Black Friday May Become Red Friday
The day after Thanksgiving is called Black Friday. Why black? Why the color black?
If we put the color black before any other day of the week, that day is often noted in history with infamy. Horrible deeds or destruction or death or worse: drop-in-wealth occurred in that day.
Wall Street has its Black Monday. On October 19, 1987, in that single Monday, the market fell 23%. By the way, program trading is named as a reason (among other reasons) to the escalating losses of that devastating day. It's a good thing that today, program trading is outlawed and we learned from that mistake. What? What do you mean? It hasn't been forbidden?! Our computers can now trade in milliseconds? So problem solved then, the 1987 program trades were TOO slow.
Where was I? Yes, why the color, black. The market fell 23% in a single Monday in '87. In the Great Depression, there were single-day, consecutive losses of 13% and 12% in 1929. Those happen to be called Black Monday and Black Tuesday. See the pattern?
In the days when we did accounting by hand, fancy bookkeepers would write losses in red ink. Gains would be in black ink. Seeing a ledger written in black meant happy business owner. So with the high volume of holiday sales starting after Thanksgiving, retailers would be in the black. That explanation for Black Friday sounds believable to me. For the previous day, we believe in the myth of the Thanksgiving feast between pilgrims and Indians, so why not swallow this story of Black Friday, too?
So with my title of "Black Friday May Become Red Friday," am I making a comment about the earnings of retailers? Same-store-sales will be negative this November and December? Red ink indicating losses on the ledgers of Consumer Discretionary companies? Americans will not spend even more money this year? No, no, no, no. I'll leave that prognostication to the more qualified analysts. Hey, don't snicker; that wasn't meant as an oxymoron.
As U.S. GDP growth continues to hover at lower and lower "new-normal" numbers, where will growth come from? China is the most cited answer. China will be that engine that drives global growth. Investment dollars and building cranes have continually signaled that outcome. Economists discuss how China is transforming from a savings economy to a consumer one. We want increase our exports to China, and a highly profitable export is the American consumerist culture. Let's get the masses in China fighting to buy stuff, too.
For any Western traveler to China or Asia, this is a sight to behold. The Great Wall? The skyline of the tallest cities in the world? No, no, look at a stock ticker board or trading screen, and then look at the faces of the locals. The joke is on you of course. Upticks are reported in red, and downticks in green. The colors are reversed. An all-red trading screen means you want to avoid the sidewalks on Wall Street because some trader may jump. An all-red ticker board in China, break out the champagne. Culturally, red is a lucky, positive color. Red is their new black.
If global economic growth will depend more on China's transformation to a consumerist culture, we may need the crazy American Black Friday phenomenon to be pervasive throughout China. Are you ready for Black Friday? Checklist of latest gadgets, names of who was naughty or nice, walking cane for the trek through the parking lot, folding chair for the long lines, mace or tazer for the fist fights, avalanche whistle for the trampling crowds. Check, check, check, check, check, oh I need the buy an avalanche whistle on Black Friday.
If I can only use those Wall Street high-frequency computers to score some online deals... Imagine how quickly I can get through my shopping list with millisecond buys of the web's doorbusters deals.
The first step would be to rebrand Black Friday as Red Friday to the Chinese. For the sake of global growth, Black Friday (hopefully) may become Red Friday.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.