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alstry (35.42)

Economy slamming on the brakes in June!!!!!

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July 21, 2008 – Comments (3)

Texas Instruments:

The company said demand "slowed unexpectedly" in June after distributors cut down inventory levels and "did not replenish them late in the quarter," the company said in a release. TI also cited a sales decline for its wireless business in the quarter.

http://www.marketwatch.com/news/story/texas-instruments-second-quarter-net-profit/story.aspx?guid=%7B61680659%2D9FAD%2D41A4%2DB27E%2D7FB2F0D6303E%7D

American Express: 

“Fallout from a weaker U.S. economy accelerated during June with consumer confidence dropping, unemployment rates moving sharply higher and home prices declining at the fastest rate in decades,” said Kenneth I. Chenault, chairman and chief executive officer. “Consumer spending slowed during the latter part of the quarter and credit indicators deteriorated beyond our expectations.

http://biz.yahoo.com/bw/080721/20080721006207.html?.v=1

We saw in an earlier post the State of Georgia's tax revenues plummeted in June.

A sharp slowing in June is consistent with my personal interviews with business owners and accountants.  Further, if we are dealing with a credit contraction.....July will likely be worse than June. 

We have now entered the shut down period.  Expect to hear about a lot of businesses shutting down over the next few weeks and months.  We just heard today that Mervyn's might be shuttering over 170 stores and Wachovia exiting the wholesale lending business.  Tonight, Royal Carribean said it was laying off 400 dockside  workers.

A little birdie tells me that one or two major national restaurant chains might be filing for BK in the next few weeks.  Also, another regional airline carrier might be on the ropes.

Again folks, none of this is any fun, as investors and Americans, we better damm well know what is going on....it's good our Treasury Secretary says our financial system is sound.

 

 

3 Comments – Post Your Own

#1) On July 21, 2008 at 8:02 PM, DemonDoug (73.55) wrote:

Hey al, what happens when inventories are drawn down?

What happens when airlines shut down, lay off workers, and cancel entire routes?

When retail stores are closing and there is less competition?

Less supply = higher prices (assuming demand remains the same, which is won't, but supply destruction is coming much faster than demand destruction).

btw, just a boots-on-the-ground report, at 3:00 pm on friday The Grove in LA was completely packed, Nordstroms wall-to-wall with shoppers, all the Batman movie theaters were sold out, people spending money everywhere, you would not know there was a slowdown at all if you were there.

I really need to get my inflation primer up (time, need the time! it's gonna take almost a full day), because I'm tired of explaining to all the uneducated why all this stuff equates to inflation, and I don't have to be like mish and say "i believe we are in inflation" because I KNOW we are inflation and I have all the data in the world to back up my statements.

sorry to hijack the thread with inflation again.  btw all that fannie/freddie bailout stuff also = inflation.  Every state bond dollar sold = inflation.  Bought with printed money in china, which is also inflating, and we are sort of cycling our inflation through each other at this point.  bailout of china through FRE/FNM = inflation.

Anyway, besides my inflation soapbox, I agree with your assessment.  Things are getting worse, this is shut-down time, I'm wondering if this fall we'll finally get a panic selling where the indices drop 10% and trading curbs kick in.  What do you think al, what's the chance for a 10% drop on the headline indices in one trading day by the end of 08?  (I'd guestimate it's about a 25% chance of happening but wondering what your opinion on the matter is)

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#2) On July 21, 2008 at 10:16 PM, alstry (35.42) wrote:

I give it a 25% chance of happening by the end of July!!!!  Maybe by the end of the day tomorrow.

It's fun having our inflation/deflation debate.  A little corny....now I call that deflation....don't you?  Or is that simply a technical correction?

In the end, I am not sure which side we eventually come down on, its just that my bias right now is deflation.

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#3) On July 22, 2008 at 12:41 AM, DemonDoug (73.55) wrote:

The thing I'm really waiting for is for freakin SPF to go bk!!!! WTH man this company was dead in the water a year ago!!!

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