Friday, July 21, 2006

Bored or Resigned?

This Author has been checking the News today, and finds the most interesting article read was one on Fort Tilden in the NYTimes. Some economic indicators seem to be flat over last week, others saying it would be worse except that the Job market held up well. Maybe it is simply more active when the Temperature outside is hitting Record levels, unlike the Cooling today; high heat meaning a battle for survival.

I suppose I should advance a Question: Will the Markets sustain a deminishment of Consumer Demand brought on by high Fuel prices and a real potential declining Workweek?

The first part of the Question must again ask: Is Consumer Demand declining? Undoubtedly! High Fuel and Utility charges are eating into Household budgets, Consumers already possess high Consumer Debt profiles, Interest rates absorb undue amounts of normal Debt repayment schedules while the demand for Mortgages reduces. Index factors track these declines poorly, but the Intelligent can estimate We may see better than a 5% decline in Retail Sales over the next Year (remember this is an Author estimate, deniable by All, and they will). The Author will respond with childish vigor, stating: Tis so, and might even decline by 12%!!

A secondary problem emerges with a decline in Retail Sales. Stock Grants and Stock Options have been issued with profusion, and the Stock Market today has a far larger composition of Shares, than it did the last time there was a Retail Sales decline. Both Markets and Corporate structures stand shaky upon foundations more unsound, trying to spread Profits across an extended Share base. The Job market will not save Retail Sales, if Corporate executives attempt to grind additional Profits from cutting Employment rolls. My advise to Corporate leadership: Do not invest in capital overproduction facilities; invest in Stock Buybacks with the excess funds. lgl

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