It started off with a rally as election day approached and everyone was filled with hope for change. On Tuesday, America finally voted for our next president- President Barack Obama. Even though the result seemed obvious in the last few weeks, it was still a very exciting day here in Chicago. Everyone in the streets were hyped, retailers like Starbucks and Ben & Jerry's were giving out free coffee and ice cream, roads around Grant Park were closed for the rally, the over all atmosphere was just very exhilarating! Unfortunately I wasn't one of the lucky few to get tickets to Grant Park, but I actually thought that both Obama's victory and Mcain's concession speech were really well done. Mcain's speech was very touching and gracious (though whoever dressed him with an ugly yellow tie should be shot), while Obama's speech was very inspiring- yes we can!
The next day after this pleasent distraction though, the market turned its attention back to the economy and it went downhill from there.
- Retail chains posted the worst monthly sales data in more than 3 decades! Retailers are closing stores. Circuit City for instance is closing 155 US stores. Jewelers were also hit especially hard. Many, such as Whitehall and Friedmans, are being forced to hold liquidation sales, which in turn is creating temoporary price competition for its healthy peers
- As sales drop, so did unemployment. The job report this week showed that in October, 240,000 jobs were lost, taking the unemployment rate up to 6.5% from 6.1% in September, hitting all sectors. Companies such as GS, Circuit City, Mattel, Time Warner, Yahoo, Ford and GM have or are planning to cut back their workforces
- GM in particular posted worst than expected earnings and have called off their merger deal with Chrysler in order to focus on its own financial health. Chrysler is now in talks with Hyundai. The auto industry as a whole is not doing well in this economy (except Porsche, which posted a 46% rise in pretax profit) and the big three (GM, Ford and Chrysler) have approached the government for a $50 billion aid. The auto industry is in fact one of Obama's top priorities to save/ I guess since it takes up 3% of overall GDP it will have immense effects both directly and indirectly on the economy, and not just affect Detroit
The outlook is pretty pessimistic. Bonuses are slashed (ironically Bear and Lehman survivors are actually getting better deals from their retention package than their counterparts in other firms like Goldman). The next domino to fall seems to be consumer loans, such as credit card and auto loans. Predictions of when this will all be over just keeps getting postponed. Last week, it was middle of 2009. Now we're hearing beginning of 2010!!
Obama is already looking into all this at a meeting of the transition economic advisory board, which included a high-powered collection of business, academic and government leaders, such as Buffet, who called into Chicago from Obama- just like Charlie in Charlie's Angels! His priorities are to get a second stimulus package out asap (maybe even before Christmas!) and saving the auto industry.
All this talk about presidency and campaigning just reminded me that I've forgotten to watch Brothers and Sisters this season. Better go catch up!