Being home sick today I’ve had all kinds of time to post but my mild fever and interrupted breathing got in the way of the writing process. I’ve done a lot of reading today on the Citigroup bailout (pretty much all of it is here now, via Mark Thoma); I wanted to comment on it this morning but I’ve just been too damned fatigued.
The one thought occurring to me that I’m able to get in writing is that this could be another one of those crazily volatile weeks — like we had in September and October. Paul Kedrosky pointed out this afternoon that the last two trading days has been one of the biggest two-day advances in the history of the Dow index. Number thirteen on a list that includes a period in October 1987 and the rest are from 1929 to 1933. So the stock market gain is anything but reassuring. We could see more record-breaking drops by week’s end too.
What makes this week so special is that it also includes ‘the biggest shopping day of the year,’ Black Friday, and a lot of eyes will be watching the sales numbers for the last week of November, the first big weekend for Christmas shopping.
It looks like discounts will be especially deep this year, and I wouldn’t be surprised if this weekend’s sales are actually quite strong, despite low predictions for the holiday season overall, as more people are determined to find bargains to stretch their dollars. Retailers will do whatever they can to pull some positive numbers out of this weekend. Best Buy and Wal-Mart etc will want to tell their shareholders they’re managing to thrive despite the crisis.
If the stock market stays keen and American shoppers fulfill their patriotic duty this weekend, some headlines next week might even proclaim that the crisis could turn around. But I have a feeling that by the time we get to Boxing Day there might be one or two more major retailers clearing out at bargain prices — literally selling the whole store, bricks and all like Circuit City.
It’s only a matter of time before the hammer falls heavily on demand for electronics and other consumer goods the way it has flattened demand for housing and automotive. [Correction: Or rather, it's only a matter of time before the mainstream, non-business media starts making a big deal about crashing demand for consumer goods.] (How many Sony products do you need to buy in the near future?) I’m increasingly afraid that despite all the volatility and apparent panic about the economy, we still haven’t even gone Code Red yet.
