I hope everyone had an enjoyable Thanksgiving holiday. In the tradition of Black Friday, we now have Green Monday as nearly every stock in the S&P 500 was up (read: green) today. However, this is coming off the worst weekly Thanksgiving performance since 1932.
We were down 6% in 3.5 days and now up 3% today. On top of this we had the worst September in 20 years, followed by the best October in 30 years. This is no way to get Main Street back on the investing bandwagon!
Why the rally? A few items to note. First, after the most recent bout of selling you had profit taking from those who were short stocks. Also, over the past seven months we have seen significant month-end mark-ups, only to be followed by a resumption in selling.
On Sunday we had a report for the Italian paper, La Stompa citing no sources that The International Monetary Fund (IMF) is discussing a rescue package for Italy amid concern that market bases solutions will not save the country. Remember this point whenever you hear IMF: the USA’s quota of anything IMF related = 17.1%, with Japan has 2nd highest quota at 6.1%, then Germany at 6%.
Finally, you had what is shaping up to be a record level of shopping activity over the Black Friday holiday. Or should we call it the Black Thursday to Monday shopping/discounting bonanza? Maybe we should just move Thanksgiving dinner to breakfast so we can open the stores at 12 PM!
Not to be a downer, but a few key issues with these reports. First, they are estimates as it would be impossible to know the full extent of sales on Sunday night of the holiday. Second, these sales numbers from the National Retail Federation are self-reported.
Third and we will not know this until next quarter, but did Black Thursday/Friday door-buster sales borrow from future sales? The National Retail Federation Survey of close to 4,000 people suggests that most consumers spent an average of about $400 during the Black Friday weekend, more than half of what they intend to spend during the entire holiday season.
Finally, deeper markdowns and extended hours (thanks to Debbie Clark for pointing this out) over previous years should also boost comparisons. So in summary, the sales numbers will be big, but how will profit margins hold up and how will the high-end shopper spend this year. Stay tuned! {TJM}
Disclosure
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Meyer Capital Group), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Meyer Capital Group. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Meyer Capital Group is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Meyer Capital Group’s current written disclosure statement discussing our advisory services and fees is available for review upon request.