The enemy of knowledge is not ignorance, it’s the illusion of knowledge (Stephen Hawking)

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so (Mark Twain)

Invest with smart knowledge and objective odds

THE DAILY EDGE (30 December 2016)

***** HAPPY and HEALTHY NEW YEAR! *****
The Thomson Reuters Same Store Sales Index is expected to come in at 1.8% for December 2016, on
track to post the strongest SSS for 2016, and an improvement from December 2015’s 0.7% result.

Our Thomson Reuters Quarterly Same Store Sales Index, which consists of 80 retailers, is expected to post 1.0% growth for 4Q (vs. 1.4% in 4Q 2015).

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Minimum Wages Set to Increase in Many States in 2017 About 4.4 million workers across the country are slated to receive a raise at the start of the year, a shift that may shed light on a long-running debate about the effects of mandated pay increases at the bottom of the wage scale.

Minimum wages will increase in 20 states at the start of the year, a shift that will lift pay for millions of individuals and shed light on a long-running debate about whether mandated pay increases at the bottom do more harm or good for workers.

In Massachusetts, the minimum wage will rise $1, to $11 an hour, a change that affects about 291,000 workers. In California, the minimum goes up 50 cents, to $10.50 an hour, boosting pay for 1.7 million individuals. (…)

  • Median household income of $58,221 for November just made it back to its 2000 and 2007 levels. (Sentier Research)

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Investors Rethink the Crowded Trump Trade

(…) It is still early to conclude whether the markets’ reversals have staying power.

“Valuations are high, so we may be in for a little bit of a bumpy road if some expected things like infrastructure spending, corporate-tax reform and deregulation don’t occur or have early momentum,” said Tom Manning, chief executive at F.L. Putnam Investment Management. (…)

Crowded? This is nearly as good as it gets as Ed Yardeni illustrates with these II charts: plenty of bulls, a deserted bear camp and “correction” banned from the financial dictionary.

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The blue line below sure needs to stay up!

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THE DAILY EDGE (29 December 2016)

U.S. Retailers on Pace for Best Holiday Season in Years Surging online orders and last-minute shoppers helped retailers make up for a slow start to the holiday-shopping season, fueling hopes that higher wages, the rising stock market, and lower food and gas prices prompted Americans to spend more.

(…) “[Americans] are shopping at a rate not seen since the mid-2000s.” [Craig Johnson, president of Customer Growth Partners]

The firm raised its holiday-sales growth forecast to 4.9% from an initial estimate of 4.1% growth. That pace, according to the firm, would be the fastest growth rate since a 6.1% increase in 2005. Customer Growth Partners’ forecasts—which excludes auto, car parts, fuel and restaurant sales—are based on a weekly in-house survey of retailers across the country combined with broader economic indicators and historical data.

Mastercard’s SpendingPulse survey found that total retail sales, excluding automobile and gas sales, rose 4% from Nov. 1 to Dec. 24, though its results found that the days preceding Christmas were weaker than expected. The survey highlighted men’s apparel and home furnishings as strong points, while jewelry sales fell from a year ago. (…)

RetailNext Inc. a brick-and-mortar retail analytic firm, said net sales at traditional stores fell by 10% from a year earlier during December, with shopper traffic plunging nearly 15%. Those results were partially buoyed by a burst of spending in the final days before Christmas, when sales rose 6.5%, according to RetailNext. (…)

RetailNext said that the average shopper shelled out nearly 11% more during the week before Christmas, offsetting a 3.9% decline in store traffic. (…)

In a sign of the surge of online shopping, United Parcel Service Inc. said it expected to ship 14% more packages this year than last, more than 700 million in total, a record level by volume. FedEx Corp. plan a 10% bump.

But peak season for the carriers isn’t over yet: UPS said it plans to ship 5.8 million packages back to retailers in the first week of January, as consumers send back unwanted items.

Frankly, I just can’t remember any spending spree led by men’s apparel and home furnishings…

Trump Win Could Usher in Boom for U.S. Housing, Says Shiller

(…) “I think we’re at a turning point. The numbers that we’re reporting today are October, before the Trump election, and everything looks different now,” he told Bloomberg Television’s Alix Steel and David Westin. “There might be a Trump boom coming.”

S&P CoreLogic Case-Shiller data released earlier on Tuesday showed that home prices in 20 U.S. cities maintained a steady pace of increases in October, rising by 5.1 percent, while a gauge of nationwide property values rose by the most since mid-2014. (…)

“I’m not forecasting a boom. I find it very hard to forecast at this point in our history because it’s such an important change in government and we just don’t know where it’s going,” he said. (…)

Shiller said that the rise in mortgage rates so far this year was “not a big deal yet” and may actually sow the seeds for further short-term gains in house prices.

“I don’t know how people react to rising mortgage rates,” he said. “One thought is they want to lock it in now. And that’s why we’ve had good home sales recently. And it might continue as mortgage rates rise. This thing could feed a boom. I’m not saying it will.”

“It could. It might. But it may not…Remember I said it first. But if it does not happen, I never said it will happen.” Winking smile

“I don’t know how people react to rising mortgage rates,”…Hmmm…generally not very positively professor:

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Even in the recent low rates era, people tend to react similarly when costs rise rapidly and meaningfully. Just the old normal…

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BTW, yesterday:

The National Association of Realtors said Wednesday that its pending home sales index, which tracks contracts signed for purchases of existing homes, fell 2.5% from October to a seasonally adjusted 107.3 last month. Sales typically close within a month or two of signing.

Housing was already weakening but rising prices and mortgage rates are biting. Pending sales are 6.7% below the April peak and are weak across the country with the possible exception of the Northeast where sales are up 5.7% YoY. (Chart from Haver Analytics)

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  • The Redfin Housing Demand Index, based on thousands of Redfin customers requesting home tours and writing offers, declined 7.3 percent from October to a seasonally-adjusted level of 94 in November.

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