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ikkyu2 (99.51)

A Read on the Economy

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July 19, 2011 – Comments (12) | RELATED TICKERS: AAPL , MGM , WYNN

Spent 4 days in Vegas, just got back.  Was staying in the Mandalay Bay.  La Reve, Friday night at the Wynn: full.  (Spectacular show, by the way - if you get a chance, don't pass it up.)  Table 10, Emeril's resto at the Palazzo, Friday pre-theater: about 1/2 full.  The Mandalay on Saturday: absolutely jam-packed, 20+ min wait for elevators; we always stay there and it was the fullest I'd ever seen it.  No special conference that weekend either.  Crystals, the ultra-high-end shops at CityCenter - actually doing some business in Hermes, Tom Ford, Mikimoto - I saw transactions happening.  Shops at Caesar - mobbed.  Cash registers ringing, if they had real bells they'd've been louder than the slots.  Julian Serrano at Aria - what a fantastic meal.  Barely got a reservation - place was jam packed from 6 PM till 11.  Aria itself - jam packed.  The Stratosphere - all 4 craps tables hopping on Saturday night, jam packed.  The Mirage on Sunday?  Jammed.  Even at 113 degrees we fought crowds to look at white tigers and lions.

And here's a very special shout out: the Apple Store at Caesar's, on Saturday: jam packed.  I'd left my iPhone in a cab, and even with the cabbie's name and number and an immediate call to dispatch, I couldn't get it returned to me.  I went to the Apple Store.

15 minutes later I walked out, with the following:

1)  A new iPhone 4, white, at a good price, with my same contract still in place, same number, AND ALL MY OLD CONTACTS - all 1100 of them - installed on the phone.  I still am not sure how that happened - it had something to do with MobileMe - and how it only took 3 minutes.  The transaction was utterly seamless and the dude was neat.

2)  An awareness and a connection to Apple's new enterprise program - I am the IT buyer for my business, and I buy Apple hardware.  Now I have a contact and a discount.  The Genius noticed my business CC and just made that happen.

3)   An amazing awareness of how Apple is leveraging technology to make really complicated retail transactions go extremely swiftly and extremely smoothly.

4)  A strong desire to buy more Apple stock - this was before earnings, too.  I already knew this, but here it is again:  Never wait to buy Apple stock.

I go to Vegas to eat, sun, game, unwind, and see a show.  But I also go because I can get a read on the global economy just by walking through a few of the resorts, and I have pretty well convinced myself that it's a leading read.  Here is what I learned: THE US ECONOMY IS BACK, BABY!  There have been trips where half the people I met were Eurasian; this time it was good old homegrown folks spending their hard earned Americano dollars.  (Full disc: long AAPL, MGM)

Verbum sapienti sufficit, eh folks? 

12 Comments – Post Your Own

#1) On July 20, 2011 at 1:04 AM, awallejr (82.39) wrote:

I go to Vegas to eat, sun, game, unwind, and see a show.

Grats you get it, sadly many don't.

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#2) On July 20, 2011 at 2:24 AM, ikkyu2 (99.51) wrote:

It is certainly possible to go to Vegas for other reasons, such as gambling compulsively, addiction to strip clubs, excessive alcohol or drug abuse, or simply to engage in antisocial behavior of a variety of flavors.  I basically just won't do that, don't care for it.

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#3) On July 20, 2011 at 1:33 PM, dwot (99.48) wrote:

Well, I think the economy looked like how you describe just prior to the massive collapse...

I see a massive debt problem that has had little done to resolve or control it and I see huge volatility because of it.

I think some people are thinking this is looking similar to the past in how the market has climbed back but I also think they are ignoring the huge economic problems that are out there and I think those problems dwarf problems in the past.

Yesterday I saw the gentleman that got me started in the market and we were discussing it.  He was saying he is about even with the 2007 top right now.  He'd been significantly out for the top but badly timed going back in and still lost about 30% before the bottom.

I still think the increasing effects of the aging population have not been considered.  I guess the 1st year of the baby boomers is 65 this year and so from here on out each year there will be more and more people, many of whom held the best paying jobs, no longer investing new money into the markets and gradually there will be an increasing number reducing what they have in the market.  And I don't think their investment dollars will be replaced by the lower paid, more indebt younger generation so there will be a long term reduction in demand for investments which I think has a tendancy to push the overall market down. 

I am probably way early on looking at this.  But either pensions or investments will increasingly be paying the cost of living for the aging population and both mean a reverse of the direction of investment dollars. 

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#4) On July 20, 2011 at 2:12 PM, miteycasey (95.46) wrote:

@#3

But this group will travel and spend money. That's what they worked their entire life for. I agree the market will go sideways while they pull money out, but the people still working are putting more and more money into the market.

@ ikkyu2

Glad to hear you had a great time. I'm heading out there in Oct. to see Jimmy Buffet and celebrate my wedding anniversary. 

 As to the economy I think the upper middleclass and the rich are doing just fine. It's the people who do not have an education, can't move, and are lower wage earners that are still struggling the most. This is not the typical Vegas customer.

 

 

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#5) On July 20, 2011 at 2:27 PM, ikkyu2 (99.51) wrote:

Well, I think the economy looked like how you describe just prior to the massive collapse...

Vegas didn't.  As the first rumblings of 'no-doc' loans and ARM resets swept across the country in 2006, business there fell off dramatically.  I remember thinking "what's going on, this place is dead" at the time.  2006 and 2007 was a pretty good leading read.  It's what Ben Bernanke wrote his PhD thesis on: the "wealth effect."  It's real, it's out there, and in a fiat/frac res/unbacked dollar economy, it's very very important because it correlates tightly to money velocity, which is far more important than money supply.

Most people - sorry to tar you with a broad brush, dwot - are still in the habit of thinking as if the money supply was fixed.  It's not; it's fungible and it's being funged.  There will be more dollars and they will slosh around in every corner of the economy! I'm looking to make money off my investments today, next week, next month, and 30 years from now; so I pay attention to these details.

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#6) On July 20, 2011 at 2:29 PM, leohaas (93.16) wrote:

Miteycasey hit the nail on the head. My wife likes to go to the outlets, and it is always the Coach store that is jam packed. Not exactly a store that is frequented by the poor.

It is the low wage earners and the ones on fixed incomes that are hurting. And still there are folks out there who call our current Administration "socialist"! Go figure...

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#7) On July 20, 2011 at 2:34 PM, Frankydontfailme (27.33) wrote:

Maybe so ikkyu2. All that means to me is high inflation. Might many globalized stocks beat inflation? Probably. Untill a good old black swan comes along...

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#8) On July 20, 2011 at 2:57 PM, ikkyu2 (99.51) wrote:

Coach is always jam packed and my lady likes the handbags so we're in there.  I prefer a nice Chanel, Balenciaga or Fendi bag - to look at, not to buy :)

Any hard asset keeps pace with inflation.  That is the story of the next decade in one sentence.  You read it here first. 

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#9) On July 20, 2011 at 7:23 PM, PainterPoker (21.33) wrote:

Any hard asset keeps pace with inflation. I just wanted to type that out (so I don't forget.)

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#10) On July 20, 2011 at 11:12 PM, awallejr (82.39) wrote:

The average investor already pulled their money out.  The boomers are in bonds now.  What happens come "inheritance" day for the younger generation remains to be seen, assuming the all boomers' money doesn't  go to the nursing homes.

The market goes where the profits go in the end.  A concept many people refuse to accept.

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#11) On July 20, 2011 at 11:28 PM, truthisntstupid (95.70) wrote:

Funny. Where I live, the economy never even blinked in the last 5 years.  I have, however, had to work harder and longer hours every year.  Every single one of the last 4-5 years was busier than the last one. 

Including this year.  If it slowed down a little, it certainly wouldn't hurt my feelings any.

For the optimists out there, don't listen to all the grinding and knashing of teeth.  It will always be there.

For the pessimists out there - have fun worrying.  

Cheers.

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#12) On July 23, 2011 at 3:29 PM, ikkyu2 (99.51) wrote:

It's the people who do not have an education, can't move, and are lower wage earners that are still struggling the most. This is not the typical Vegas customer. I really struggled with whether or not to respond to this, so I've waited a few days so only my most avid fans will read this. The fact is - and I don't agree this is how it should be - but these folks you're talking about don't control any capital flows.  They behave very predictably: they spend all their income every month on consumer staples, probably at Wal-Mart.  Because they don't control capital flows, they get ignored when I am having a discussion about capital flows.  More and more our government seems to be ignoring them and their needs too, which is regrettable, but the result - that monetary and fiscal policy is also ignoring their needs - is pertinent to the discussion, which leads me to further ignore this segment of the population.
Sad but true.

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