Sunday, November 30, 2008

One Month To Go in 2008

"Those That Have Not Yet Embraced Frugality Are About to Have Frugality Embrace Them"

A sidebar to the current banking crisis is the Rightsizing occurring at banks across the US (rightisizing is just downsizing in a pretty package).

As part of the JP Morgan/Washington Mutual merger JP Morgan plans to cut up to 19,000 jobs this weekend as reported in Forbes.

"Up to 19,000 employees of Washington Mutual face being laid off this weekend as JPMorgan Chase turns up the synergy on its recent acquisition.

On Friday, JPMorgan Chase said it expects to retain the 22,000 employees who work at Washington Mutual branches and 2,000 workers in the mortgage and wealth management divisions in California, spokesman Tom Kelly told Forbes.com.

The company has not yet determined the total numbers to be cut in other states, but it planning to inform all former WaMu employees of their job status by Monday."

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Black Friday Sales
There was a good deal of press coverage over the weekend about the amount of Black Friday Sales in the US. Clearly, the expectations are that spending will be down this year, but somehow spending was up 3.3% according to ShopperTrak.

How does that data merge with expectations? Well, some of the growth in Black Friday sales is probably due to a delay in spending (I saw one recent poll that said only 10% of people had started shopping as of mid-October) and the shortened shopping calendar this year (27 shopping days between Thanksgiving and Xmas vs 32 days last year). Also, the composition of the sales (loss leaders versus full price items) will be important to understanding the value of these sales to the retailers.

However, I'll admit to being surprised by the small uptick in sales. The rampant consumerism of the US never ceases to amaze me.

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Markets

As I suspected, trading was thin last week and muscled around by relatively few buyers. But you can't overlook the 15-20% bounce in a week. This is basically the biggest one week move in about 75 years. Unfortunately, that last big bounce occurred in 1932 and I think we know how that played out. The volatility remains in the market, but the retail data might help hold things up for awhile this week.

It's been some time since the markets have had to focus on Geopolitical events, but the tragic events in Mumbai this past weekend have refocused the market watchers on international incidents. Hopefully, cooler heads will prevail, but be aware that tensions are rising between India and Pakistan faster than anyone can predict. Both countries are said to be reallocating military resources toward their shared borders. Yikes!

Cheers!

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