I missed the close today. I have been working on my vintage 1967 Fender Blackface Deluxe Reverb amp for the past couple of hours. There is something wrong with it.......very distorted.

I thought it might be the speaker. I had an old blown JBL D120F that I just got it back from JBL freshly reconed so I know it is good. I replaced the speaker........a pain to do since I have to take the entire amp apart.... and the issue is still there. So I checked the reverb tank and all the tubes. I found a cracked pre-amp tube....so I replaced ALL the tubes. Put it all back together and the problem is still there. So......I will take it in to my amp tech tomorrow and have him go through everything and fix it.

 

My ten stocks were......too sexy......for the markets today......so they were ALL down. At least I beat the SP500 today by 0.16%. I had a medium level loss today.

At least I now have a nice cushion in my account for the next time the markets push down. My streak is over at 7 days in a row.

 

Looks like the FED was out in full force to kill the markets today......typical.

US STOCKS-Wall Street reverses gains as hawkish Fed officials douse easing inflation cheer

https://finance.yahoo.com/news/us-stocks-wall-street-reverses-175950598.html

(BOLD is my opinion OR what I consider important content)

"Jan 18 (Reuters) - Wall Street's main indexes reversed gains by early afternoon on Wednesday as hawkish comments from Federal Reserve officials sparked worries that the central bank may not be pausing interest rate hikes any time soon.

Markets reacted positively to data, which showed retail sales and producer prices declined more than expected in December.

However, the gains were short-lived as St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester stressed on the need to raise rates beyond 5% to bring inflation to heel.

It also highlighted the disparity between the U.S. central bank's estimate of its terminal rate and market expectations, which were of the rate peaking at 4.88% by June. Traders are now betting on a 25-basis point rate hike in February.

"Despite the producer prices numbers being okay today, it was just a harsh reminder that we're a long way from a Fed pivot," said Dennis Dick, trader at Triple D Trading.

"This market is very hopeful that we're going to get a soft landing and every time you have hawkish comments from the Fed, it feels you're not going to get that."

Focus also remains on the earnings season as it gathers pace to gauge the strength of corporate America against the backdrop of higher interest rates.

Analysts now expect year-over-year earnings from S&P 500 companies to decline 2.6% for the quarter, according to Refinitiv data, compared with a 1.6% decline in the beginning of the year.

U.S. stock markets have started 2023 on a strong footing on hopes that a moderation in inflationary pressures could give the Fed cover to dial down the size of its interest rate hikes.

At 12:27 p.m. ET, the Dow Jones Industrial Average was down 419.97 points, or 1.24%, at 33,490.88, the S&P 500 was down 41.19 points, or 1.03%, at 3,949.78, and the Nasdaq Composite was down 92.42 points, or 0.83%, at 11,002.70.

The blue-chip Dow was on track for second straight day of losses, while the Nasdaq was set to snap a seven-day winning streak.

Analysts noted that the Dow was positioned for a pullback after having fallen the least among the three major indexes last year.

IBM Corp was among top drags on the Dow, falling 3.1% after Morgan Stanley downgraded the company's shares to "equal weight" from "overweight".

Early gainers Microsoft Corp and Tesla Inc erased gains by afternoon trading.

Moderna Inc rose 2.6% after reporting data which demonstrated the effectiveness of its respiratory syncytial virus (RSV) vaccine.

PNC Financial Services Group Inc fell 4.9% after the company missed estimates for fourth-quarter profit.

Declining issues outnumbered advancers for a 1.23-to-1 ratio on the NYSE and a 1.53-to-1 ratio on the Nasdaq.

The S&P index recorded nine new 52-week highs and two new lows, while the Nasdaq recorded 63 new highs and 12 new lows."

MY COMMENT

Two things going on here. First, the FED needs to learn how to give their opinions without tanking the markets. Second, people need to get over this pivot stuff. BOTH....are ridiculous. In my opinion short term traders are manipulating this stuff to drive their news based......AI..... trading programs.

We are going to probably get at least FOUR more rate increases. I am expecting 0.50% in early February and 0.25% for the next 2-3 increases after that. At that point the FED will just sit and wait to see what happens....unless they PANIC.

 

I actually consider this good news.

Holiday retail sales tanked, but trucking data shows e-commerce wasn’t the issue

https://www.cnbc.com/2023/01/18/hol...ng-data-shows-e-commerce-wasnt-the-issue.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• DHL Supply Chain is investing heavily in North American e-commerce operations.
• The retail holiday sales data for 2022 was a disappointment, but DHL said it is “continuing to see large growth in e-commerce.”
• Categories including autos, engineering, manufacturing, and high-end consumer goods are doing well.
• Core consumer retail may rebound in the mid-to-late second quarter, DHL’s head for North America tells CNBC.

The market did not like what it saw from the final retail holiday sales numbers for 2022 which sets up a tough year for retailers, but e-commerce is continuing to boom, including in areas outside the core retail consumer.

Trucking data shared by DHL with CNBC shows that while the core consumer market has pulled back, in many categories e-commerce sales remain strong.

“E-commerce is continuing to boom,” said Jim Monkmeyer, president of transportation for DHL Supply Chain, North America.

DHL described large growth in e-commerce and the logistics company is investing heavily in that segment.

“I would say the other spaces that are still growing fairly rapidly for us are automotive and high engineering, manufacturing as well as high-end consumer goods and spirits. Food products and life sciences areas are also doing well,” Monkmeyer said.

Amid weak holiday sales year over year, it was online and nonstore sales that saw the biggest year-over-year gains, jumping 9.5% during the holiday season, according to the National Retail Federation data released on Wednesday.

But Monkmeyer said DHL is seeing a continued downturn of the core retail consumer, with the near-record inventories a stark reminder of the pullback. As a result, more retailers are slashing prices to get rid of their inventory.






In December, Scott Sureddin, CEO of DHL Supply Chain, told CNBC he anticipated more discounts post-holiday. “I have never seen inventory levels like this and after the first of the year, retailers can’t continue to sit on this inventory so the discounts they’ve been pushing will have to continue,” he said.

Inflation is one of the reasons behind frugal consumer holiday spending.

Retail sales data released on Wednesday showed a decline of 1.1% in December, slightly more than the 1% forecast, reflecting tepid consumer demand during the holiday shopping season.

The holiday sales period was facing difficult annual comparisons given the Covid boom, and Monkmeyer is confident there will be a turnaround as supply chain inflationary pressures, such as freight rates, fall back below pandemic peak levels. Recent inflation readings, both the Consumer Price Index and Producer Price Index, have provided confirmation of inflation easing.

“I think we’ll see the turning point come sometime in mid to late second quarter,” he said. “The cost of the ocean containers moving from $20,000 a container to $3,000 will drive down costs to a lot of different products. And on top of that, you have fuel costs coming down, and they’re projected to continue to go down slowly but steadily for the rest of this year. I think consumers will notice that right away and we will hopefully get back to some of that spending that we were seeing in the last two years.”"

MY COMMENT

The big in-person retail operations are in for a continued shock as more and more business moves online. No surprise there, at all.

We continue to make more and more progress from the Covid distorted economy......and.....we will do so for the next year or so. In my little area people are not being shy about buying things or spending money.