Preparing For A Tough Holiday Season
Written by A Forex View From Afar on Thursday, November 27, 2008Asian shares advanced overnight, even though the gains were modest. The European markets continued the positive momentum, advancing for the fourth consecutive day. The U.S. markets will be closed today.
Today, the U.S. will celebrate Thanksgiving Day, the date that unofficially marks the start of the holiday season. However, things are not so rosy ahead. Consumer spending dropped in October the most since 2001, marking the fourth consecutive month of declines. Spending makes up about 70% of the economy, so this report only increases the chances of a full recession in the coming quarters. In addition, consumer sentiment hit a 28-year low in November.
The two reports show that the coming holiday season might not be as it once used to be, with strong retail sales. Both retailers and manufacturers derive an important part of their profit from this part of the year. Most analysts expect the holiday earning season to miss the initial estimates. If so, the market will have another round of disappointment come the following earnings season.
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