Hurry! Only 121 Shopping Days Left Before Christmas; What to Expect This Holiday Season; Perpetual Christmas

Better hurry. There's "only" 121 shopping days left before Christmas.

If you think that sounds ridiculous so do I. But all it takes is for one major retailer to start Christmas promotions a few days earlier than last year, and all the lemming fall in line.

Thus, retailers en masses started bombarding customers with Christmas promotions three days sooner this year than last.

What to Expect This Holiday Season

MarketWatch says Wal-Mart’s free layaway launch foreshadows a competitive holiday to come.

Many top retailers have cut their full-year earnings outlooks, a clear indication they see a rough holiday season ahead.

Wal-Mart Stores Inc. WMT , cognizant of the climate, is wasting no time getting a jump on the competition.

Merchandising and marketing chief Duncan Mac Naughton, speaking Wednesday before 6,000 employees at Wal-Mart’s annual holiday meeting, said the company for the first time will introduce free layaway with no opening fee and no gift-card reimbursements. Last year, Wal-Mart layaways carried a $5 fee. It’s also adding infant toys, car stereos and other automotive electronics to the list of categories available for layaway.  The program starts Sept. 13, three days earlier this year, and lasts through Dec. 13.

Citigroup analyst Deborah Weinswig said Wal-Mart’s layaway-tied sales last holiday season rose about 10%. “We have a cautious view on the consumer,” she said, adding Wal-Mart’s no-fee program will resonate with shoppers given the challenging economic environment.

Christmas in August

As goes Wal-Mart, so goes the rest of retail. On Thursday CNBC stated Retailers start Xmas deals.

Even before the school bells are ringing for many families, retailers are sounding sleigh bells.

Yes, that's right. With 120-plus shopping days left, stores are already talking up their holiday offers.

Toys R Us announced Wednesday that it would expand its price-match guarantee to include online retailers including Amazon.com, Walmart.com, Target.com and BestBuy.com, among others. The aim, according to the release, "Removing any doubt before holiday shopping begins in earnest that customers are receiving the best available prices."

"Retailers are determined not to be left on the sidelines," said Dave Cheatham, managing principal of Velocity Retail Group. "They're reinventing the rules on how to do holiday shopping."

And there is some basis for the Christmas-in-August approach. "We do know that 40 percent of holiday shoppers say they begin shopping before Halloween," said Kathy Grannis, spokeswoman for the National Retail Federation. If it draws in even a few extra customers, early action can be a big advantage in a competitive season, she said.

"Perpetual Christmas"

So when does Christmas in July start? Heck, why not perpetual Christmas?

And I have just the slogan: "It's always Christmas at Wal-Mart". And if it's "Always Christmas",  there's never any shopping days left - so you really better hurry with that shopping!

Wal-Mart better grab this slogan before Amazon does.

Retailers seem to be worried. But if consumers behave rationally for a change, it will be a good thing.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Brazil Plans $60 Billion Currency Intervention Scheme; Indonesia Abandons Intervention, Adopts Other Measures

The Financial Times reports Brazil, Indonesia launch measures to shore up their currencies.

Brazil and Indonesia have moved to stem the declines in their currencies and shore up confidence at the end of a torrid week for emerging markets where local borrowing costs hit a two-year high.

The central bank of Latin America’s largest economy said late on Thursday that it would launch a currency intervention programme worth about $60bn to ensure liquidity and reduce volatility in the nation’s foreign exchange market.

On Friday, Indonesia’s chief economic minister Hatta Rajasa told reporters that the government would increase import taxes on luxury cars, introduce tax incentives for companies investing in agriculture and metals industries and aim to reduce oil imports.

Brazil’s huge programme, which will be conducted through currency swap and repurchase agreements, follows a more than 15 per cent depreciation in the real against the dollar this year to its weakest levels in more than four years.

Brazil’s central bank said in its statement that it would on Monday to Thursday offer $500m a day in currency swaps to support the real, while on Fridays it would sell $1bn on the spot market through repurchase agreements.

“If judged appropriate, the central bank will take additional measures,” the bank said in the statement. The programme, which will last until December, follows intervention this year by the bank through derivative markets and other means worth about $45bn.

Brazil's  Currency War

These moves by Brazil  are rather amusing since Brazil launched a "currency war" while complaining bitterly over the past two years that its currency was too strong.

Flashback March 3, 2012: Brazil Declares New Currency War on US and Europe; Japan Losing Balance of Trade Battle

Brazil has declared a fresh “currency war” on the US and Europe, extending a tax on foreign borrowings and threatening further capital controls in an effort to protect the country’s struggling manufacturers.

Guido Mantega, the finance minister who was the first to use the controversial term in 2010, said the government would not “sit by passively” as developed nations continue to pursue expansionary monetary policies at the expense of Brazil.

“When the real appreciates, it reduces our competitiveness. Exports are more expensive, imports are cheaper and it creates unfair competition for businesses in Brazil,” he said on Thursday after announcing changes to the so-called IOF tax.

Be Careful of What You Ask 

Countries need to be careful of what they ask as they just might get it.  Brazil got what it asked and now does not want it.

OK Guido, what happened to the increased competitiveness you thought you were going to get?

Brazil's currency madness should provide a lesson for Japan, but it won't.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Diversion from Down Under

Here is an extremely well done video by reader Peter Sonners who lives in Australia. I offer this as a weekend diversion from economic news, war news, political news, etc.



Link if video does not play: King Tide on Tallebudgera Creek.

"Just once or twice a year, the mangrove forest next to Tallebudgera Creek floods deep enough to paddle all the way through to the other side"

Enjoy.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Prepare for War: Pentagon Crafts "Limited Strike Plans" for Syria; U.S. Forces Ready to Act With "Wide Range of Options"; Lose-Lose Situation For US; A Sensible Option

Flashback May 17, 2013: Foreign Policy magazine reports Obama rules out unilateral action in Syria as Russia ships advanced missiles to Assad

Top News: U.S. President Barack Obama again ruled out unilateral U.S. military action in Syria at a press conference with Turkish Prime Minister Recep Tayyip Erdogan yesterday. "It's not going to be something that the United States does by itself. And I don't think anybody in the region would think that U.S. unilateral actions … would bring about a better outcome," the president said, promising to "keep increasing the pressure on the Assad regime and working with the Syrian opposition.”

Pentagon Crafts Limited Strike Plans for Syria

Today's "Top News" looks remarkably different: Pentagon Crafts Limited Strike Plans for Syria

A U.S. official said the Pentagon has crafted military options for limited U.S. air strikes in Syria that would send a message to the regime of President Bashar al Assad not to continue using chemical weapons against its civilians. There has been no presidential decision to use the military options, and U.S. intelligence continues to investigate an apparent large-scale chemical weapons attack by the Assad regime this week that may have killed as many as 1,000 civilians.

The official said the military options developed for consideration by the White House are limited in scope and would be intended to “deter or prevent” the Assad regime from the further use of chemical weapons.The options are not intended to remove the  Syrian president,  who has tenaciously hung on to power as Syria’s two-year civil war has raged on.

Traveling on a plane to Malaysia, Secretary of Defense Chuck Hagel confirmed to reporters that  Obama had asked the Pentagon to provide military options in Syria in light of the reported use of chemical weapons against civilians by the civilian government.

Ready to Act

Bloomberg reports U.S. Forces Are Ready to Act on Syria as UN Envoy Arrives.

“The Defense Department has a responsibility to provide the president with options for all contingencies,” Hagel told reporters yesterday while en route to Kuala Lumpur, where he starts a week-long visit to the region. “That requires positioning our forces, positioning our assets to be able to carry out different options, whatever option the president may choose.”

Military options include the repositioning of personnel and assets including ships, so as to be ready if the president chooses a military intervention, a senior U.S. defense official told reporters, speaking on condition of anonymity to discuss internal planning.

Obama is under increased pressure to intervene in Syria amid allegations that President Bashar al-Assad’s government used chemical arms in an Aug. 21 attack in a Damascus suburb that opposition groups say killed 1,300 people.

French Foreign Minister Laurent Fabius called on the world to respond “with force” to any use of chemical weapons.

Iran’s foreign ministry warned against any international military action in Syria today, saying that intervention would heighten tensions in the Middle East.

“There are no international authorizations for a military intervention in Syria,” foreign ministry spokesman Abbas Araghchi was quoted as saying by the state-run Iranian Students’ News Agency. “We warn against any moves or announcements that would result in further tensions in the region.”

"Wide Range of Options"

Liberty Radio reports Obama To Meet National Security Team To Discuss Syria

The White House says President Barack Obama is meeting with his national security advisers to discuss possible next steps in Syria.

The meeting comes amid reports that the Syrian government has carried out a toxic-gas attack near Damascus on August 21.

A White House official said in a statement Washington had "a wide range of options available."

Hagel said Obama had asked the Pentagon to prepare military options for Syria, and that some of these options "require positioning our forces."

Lose-Lose Proposition

Edward N. Luttwak, in a New York Times Op-Ed says In Syria, America Loses if Either Side Wins

The Obama administration should resist the temptation to intervene more forcefully in Syria’s civil war. A victory by either side would be equally undesirable for the United States.

At this point, a prolonged stalemate is the only outcome that would not be damaging to American interests.

Indeed, it would be disastrous if President Bashar al-Assad’s regime were to emerge victorious after fully suppressing the rebellion and restoring its control over the entire country. Iranian money, weapons and operatives and Hezbollah troops have become key factors in the fighting, and Mr. Assad’s triumph would dramatically affirm the power and prestige of Shiite Iran and Hezbollah, its Lebanon-based proxy — posing a direct threat both to the Sunni Arab states and to Israel.

But a rebel victory would also be extremely dangerous for the United States and for many of its allies in Europe and the Middle East. That’s because extremist groups, some identified with Al Qaeda, have become the most effective fighting force in Syria. If those rebel groups manage to win, they would almost certainly try to form a government hostile to the United States. Moreover, Israel could not expect tranquility on its northern border if the jihadis were to triumph in Syria.

The war is now being waged by petty warlords and dangerous extremists of every sort: Taliban-style Salafist fanatics who beat and kill even devout Sunnis because they fail to ape their alien ways; Sunni extremists who have been murdering innocent Alawites and Christians merely because of their religion; and jihadis from Iraq and all over the world who have advertised their intention to turn Syria into a base for global jihad aimed at Europe and the United States.

Given this depressing state of affairs, a decisive outcome for either side would be unacceptable for the United States.

There is only one outcome that the United States can possibly favor: an indefinite draw.

By tying down Mr. Assad’s army and its Iranian and Hezbollah allies in a war against Al Qaeda-aligned extremist fighters, four of Washington’s enemies will be engaged in war among themselves and prevented from attacking Americans or America’s allies.

That this is now the best option is unfortunate, indeed tragic, but favoring it is not a cruel imposition on the people of Syria, because a great majority of them are facing exactly the same predicament.

Maintain Stalemate Says Luttwak

Luttwak continues with a hugely controversial set of statements "Maintaining a stalemate should be America’s objective. And the only possible method for achieving this is to arm the rebels when it seems that Mr. Assad’s forces are ascendant and to stop supplying the rebels if they actually seem to be winning."

Stalemate Option Foolhardy

Up until his "maintain stalemate" position, Luttwak was on track. The point being the US receives no particular benefit regardless of who wins.

Yet, by alternating support depending on who was winning, both sides would resent US tactics. And sooner or later one side is going to win by some US miscalculation somewhere, intervention by Russia, or intervention by other Mideast countries.

In the meantime, the hot-cold practice of on-again off-again backing of both sides would be 100% guaranteed to inflame tensions in Iran, Iraq, and Saudi Arabia (all of which would resent US policy).

Better if Assad Won?
 
One might even argue it would be better if Assad won than a group of belligerent Al Qaeda rebels guaranteed to stir up more problems in the region if they win.

Yet backing Assad is hardly an option.

Sensible Option

I suggest the sensible option is to condemn chemicals, condemn bloodshed, and otherwise stay out of the mess.

Unfortunately, I strongly suspect the US will not choose the sensible option. Preparing a wide range of military options and sending forces to the area is hardly encouraging. So mentally prepare for the US to engage in another senseless, unwinnable war, that we cannot afford in the first place.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Humorous Clarke and Dawe Video - Same Special Subject as Everyone Else - Ben Bernanke

Here's a bit of weekend humor on Ben Bernanke.



Link if video does not play: Clarke and Dawe - Same Special Subject as Everyone Else

Here is a flashback to another Clarke and Dawe Video, one of the funniest ever.



Link if video does not play: Clarke and Dawe: Lending merry-go-round

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Outlook for Jobs and Confidence in Economy Sink

Gallup reports Americans Sour Slightly on Quality Jobs Market.

The market for quality jobs may be cooling. The 21% of Americans who say now is a good time to find a quality job is down from 25% in July -- and the most negative reading this year. Now, 76% say it is a bad time to find a quality job, up from 70% in July.



Prior to this month, Americans' views of the availability of quality jobs, though still generally pessimistic, had been improving. The percentage saying now is a good time to find quality work rose through most of 2012 and increased further in 2013. But that momentum appears to be fading, which could be due to a variety of economic factors. Americans' quality jobs outlook has worsened at the same time that their confidence in the economy has declined and the U.S. Payroll to Population employment rate has been stagnant.

Confidence in the Economy Sinks



It should not be surprising to discover confidence in the economy has slipped along with availability of jobs given a huge rise in polled unemployment.

For a complete detailed analysis of Gallup employment trends, please see Gallup Unemployment Rate Spikes from 7.9% on Aug 1 to 8.9% on August 20! Sampling Error or Seasonal Effect?

Expect a Jump in BLS Reported Unemployment

I expect to see a strong jump in the BLS unemployment rate unless the Gallup unemployment trend reverses significantly, and soon.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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New Home Sales Plunge 13.4% in July, June Revised Lower; Blame Rising Mortgage Rates; Starts 896,000 - Sales 394,000 - Hmmm

On August 14 I penned Mortgage Applications Decline 13th Time in 15 Weeks; Are Mortgage Rates Cheap? What's Next For Housing?.

Pertinent Snips

30-Year Fixed Rate Mortgages



Explaining the Rebound in Housing

If you are looking for what fueled the rebound in home sales and the increase in home prices, look no further than the above chart.

In the two-year period from December 2010 until December 2012, the rate on popular 30-year mortgages fell from 4.97% to 3.42%, a decline of 155 basis points (1.55 percentage points). In April, rates were still near record lows at 3.56%.

Treasury Yields and Housing Affordability

On June 24, in 10-Year Treasury Yield Up 100 Basis Points Since May; What's That Mean for Mortgage Rates and Housing Affordability? I commented ...

Anyone who stretched to buy is no longer qualified unless they locked some time ago.

Refinancing will soon be dead in the water (anyone who has not already locked no longer has any incentive) and new home affordability has taken a big hit.

Mainstream media talking heads say this will not affect the housing recovery. Assuming this trend sticks (even if rates simply level off now), how can this bond revolt not affect housing?

Sales Plunge Starts Rise

Today, the Census Bureau reports New Home Sales Plunge 13.4%



June was revised lower to 455,000 from previously reported 497,000.

Why the Surprise?

None of this should be a surprise given what I said on August 14. Nonetheless, it was a surprise.

USA Today posted charts of new and existing sales along with this comment "Sales of new homes plunged in July. The seasonally adjusted annual sales pace of 394,000 missed analysts' expectations of 487,000."

New Home Sales



Existing Home Sales



Comments From Bloomberg

Here's a few comments from Bloomberg.

Sales of newly built homes declined 13.4 percent to a 394,000 annualized pace, the weakest since October, following a 455,000 rate in the prior period that was lower than previously estimated, Commerce Department figures showed in Washington. The median estimate of 74 economists surveyed by Bloomberg called for a decrease to 487,000. Last month’s decline was the biggest since May 2010. 

Purchases of previously owned homes jumped in July to the second-highest level in more than six years, data showed Aug. 21.

“New-home sales data was weak, but the existing-home sales was very good -- there’s nothing that changes the FOMC general picture that the housing market continues to recover,” Greg Anderson, head of global foreign exchange strategy at Bank of Montreal, said by phone from New York

That's a rather curious statement from the head of global foreign exchange strategy at Bank of Montreal.

New home sales are recorded at signing while existing home sales are recorded at closing. The surge in existing sales reflects contracts written months ago and possibly contracts rushed to closing to beat rate increases. Thus, we need to wait a month minimum to see what effect rising rates had on existing sales.

The plunge in July new home sales coupled with June revisions lower perfectly coincides with rising rates and "Mortgage Applications Decline 13th Time in 15 Weeks".

Builders Still Optimistic

Don't worry! Builders aren't. Housing starts are up 5.9% to a whopping 896,000 with sales coming in at an annual rate of a mere 394,000, a decline of 13.4%! Is that optimistic or what?

I sense a drop in prices and a further plunge in home buying if mortgage rates continue to rise. Home builders and analysts will be surprised when that happens.

Addendum:

Reader Michael responded Permits include condos. He also commented "A housing start is recorded when the permit is issued so it doesn't necessarily mean the house will be built in the immediate future if ever."

Actually a "start" is recorded when ground-breaking begins.

But, as Michael points out, total permits to new home sales are not directly comparable. Nonetheless, rising permits with declining sales does seem to reflect a bit of unwarranted optimism.

If homebuilders learned their lesson, those permits will gather dust.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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