"Kondratieff" delivering a "New Normal"

The oncoming rush of the “Kondratieff” Long-Wave is now putting the squeeze on ALL retailers, as the DCBF (Debt Crazed Buying Fanatic) of the last few decades is slowly, but very assuredly, being converted into the CFSS (Conservative, Frugal, Sane Shopper) that we identified in the first two paragraphs of our Home Page.

   

Costco First-Quarter Profit Trails Estimates

Bloomberg; By Matt Townsend - Dec 8, 2011 10:16 AM ET

“Costco Wholesale Corp. (COST), the largest U.S. warehouse-club chain, said profit margins shrank in the first quarter amid rising costs.

Net income advanced 2.6 percent to $320 million, or 73 cents a share,…

Costco increased all membership fees by 10 percent last month, the first widespread boost since 2006, after rising costs of commodities narrowed profit margins.. . .”

The long-term detailed forecasts in our inaugural Market Review are born out by the following confirmation of a growing trend to “Down Shop.”   Namely, consumers will be forced to “Down Shop” in ALL retail categories.  Notice the following lingo-creep regarding McDonalds, which is here called a  “restaurant chain.”  Since when did this  ‘fast-food’ chain or ‘cheap food emporium’ chain or ‘hamburger shop’ chain attain the status of restaurant?

The following is absolute proof that the “Kondratieff” Long-Wave will force “Down Shopping” across all retail categories and at the same time it offers proof that the Polestar Communications’ RCPI will much higher than the Commerce Department’s CPI moving forward!

Stay Tuned to this one folks, because the RCPI will shock one and all, who have not been keeping tabs!

And following the article 'highlighting' the revenue surge of McDonald's is another one 'highlighting' the collapse of a real restaurant chain's revenue, which trends we are absolutely certain will continue into the future.     

McDonald’s November Store Sales Rise 7.4%

Bloomberg; By Leslie Patton - Dec 8, 2011 9:33 AM ET

 “McDonald’s Corp. (MCD), the world’s largest restaurant chain, said sales at stores open at least 13 months rose 7.4 percent globally last month, driven by demand in Japan and China.

Analysts forecasted a gain of 5 percent, the average of five estimates compiled by Bloomberg. Sales in Asia, Africa and the Middle East advanced 8.1 percent, the most since December last year, the Oak Brook, Illinois-based company said today in a statement. Analysts projected a gain of 5.9 percent.

…

Surging Costs

Sales in all regions topped estimates, helped by peppermint mochas and chicken McNuggets in the U.S. and promotions in Europe. Both U.S. and European sales rose 6.5 percent. Analysts were expecting growth of 5 percent and 4.3 percent respectively. …

McDonald’s, along with other restaurants, is facing surging ingredient costs and has raised menu prices this year. Commodity inflation will be as much as 5.5 percent in the U.S. and 3.5 percent in Europe during 2012, Bensen said last month. . . “

 Darden Falls After Cutting 2012 Forecasts

Bloomberg; By James Callan - Dec 6, 2011 8:00 AM ET

“Darden Restaurants Inc. (DRI), operator of the Red Lobster and LongHorn Steakhouse chains, declined in New York after cutting its full-year sales and profit growth forecasts.

Darden fell 8.7 percent to $43.61 at 7:49 a.m. The shares had gained 2.4 percent this year before today.

Full-year earnings per share growth from continuing operations will be 4 percent to 7 percent, down from a previous forecast of 12 percent to 15 percent, the Orlando, Florida-based company said today in a statement. …”

As we examined in great detail in our inaugural Market Review issue, the essence of the “Kondratieff” Long-Wave down turn is the paying off or the liquidating of the excess debts that were created in the Internet stock “Bubble” and in the Commercial and Residential RE “Bubble."

The economic pundits are quite fond of calling this process the ‘deleveraging’ of Balance Sheets.  Well, that is one not quite accurate description, because it fails to recognize that the entire process WILL BE FORCED by collapsing RE prices and exploding commodity prices - ultimately affecting all consumables. 

Furthermore, it fails to recognize that the game is now rigged. By that we mean to say that the ‘die is cast’ and the future continued collapse of ALL “Bubble” priced Commercial and Residential RE is a certainty.  And it also fails to recognize that the one still largely intact asset class – the stock market - has been artificially propped up by (perhaps the rumored PPT) but most assuredly by Goldman Sachs and JP Morgan and all the other major banks, who upon unloading their most worthless and questionable mortgages to the FED, immediately placed those released Dollars into the stock markets.  

In fact there is an almost perfect correlation between QE 1 and QE 2 and the "Now Stealth" QE 3 and the stock markets.  We covered these FED machinations to great extent in our inaugural Market Review. 

But when the prop under the markets is removed in the winter of 2012/13, then the resurging “Kondratieff” Long-Wave will continue the ‘deleveraging’ process until ALL Bad debts are either paid off or written off!

That is ALL Bad-Debts except those of the US Government, which will have to be renounced, resulting in the final Tsunami Wave of the “Kondratieff” Long-Wave Super Storm!  

Household Net Worth Falls $2.45 Trillion on Stocks, Housing

Bloomberg; By Timothy R. Homan - Dec 8, 2011 12:12 PM ET

“Household wealth in the U.S. fell from July through September for a second straight quarter as the European debt crisis depressed stocks and home values decreased.

Net worth for households and non-profit groups decreased by $2.45 trillion to $57.4 trillion, the Federal Reserve said today in its flow of funds report from Washington. Americans reduced debt in the third quarter, extending a string of declines dating back three years….

 “We’re kind of in the third inning of the consumer deleveraging at this point,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, said before the report. “Job growth suggests that we’ll see some pace of increases in consumer income.”

The value of household real estate decreased by $98.3 billion in the third quarter after dropping by $37 billion in the previous three months.

Owners’ equity as a share of total household real-estate holdings was little changed at 38.7 percent last quarter, today’s report showed.

Mortgages Outstanding

The volume of outstanding home mortgages was $9.93 trillion at the end of the second quarter, the lowest since the end of 2006, according to separate Federal Reserve data. That means U.S. mortgage debt, a driver of consumer spending during the real estate boom, may be about to enter its fourth year of decline as foreclosures wipe out home loans and housing purchases fall.

The value of financial assets, including stocks and pension fund holdings, held by American households decreased by $2.78 trillion in the third quarter, according to the flow of funds data.

…Total non-financial debt last quarter rose at a 4.3 percent annual pace, led by a 14.1 percent increase by the federal government and a 3.5 percent gain among businesses. State and local government borrowing was little changed.

Shocking Pundit Alert #1 *- Now if, as Mr. Guy LaBas asserts, we are in the 3^rd inning of a ‘deleveraging’ process that stated in roughly the summer of 2007, then with six more innings to go that means, by Mr. Guy LaBas’s playbook, that we have until roughly Christmas of 2019 to see a reestablishment of that famed ‘equilibrium’ in the economic marketplace!

Does that make you executives and principals of businesses in the Retail Space excitedly exuberant and giddily happy? 

And, now do you faintly grasp the nature of the gravity of the situation in this country that this Web Site has been created to expose.  And do you now understand the absolute necessity to immediately create viable means for your business to weather the coming storms?

If you do, then you should consider very carefully the wisdom of gaining another perspective on just what the future may hold for you and for you business in the very next few years.  One such alternative is in the package of services that we offer as our SMS (Survival Mode Strategies) to subscribers of our Market Review. 

* Shocking Pundit Alert (SPA) is a new category of insane prognostication absurdity that I decided to create upon reading this particular individual’s prognostications.