Retail Numbers: Is the “Auto-Save” Ending?

We begin this morning with a quickie “economic history” lesson, but you’ll soon see why somewhere, someone in Washington who has been laughing their butts off about the taxpayer bailouts of Detroit’s auto giants may be coming to their senses today. 

The Wikipedia entry on the global auto crisis in the wake of the Housing Collapse, sums it up this way:

The crisis in the United States is mainly defined by the government rescue of both General Motors and Chrysler. Ford secured a line of credit in case they require a bridging loan in the near future. Car sales declined in the United States, affecting both US based and foreign car manufacturers. The bridging loans led to greater scrutiny of the U.S. automotive industry in addition to criticism of their product range, product quality, high labour wages, job bank programs. The government-backed rescue of the American auto industry gained the support of a 56% of Americans in 2012 according a Pew Research Center poll.[62]

While the “Big Three” U.S. market share declined from 70% in 1998 to 53% in 2008, global volume increased particularly in Asia and Europe.[63] The U.S. auto industry was profitable in every year since 1955, except those years following U.S. recessions and involvement in wars. U.S. auto industry profits suffered from 1971-73 during the Vietnam War, during the recession in the late 1970s which impacted auto industry profits from 1981–83, during and after the Gulf War when industry profits declined from 1991–93, and during the Iraq War from 2001–03 and 2006-09. During these periods the companies incurred much legacy debt.[64]

At the time, many people were critical of the bailouts, including Ures truly:  If the companies had gotten so big that they would fail without taxpayer money, then perhaps that is the thing to have happen.  In the refuse of failure companies is often the fertile soil of future development. But, that wasn’t the case. 

Instead, in this morning’s retail sales figures, we see how the sales in the Auto sector are what’s keeping the economy on life support (that and government hiring).

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for June, adjusted for seasonal
variation and holiday and trading-day differences, but not for price changes, were $439.9 billion, an increase of 0.2 percent (±0.5)* from the
previous month, and 4.3 percent (±0.9) above June 2013. Total sales for the April through June 2014 period were up 4.5 percent (±0.7) from
the same period a year ago. The April to May 2014 percent change was revised from +0.3 percent (±0.5)* to +0.5 percent (±0.2).

Retail trade sales were up 0.3 percent (±0.5)* from May 2014, and 4.1 percent (±0.9) above last year. Nonstore retailers were up 8.1 percent
(±2.3) from June 2013 and health and personal care stores were up 7.9 percent (±1.9) from last year.

Blah, blah, blah…numbers.  But here’s the two charts that matter – hugely:

See what happened in June to car sales?  Down….but just a tad and still waaay ahead of last year.

For the conspiratorially-minded, I would bring up (again) the notion of our long-hypothesized Directorate 153 which would have been a logical policy follow-on to Cold War era strategic long-term government planning.

When one considers the general topic “continuity of government” the overwhelming underlying issue reduces to a simple question of keeping the old paradigm afloat.

Whether such decisions are made based on computational public policy (a favorite Peoplenomics theme) or whether things just “sort of work out that way” is a hard-to-settle question.

But this morning, we have another month’s worth of evidence that the largest contributor – by miles and miles – in the current prequel/replay of the Great Depression – is the automotive sector and the engineered auto bailouts, followed in turn by what?

The Auto Sector: Bailing Out America in Return.

One other number to note this morning:  Good news in the NY Fed’s Empire State Manufacturing report:

The July 2014 Empire State Manufacturing Survey indicates that business conditions improved significantly for a third consecutive month for New York manufacturers. The headline general business conditions index climbed six points to 25.6, its highest level in more than four years. The new orders index was little changed at 18.8, while the shipments index rose nine points to 23.6; both indexes were at multiyear highs.

My Dow dart landed on up 30 around the open this morning.

More after this…

Santelli: Right Message, Wrong Audience

A lot of people are talking about what some are calling a “meltdown” on the tube yesterday:


Santelli is, unfortunately, right…but just not yet.

Timing – as I’ve come to understand Long Wave Economics over the years – is a difficult beast to grapple with. 

The easiest way to see it (it being the ultra long wave in economics) is to look at the phase relationships between one way – like interest rates – and another wave (like housing prices) with yet another wave (stock prices).

Tomorrow in our report, we’ll demonstration how some of these “phase relationships in economics” work.  We’ll be doing with with an oscilloscope and a couple of audio generators but we’ll touch up the photos with a bunch of pointers so it should be easy to follow-along.

For the non-subscribers, however, the following charts should give you a very clear picture of how the long wave works:  Look at the pattern in the CBOE 10-Year Treasury Note over here (it peaked in 1981) and then notice how the Velocity of Money has behaved in the same period when you look at the Federal Reserve Bank of St. Louis chart:

Few people remember that the Federal Reserve raised interest  rates in…no, wait…we’ll cover that tomorrow for subscribers.  If you were seriously interested, you’d be a subscriber.

Sure as I put out the information (again) here, troll will be along to argue about it and try to pick minutia – which I don’t have time for.  The sad fact is that sometimes people only value information based on what they pay for it.  If it’s free – they bitch.  Go figure.

So my take on Santelli?  There’s this matter of “right message, wrong audience” that everyone has to deal with.  That and timing.  Shorting bonds in the spring, maybe.  Now?  Too early, perhaps.

Big Money in the Death Industry?

We can’t help but comment on the report that ciggie maker Reynolds is buying Lorillard for $27.4 billion.

Reynolds American’s latest PR move is to label itself as “transforming tobacco” but in practice that seems to involve largely moving consumption offshore.

As CNN reported early this year about tobacco:  “We know it can kill us: Why people still smoke.” 

I find it immoral that a company will sell an addictive product on the one hand and then sell the “withdrawal product” on the other.  Would people react any differently if heroin-growers opened rehab centers?  Ah, but it’s the same thing, just the lite version, you see.  And it is what?  A business model!

Given that years and years back I used to smoke, in light of what we know today, I’d sure like my money back.

Like the old saying goes (in the country song “Cigarettes and Whiskey”  “There’s a fire on the one end and a fool on t’other.”  Except the companies are very profitable, which tells you something about people, death, and money.

Hamas No Cease Fire

So the warring in Gaza continues.

Shake UP for Show

The kneelers are going through a cabinet shakeup in the UK.

An old management mentor of mine used to say: “If you haven’t got anything good to report, reorganize and shake ‘em up a bit.”

So look for no substantive changes other than some high-fives and hyperbole.  They still kneel, but we’ll be doing that soon  enough.  What’s the MRAP count in your PD or sheriff’s office?

Partner in Cloud

The move to cloud computing continues with Microsoft pushing for even more cloud-based aps and such at their Partner Conference.  Cross-platform interoperability or you’re toast.

(I’m sure I mentioned I used to work for a MS Gold Partner, right?  Cross-platform resources are a HUGE thing.  I still get email from the odd Luddite who liked our old HTML site, but the fact is that mobile and other devices are the future so we are here with the present Urbana site looking like it does because it’s fully responsive code and blazing fast as things go.  Typical load times for our reports are under 2-seconds.  The Luddites?  Might not notice since they’re likely still on dial-up, lol…)

Eyes ON

Alabama and North Carolina runoffs today.

What’s in your wallet?