Sunday, August 21, 2016

An Inconvenient Obliteration

Barron's Aug. 20th, 2016
"Perception and reality are furthest apart on the consumer discretionary stocks, where people doubled down, unaware of the monster inventory overhang. The correction will drag down most of the market. We could easily go back to the 2009 lows. I could see 2017 being a pretty nasty year."

We face a choice to be pissed off now or bankrupt later. We know what choice was made by Zombieland. Corporations have systematically dumbed people down to doorknob level. Companies don't want anyone below CEO level to have a fucking brain, because that might delay their inevitable layoff to make the quarter. According to this Barron's article, no less than 40% of Big Tech workers could be laid off in the coming year due to mass migration to Cloud (Centralized) computing:

Barron's Aug. 20th, 2016
Dark Clouds Over Tech
The Street is enamored of how cuts may help operating-profit margins...Yet one observer who anticipated the current climate of cuts—thinks tech companies are about to double down on layoffs. He told me Thursday that “the worst is yet to come. BACK IN JANUARY, Chowdhry predicted as much as 333,000 in layoffs at tech giants this year. Now he expects Cisco and other tech companies to cut 40% of their employees from January of this year through June 2017.

Barron's Aug. 20th, 2016
What ignited and supported the entire era of globalization was the spendthrift U.S. consumer; economies have been totally reliant on trade to U.S. consumers

As U.S. consumption slowed in the aftermath of the crisis, global exporters that relied on trade with the U.S. scrambled to gather a larger share of the shrinking pie by debasing their currencies. But these policies started creating bubbles in their own economies. So now they’ve focused on boosting growth domestically, which is why you hear so much isolationist rhetoric today.

The July payroll number was a barnburner on the upside. But that report is the exception...Inventory accumulation has been explosive.

 Inventory-to-sales ratios across a variety of industries—manufacturing, machinery, autos, wholesale—are at the highest level since 2009. In prior inventory liquidation cycles, nominal GDP growth is cut in half during the liquidation phase. As for profits, we’re starting with five negative quarters and we haven’t even begun the inventory liquidation cycle. So the second half will be a real eye-opener.

You’re already seeing a reluctant return to credit-card usage, a clear sign of distress—they are charging what they previously paid with cash. The credit-card delinquency rate is picking up.

CapitalOne: "What's in your wallet?"