Wednesday's Mix Tape

The usual round-up of interesting news stories and other tidbits I think you may find interesting: 

Let's start off with something lighthearted: 15 reasons why Mr. Rogers was the best neighbor ever; while I'm not exactly a shiny happy optimist but in times like this it's nice to read something like this considering everything that's going on right now.

Here is a listing of the banks that are participating in the TARP program, it includes the date the capital infusion was announced and the amount received by the bank through 11/3/08. The list is sortable by bank, state and amount.

Generally speaking the best way to look at this list is to think about the amount received Vs. their market cap, P/L for '07 and '08, and loan losses & write downs; the reason for this is that it can help you to differentiate between the banks that are using TARP as a cheap way to raise capital/not to lose a competitive advantage and those that are taking TARP money to remain solvent.

Looking at the car industry for a second, here is a listing of the top 20 vehicles sold last month as well as the YoY change in sales from '07. Ironically despite Detroit's troubles the Chevy Malibu and the Ford Focus are the only cars to show double digit increases from last year (no doubt driven by a combination of a new model (Malibu), extra deep discounts and the Focus being a popular small car); still any cause to celebrate is undoubtedly negated by the fact that the vehicles it's competitors sell in similar volumes are sold for an actual profit.

Still it's a faint ray of hope.

Putting the results above into better perspective let's look at a graphic depicting auto sales from GM, Toyota (TM), Ford (F) and Chrysler over the past three months:

 

Graphic courtesy of the WSJ

While these short-term trends are definitely interesting, it's probably better to look at trends the span the course of 6-18 months, because the economy is so volatile right now that it's hard to tell if we're seeing the beginning of at least a medium term trend or a short-term anomaly.

However looking at the data puts GM sales of the Chevy Malibu into better perspective: they may be selling a lot more Malibus but they're selling far fewer of their other models, it's even quite possible that their Malibu sales are just cannibalizing sales from their other brands. Overall GM can't survive many more months of sales dropping as precipitously as they have over the August to October time period.

Additionally it's rather interesting to note that Chrysler's sales have suffered the least over the past three months, whether or not this is a strength that Chrysler can leverage long-term remains to be seen.

Here is a piece from the WSJ around Retailer expectations of a gloomy holiday shopping season; I think this has to be one of the more obvious "calls" this year, especially when you consider that last year was pretty abysmal despite the best efforts of some to spin things to appear otherwise. In my view the changing world of consumer credit (from the perspective of banks and consumers) is going to cause some long-term changes in the retail arena, as consumers are forced to cut back on the hyper-consumption of the last 25+ years and manage their finances more conservatively.

I think that over the medium to long-term there needs to be a resetting of expectations around retail results, consumer spending, etc, because the world is changing and we can't use the metrics of old anymore. So much of our economy is built on credit that it's going to take some time for all of the effects of our changing economy to be noticed/discovered, and coming  period of expectation setting may last for quite a few years.

In a somber economic indicator, Utility Companies across the nation are reporting a surge in the number of disconnects and past due bills, indicating that many people are struggling to make ends meet and are probably choosing food and gas over paying their utilities. I suspect that if you were to talk to the collection departments of cell phone companies, cable companies, etc, you would see a similar trend.

In my view this trend is a function of rising unemployment, general economic struggles and lack of access to credit (nearly every electric company takes credit cards these days), and is something that will probably get quite a bit worse before it improves.

Like I've said in the past whether or not we're in an "official recession" matters little to many folks on Main Street.

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.