On Retailers, Madoff Scandal, US Dollar

The usual round of various news stories and other tidbits from around the web that I think you may find interesting:

As Christmas approach many retailers are planning major sales with discounts that are deeper than those offered during Black Friday, which pretty much sums up how dismal this particular shopping season has been for retailers. I suspect the sales will show mixed results due to many consumers being either finished with their shopping for their year, and other consumers just being snowed in.

On a short to medium term basis I’m actually more interested in how many retailers are forced to declare bankruptcy, liquidate, close stores, etc, than I am in the actual sales tallies. While it’s practically a given that Circuit City probably won’t survive, how many other retailers will join them and how will this impact the overall retail landscape?

I’m also curious as to how the economy will impact grocery stores and pharmacy chains in particular in light of Wal-Mart’s (WMT) success, which I think is primarily driven by people going down market for necessities. The way I see it people are cutting back on discretionary expenses which is hurting chains like Target (TGT), Macy’s (M), and the rest, and are looking for cheaper sources for food and basics like Laundry Detergent. Let’s not forget that some of the big Black Friday bargains were for food, soap and other basics.

It will be interesting to see how things play out in the traditional grocery and pharmacy space.

Speaking of the above here is a link to an article(WSJ) discussing Rite-Aid’s recent Q3 loss, now Rite-Aid has been struggling for some time and it makes sense that the current economic climate would only make things worse. However I believe that it’s not just a slow economy they have to contend with, it’s Wal-Mart’s rapidly growing presence in the pharmacy space as well as a slow economy pushing consumers down market.

Quick investing article discussing earnings quality, and how the gap between operating earnings and “as reported” (true earnings) widens during tough economic times.

Here is a link to an interactive graphic from the Financial Times that  details the amount lost by various major investors who were swindled by the Madoff Hedge Fund fraud, as you can see there are some fairly big names on the list, and not all of the swindled investors have been identified yet.

The FT has a page dedicating to covering the Madoff scandal that you can find here, and you can read the WSJ’s coverage of same here.

You can read WSJ coverage of the recent rate cuts here, and coverage from the FT on same here.

In “water is wet news” the Dollar plunged against various currencies in wake of the Fed’s move to “zero” interest rates; something we can expect more of as the Fed continues it’s “flood the world with dollars” strategy. However the dollar’s weakness will be muted by the fact that EU and the UK are likely to cut interest rates as well; although it’s probable that the former won’t cut as aggressively as the latter. On a medium term basis the outlook for the dollar will probably be more dependent on the Fed’s ability to clean up the mess caused by excess dollar liquidity, more than it will be on future interest rates, as the impact of the Fed’s current actions will be with us for some time.

Disclosure: at the time of publishing the author didn’t own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn’t be viewed as financial or investment advice.

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