Retail’s Back

You can see it in this chart – even the auto sector is back in a big way:

The Happy Talk?

“Advance estimates of U.S. retail and food services sales for May 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $485.5 billion, an increase of 17.7 percent (± 0.5 percent) from the previous month, but 6.1 percent (± 0.7 percent) below May 2019. Total sales for the March 2020 through May 2020 period were down 10.5 percent (± 0.5 percent) from the same period a year ago. The March 2020 to April 2020 percent change was revised from down 16.4 percent (±0.5 percent) to down 14.7 percent (± 0.2 percent)

Dow futures up over 600  725 points on the high-octane news.

Corporate Socialism’s Rise

Here’s something big the Mainstream Media is NOT covering.  It’s a key aspect of how major U.S. corporations are lining up to give money to BLM and other racially distinct groups in the wake of the George Floyd killing.

We were appalled and sickened by Floyd’s death – and again the case in Atlanta.  However. there’s a point here which everyone is overlooking in the headlong rush into politically correct corporate giveaways.

Dilution of Shareholder Interest

Here’s my point in a nutshell:  How many corporations (lots!) have promised “millions in support” for BLM and other racially focused groups?”

Where was the disclosure (that the corporations) would be giving away money to social causes that in my (narrow-minded) view OUGHT TO BE GOING TO SHAREHOLDERS???

Let’s take a typical Big Board company.  They promise to donate XX-millions to some group.  The question to us is “Where is that money coming FROM??”

I think the answer is pretty obvious:

SHAREHOLDER VALUE

When corporations gift money they are giving away money that could be used to either expand their business OR could be paid out as  (larger) dividends to people who invest.

Naturally, Corporate Gifting Departments will argue “Yes, but it will build brand loyalty and so in coming years there will be a payback!

Bullshit.

People get their money and their hearts confused all the time.  They are different questions.  Money-making is one thing.  Giving it away on social agendas is another.

If an endowment fund of a traditionally black college invests in stocks, who takes the hit when the money is spent elsewhere?  They do. (In common with all other shareholders.)

When a black family invests in stocks, or their pension plan does, who takes the hit?  Why of course!  They do – in common with all other shareholders.

An Easy Example

Let’s take a company that makes a good product, one of which might be streaming of content.  Blacks, whites, Hispanics, and Asians are already all consuming this streaming product.

Therefore, in order for “corporate giving” to make financial sense to the investor, there would have to be an increase in profits – based on the increase in sales directly attributable to the corporate giving to the social causes.

Unanswered is the question:  Will (in our example streaming) increase by more than the cost of the gifting?

Otherwise, the shareholders get screwed.  Ure is skeptical.

It’s Creeping Corporate Socialism

My further point is that this is not a black or white issue.  This is really about the ongoing merger between government and corporations – which no one – among the dimwitted press –  is calling out.

It’s like the other day, the FDA squashed the use of a 50-year old malaria drug (because there’s no money in it for Big Pharma).  Which immediately got the Fooled and Drugged Administration sued by a medical group (of honest doctors) who see through the “regulatory charade.”

This was – yet another – case of government for corporations and at the expense of little people like us.

When corporations start handing out cash – shareholders should immediately Or ask whether something crooked is afoot.  Because investors – white, black, Chinese, and whoever – all see their shareholder value diluted.  Black pension funds and white pension funds are equally short-changed.

Is this correct?  Or, are corporations being held ransom because if they don’t pay they might get painted with the “R” word?  Where’s the decision-support that backs-up a positive ROI, then?  Shareholders ask tough questions – and one of the most important is “What business are we in?”  Gifting based on retail?

Why are corporations becoming social partisans?  It’s not the business they are in…or are they, now?

When corporations embrace “causes” they spend money. That could be going to investors.

Bigger question:  Is there really such a thing as “social responsibility”?  Beyond reams of environmental and workplace regulations.

Here’s an interesting notion:  We wouldn’t be surprised some day if the FedGov were to sue Amazon.  Anti-trust grounds.  Too big, too successful. If such a hypothecated lawsuit were to arise, would the “social defense” then be played?  “Look what we did for groups XX, YY and….”

Nickel bet says when Bezos talks to Congress about this anti-trust business, there will be a fine patina of “social defense” included.  Amazon is giving $10-million to BLM and other groups.

I don’t know of a single Fortune 1000 company that has ever been involved in anything overtly racial (though I could be wrong).  They can be sued for that, already.  Why the rush to “give away” then?

An investor’s job is hard enough without having to add the “Kentucky Windage” to recalibrate their investments to whatever political agenda company managements want to support next.  Is company management ultra-liberal?  Is company management tone deaf to the times?  Why am I asking those  questions?  I just want stock in companies that throw of capital gains.

Giving away money is NOT what “corporations” should be doing.  They should be running ethical, non-discriminating companies and not trying to usurp social movements as a branding tactic.  Competition to “give the most” bends over even more shareholders.

I don’t think corporations should be allowed to use ANY money for “social purposes.”  They are businesses and just like we have “separation of Church and State” I propose that we ought to also clearly delineate a line setting forth “separation of Corporations and Social Movements.”

The (too liberal and not pointed enough for our tastes) NY Times gleefully reported this week “Racial Justice Groups Flooded With Millions in Donations in Wake of Floyd Death Progressive and racial justice groups have seen a cascade of donations since George Floyd’s death and the ensuing protests. Bail funds alone have received $90 million.”

This is a HUGE monetization.  Shareholders are – to our simple-minded view of accounting – seeing dividends being squandered.

Go ahead, call me a racist, if you will. (I don’t buy shame.) I’m asking a direct accounting question that the SEC ought to be asking. Around here, there’s only one race we care about:

GREEN.  (And that’s all of us.)

Trump Hypes Markets w/ $1-Trillion

We have to wonder how long the WH has been sitting on this one: Dow futures jump amid report that Trump is preparing $1 trillion infrastructure proposal.”

You don’t really thing the U.S. Hosed-Up Representatives are going to give him an effing dime, do you?  Nasty and Schifty?  Not-a-chance, bubba.  Rally should fade to replay when people get their brains out their behinds.

Problem is, if the market only goes up a hundred, or two, today, then markets have a terrible problem just ahead.  Here’s our green circles to follow on the 1929 replay…and a gain for the day of just a couple of hundred would complete a worrying mini-bounce.

This is based on early futures – before retail sales came out.  Europe is on fire today, so mania is in the air again.

Desperation Day for the G20.

In Our Shorts

Keep in mind, the whole economic “recovery” is due to massive giveaways...the money is not “real” and the M1 creation rate is presently over 100% per year – which will halve money’s purchasing power.  Go read Trader: The Fed’s Actions “Smack Of Desperation”.

Sailing past 8-million CV Cases now as China races to contain a surge of new coronavirus cases in Beijing.

And the US is not all open yet: McDonald’s U.S. same-store sales fall 5% in May as dining rooms reopen.  All as Experts expect a second wave of Covid-19. And continued loosening of restrictions may make the impact of the next outbreak worse..

Enjoy the rally while it lasts.  All just paper…stand by to light ’em up.

Write when you get rich,

george@ure.net