Holiday Shopping 2015

American consumers, start your engines! This weekend kicked off the holiday shopping season and here is what you need to know. Despite the rapid growth of digital sales (the government said that overall E-commerce jumped 15.1 percent in the third quarter from a year ago), most shopping occurs in physical stores. In fact, last quarter, E-commerce accounted for just 7.4 percent of overall retail sales. But these numbers are somewhat misleading, because overall retail sales include the big-ticket automobile category, as well as gas and groceries. According to consultancy Strategy&, these groups are responsible for almost half of total retail sales. Without them, online’s penetration of its “addressable market” is closer to 16 percent.

But that’s not the whole story: Deloitte found that nearly two-thirds of in-store retail sales will be influenced by digital interactions this holiday season, as consumers smarten up and conduct research on their desktops, tablets and phones and consult shopping apps to land the best deals.

Speaking of those bargains, shopping early can pay off. According to Adobe Digital research, online prices should hit rock bottom on Thanksgiving Day, where consumers will snag an average discount of 27 percent. So if you are one of the 45 percent of consumers who can sneak away in between football games and family time to click away, you’ll be rewarded.

If shopping on Thanksgiving -- even from the privacy of your home -- doesn’t sit well with you, try the Monday before Thanksgiving, which has been a good option to beat the rush and still get deals. Adobe also found that the best time to buy depends on both discounts and product availability, especially for hot-selling gifts. In fact, this weekend is the best time to shop for toys and Monday is good for electronics, though the entire week leading up to Thanksgiving will deliver bargains.

Before you hit the stores, don’t forget to download a few apps to help: Red Laser, Snip Snap and Coupon Sherpa can help you score the best deals and find extra savings and Slice keeps tabs of your online purchases by monitoring your email and extracting online order details. The app also notifies you about price drops on recent purchases and helps you get a refund when possible.

Finally, a quick word about security…when shopping in a brick and mortar location, the safest choice is cash at the checkout counter, but that too has risk, because who really wants to shop with wads of cash? For convenience, credit cards are the safest option because issuers usually provide protection against stolen, damaged or lost items. Additionally, if credit card information is stolen or compromised, your liability is minimized, whereas a debit card thief could drain your bank account before you notice.

And during this time, carefully review your credit card statements as soon as you receive them to make sure there aren’t any unauthorized charges. If there is a discrepancy, call your bank and report it immediately. If you think that your information has been compromised or that you have been a victim of identity theft, go to the FTC website for step-by-step instructions about what you need to do.

MARKETS: The bulls had visions of Sugar Plum fairies this week, as stocks reversed most of the previous week’s losses.

DJIA: 17,823 up 3.4% on week, up 0.2% YTD
S&P 500: 2,089 up 3.3% on week, up 1.5% YTD (best week in almost a year)
NASDAQ: 5,106 up 3.6% on week, up 7.8% YTD
Russell 2000: 1175, up 2.5% on week, down 2.5% YTD
10-Year Treasury yield: 2.26% (from 2.28% a week ago)
Dec Crude: $40.39, down 0.9% on week
Dec Gold: $1,076.30, down 0.4% on week (fifth straight weekly drop)
AAA Nat'l avg. for gallon of reg. gas: $2.09 (from $2.18 wk ago, $2.84 a year ago)

THE WEEK AHEAD:

Mon 11/23:

8:30 Chicago Fed Nat’l Activity Index

10:00 Existing Home Sales

Tues 11/24:

8:30 Q3 GDP (2^nd Estimate)

9:15 Case Shiller Home Price Index

10:00 Consumer Confidence

Weds 11/25:

8:30 Personal Income and Spending

8:30 Durable Goods Orders

10:00 New Home Sales

10:00 Consumer Sentiment

Thursday 11/26: THANKSGIVING DAY-ALL US MARKETS CLOSED

Friday 11/27: BLACK FRIDAY

1:00 U.S. Markets close early

With Halloween in the rear-view mirror, it’s time to talk HOLIDAY SHOPPING 2015 -- now that’s scary! The always-dubious National Retail Federation (NRF), the industry cheerleader, is predicting a 3.7 percent increase in holiday spending. As Barry Ritholtz has noted, “the methodology employed by the NRF survey is defective, because it relies on asking consumers how much they spent last year, and how much they plan on spending this year.” Of course, people have “no idea what they spent last year. No clue whatsoever,” which is why “the track records of these surveys are awful.” So what’s really going on for consumers, as we head into the final two months of the year? Although wage gains have been paltry, low prices overall (health care costs not withstanding) have amounted to extra money in the wallets of most Americans. They are spending some of that money on long lasting goods, like cars, as well as services; and also saving at a decent 4.8 percent rate.

The dual trends of pokey wage increases amid low inflation encouraged the Fed to maintain 0 - 0.25 percent interest rates at its meeting last week, but the central bankers also left the door open to a possible rate hike at the final policy meeting of the year. Before that confab, there will be two more employment reports: one this week and then another on the first Friday in December. What might get the Fed to act in December is a pick up in job creation and wages. The prior three months has seen an average monthly gain of just 167,000, down from the nearly 200,000 this year and annual wage gains have been stuck at 2 - 2.2 percent.

Economists expect that 175,000 – 185,000 jobs were created last month at that the unemployment rate will remain at 5.1 percent. The Fed may also keep an eye on the participation rate (the number of Americans working or actively seeking employment), which dropped to a 40-year of low of 62.4 percent in September.

According to Capital Economics, most of the 4.5 percent decline in the rate from the peak of 67.3 percent in 2000 is due to the aging of the population (1.8%), rising disability (1.2%) and an increase in post-secondary education enrolment (0.9%), there will continue to be a chorus of commentators, who will cite participation rate as a rationale for the nation’s woeful job market. It may be helpful to know that just 0.6 percent of the decrease should be attributed to the recession. “It is notable that, even with the job openings rate at a record high and the unemployment rate within touching distance of the long-run natural rate, the participation rate continues to trend relentlessly lower.”

MARKETS:

DJIA: 17,663 up 0.1% on week, up 8.6% on month, down 0.9 YTD
S&P 500: 2,079 up .2% on week, up 8.3% on month, up 1% YTD (best month in 4 yrs)
NASDAQ: 5,053 up 0.4% on week, up 9.2% on month, up 6.7% YTD
Russell 2000: 1161, down 0.4% on week, up 5.9% on month, down 3.6% YTD
10-Year Treasury yield: 2.09% (from 2.03%)
December Crude: $46.59
December Gold: $1,141.40
AAA Nat'l avg. for gallon of reg. gas: $2.18 (from $2.21 wk ago, $3.00 a year ago)

THE WEEK AHEAD:

Mon 11/2:

9:45 PMI Manufacturing Index

10:00 New Home Sales

10:00 Construction Spending

Tues 11/3:

Motor Vehicle Sales

10:00 Factory Orders

Weds 11/4:

8:15 ADP Private Jobs Report

8:30 International Trade

10:00 ISM Non-Manufacturing Index

Thurs 11/5:

8:30 Productivity

Fri 11/5:

8:30 October Employment Report

3:00 Consumer Credit

Thanksgiving Week Holiday Shopping

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