Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Some of you don't get the point regarding corporate buybacks. When a company can't find any better way to invest money than to buy itself something is wrong with either the company or the business climate. And many times a company buys back its stock just to support stock price to enrich officers with stock options.
You don't get the point regarding capital structure. Investing money into your own stock buy back says they have more faith in their own company than going outside to get a return on their investment. Secondly, if debt is cheap with low rates, it's better to swap out fixed debt payments with a known payout rather than a variable equity payout. If you're doing well it's better to hold more of the equity and take the gains for yourself and pay off low interest debt.
Some retail stores have been closing but this is a natural occurrence in the real world. As a shopping center ages, it has to be rebuilt at least every 20 years or so, as buyers move to other newer brighter shopping centers. The old one has the leases run out for the anchor stores, who move to the new facilities. Some close, as a neighborhood runs down, and some even over a period of 20 years or so go from nice middle class area to a slum, which means any good store will close as buyers desert it. Those stores that are closing loser stores, are largely opening new ones in more stable areas of town.
Housing sales give no indication of any recession.
This has happened in my town. The one indoor mall has been around for over 40 years and little by little the neighborhood has gone downhill and everyone refers to it as the "ghetto mall". Most women I know won't go there after dark by themselves including me. The four anchor stores have been reduced to three: J.C. Penney's, Macy's and Sears and all of those have been having store closings.
However we have many upscale outdoor malls and several outlet malls which keep adding new stores. It's hard to gauge the economy these days on brick & mortar stores.
On the Real Estate front, I've noticed many listings with "price reduced" signs on them. However, as my realtor/friend told me, here in Florida many owners reduce their home price once the snowbirds go home in April.
Some of you don't get the point regarding corporate buybacks. When a company can't find any better way to invest money than to buy itself something is wrong with either the company or the business climate. And many times a company buys back its stock just to support stock price to enrich officers with stock options.
NJBOY3 you get it. Corporate Share buy-backs are the latest BIG SCAM brought to you by (you guessed it) the friendly Federal Reserve Bank. That's right. Corporations have figured out that when no one is buying your stock, and revenues are declining, what can you do if not cheat a little bit, right?
Low interest rates have allowed many companies losing money hand-over-fist, to buy back their own shares, reducing the number of outstanding shares to drive up EARNINGS PER SHARE. As long as investment media agrees to focus on (dumped-down) EPS expectations and not sales or income, stocks continue to shink a bright spotlight on their own honor.
There are two ways to drive up EPS: (1) make money; (2) take on more debt and buy back shares to trick the public. The first way is the method of successful capitalism; the second method is the way of corrupt capitalism in bed with the state to avoid the picture of failure.
We all have witnessed in our recent history many companies that are clearly failing in the marketplace, companies with seriously declining sales but with never ending stock price appreciation. This is not what capitalism was supposed to be about, was it? No, it wasn't. The FIX was in. The Federal Reserve, with it's low interest rate policy, had fixed the game. The FIX was the repression of rates to allow companies losing ground in the global depression to pretend they were really winning by allowing/encouraging these companies to borrow money at low rates to buy back their own shares. By retiring shares through these purchases, companies changed reality to make it look like earnings were actually going up. Of course, debt is rising; it is low-interest debt, true; and company officials are collecting those infamous bonuses that are tied to stock price appreciation.
How does all of this work? Let's say company XYZQ projected earnings are $17,000,000,000 and this company has 8,330,000,000 outstanding shares. $17,000,000,000 divided by 8,330,000,000 equals 2.04 EPS right?
Then all of a sudden XYZQ experiences a bad quarter and has revenues decline by $1,000,000,000. It's not the end of the world - they are still selling $16,000,000,000. But the EPS declines from 2.04 to 1.92. This is about a 6% decline. If the headline reads: "XYZQ earnings decline 6%" - investors might notice this. So, companies can trick investors by buying back shares. If you don't improve the earning side of the equation, you improve the shares side of the equation - while you also take on more debt as a company. In fact, these are two negatives, that seem like a positive.
Let's say the company in question declines in revenues by the agreed-upon $1,000,000,000 but buys back a billion shares. Suddenly, the company is not reporting a negative quarter, the actual loss of $1billion in sales, but they report EPS surged from $2.04 to $2.18. Investors don't even notice that sales are going down. Earning (per share) are up a whoppiing 14%.
And our government enables this type of cheating on Wall Street. They are all in bed together. The government passes laws to help Wall Street take money from investors - and then Wall Street rewards the governors who, when finally replaced in Washington by voters, go to Wall Street for $1million/year jobs.
This is State Capitalism, government and business soaking the public together. Where does corporate income originate? The money is not grown on trees. It comes from consumers. When the government regulates Wall Street, profits are more honest. When government realizes that they can join Wall Street to get rich quick by soaking consumers, then we have a state of crisis, cataclysm. The only way for the public to continues buying is through lower and lower interest rates, more and more debt - debt slavery in fact. When the Big Government enables Big Business (as partners in crime) to enslave the public, and rob them at will, this is a cataclysm. This is socialism for the rich. This is NOT what capitalism is supposed to be about. This is robbing the future of America to keep the rich rich.
If you knew in advance of the crash of 1987 and stayed out of the market for the entire year (Jan 1, 1987 to Jan 1, 1988) then you still didn't come out the winner. This is the problem with trying to time these things.
This has happened in my town. The one indoor mall has been around for over 40 years and little by little the neighborhood has gone downhill and everyone refers to it as the "ghetto mall". Most women I know won't go there after dark by themselves including me. The four anchor stores have been reduced to three: J.C. Penney's, Macy's and Sears and all of those have been having store closings.
However we have many upscale outdoor malls and several outlet malls which keep adding new stores. It's hard to gauge the economy these days on brick & mortar stores.
On the Real Estate front, I've noticed many listings with "price reduced" signs on them. However, as my realtor/friend told me, here in Florida many owners reduce their home price once the snowbirds go home in April.
There is a lot of truth to the indoor mall story you are talking about. This has been a trend for 10 or more years. It is simply sign of what people want and has nothing to do with the economy. People are inclined to enjoy the newer look of outdoor malls, with brick sidewalks, trendy specialty store and cool restaurants. But even many chain restaurants are in trouble. More people are leaning toward independent dining. Shopping wise, as most know is happening on line or at the big box stores.
Here the real estate market is very strong. Of course there are signs "price reduced" but according to the realtors, if a home is price right it will sell in hours or a few days. There will always be the guy who thinks his home is more valuable than the neighbors home or guy who hopes to find a fool out there that will pay thousands of $$s more for his home than it is worth.
Well, "priced right" and selling within a few days are great things in the eyes of realtors. Not so much in the eyes of sellers. Any seller knows that he or she can sell more quickly into the bottom of the market, but thousands of extra dollars can be had simply by waiting for someone from nearer the top of the market to come along. Those extra dollars are what will pay for your next home or fund your retirement, so holding something other than a fire sale can be a very beneficial.
Well, "priced right" and selling within a few days are great things in the eyes of realtors. Not so much in the eyes of sellers. Any seller knows that he or she can sell more quickly into the bottom of the market, but thousands of extra dollars can be had simply by waiting for someone from nearer the top of the market to come along. Those extra dollars are what will pay for your next home or fund your retirement, so holding something other than a fire sale can be a very beneficial.
Certainly we are not talking about selling below market value by any means. We are talking pricing right. As an X realtor I can tell you with certainty a house that sits on the market more than a month becomes stale and loses its appeal. People who hold out for top $$ even when they are shown the comps ends up losing out on a good market. The wise seller will interview 3 agents, look at the comps and go with the middle of the three.
The buyer's realtor and the seller's realtor are working at odds with each other. Buyers themselves want bargains. Sellers want buyers who see the value in a home. It's a contest that can settle all over the place. Making the process work well for your side is not an easy task. Opportunities to give in will be plentiful but will cost you money. The average in my area was 53 days on the market in March of this year. That was typical, not exceptional.
With the way we are trending towards shooting from the hip with our market interests again and the market being due for a correction, yes.
"....shooting from the hip with our market interest...."
I have no idea what that is supposed to mean.
"....due for a correction....."
In case you did not notice we had a couple of sizeable corrections, one in the Fall of 2015 and another in the first quarter of 2016. How often do you think we should be due?
retail sales were at their peak when recession begun,
Because the recession was happening on the business/corporate end of the economic cycle. It has taken this long for it to reach the consumer side of the cycle.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
