Walmart just putting out press releases to drum up business.
Is a headline of "Wal-mart slashing prices" is a news item?
Or a company slogan?
Walmart slashing prices:
http://online.wsj.com/article/SB1000...YWORDS=walmartWal-Mart says that it isn't so. Its executives attribute the chain's slowing sales to a general decline in food and electronics prices, a trend they say has begun to ease.
The company says it believes that, despite increasing consumer optimism, many Americans will continue to struggle in the months ahead. So, it is cutting prices this week on roughly 10,000 items, mostly food and other staples. The company declined to specify the sizes of the cuts.
Pizza Hut offering a $10 pizza, 50 cent wings:
http://adage.com/cmostrategy/article?article_id=143520No. 1 pizza chain Pizza Hut is pinning its turnaround on sending a value message to consumers, tempting them with lower prices...$10 pizzas and 50-cent wings, the chain appears to have promoted itself out of a slump in which same-store sales fell as low as 13%
Walmart just putting out press releases to drum up business.
Is a headline of "Wal-mart slashing prices" is a news item?
Or a company slogan?
If Germany is going to bail out some piigs, they're going to want some fire sale prices, forced capitulation and a lower Euro so they can export en masse again. Guaranteed deflation in the EZ.
Of course, both these companies are trying to play it cool and act like they are doing the consumer a favor, but deflation is slowly winning out. How much of the world market does Wally World have? I have no idea, but it's gotta be a lot. I look at it as- these guys are the smartest minds in retail. They see something happening here as consumers are no longer paying up for things they (don't) need.
Further signs of deflation abound, but of course, gold bugs continue to shrug this information off just as investors shrug off the global debt disaster. Procter and Gamble, like Wally World, has a nice market share so this is something to think about. Once again, the word deflation has been expunged, but what else do you call mass price cuts?
http://www.nytimes.com/2010/04/30/bu...html?src=buslnBrand-name consumer products companies, by cutting prices, introducing products and pumping up promotions, are starting to win back shoppers who traded down to store brands. Unilever and Procter had to cut some prices because people were more apt to trade down to off-brand household products than health or beauty goods, said David Kolpak, managing director at Victory Capital Management in Cleveland.
This is a very slippery slope as shoppers have discovered how 'much cooler it is' to use coupons and get the discount than to just whip out the plastic at checkout.
Ok - I'll add a little deflation anecdote
Local bowling alley just came out with a deal of for a family of four to bowl for any and as many weekdays as you like for two hours per day between noon & 7pm - $25 for the entire summer! (Just have to pay regular shoe rental)
Also - same deal is free if just kids bowling - only pay shoe rental. Since we only have one kid, we called & asked if we could have another adult couple be our #3 & #4 for the $25 deal- they said sure.
(Also: As I was researching vacation options for this summer I found that condos in Maui & Hawaii are just a bit cheaper than when we went 2 years ago.)
Good point Tex. Businesses can no longer rely on jacking up prices to make the consumer feel as if they are getting a better product. People have had it. At the end of the day bowling is bowling no matter what you pay, so you might as well not pay up to do it.
---------------
Meanwhile on the other side of town, Goldman is raising the outlook for gold because they need somebody to sell to. Got T-Bills? A 3.7% yield in a negative inflation economy would yield big gains.
And the producer price outlook moving forward? As of now, with little wage pressure, and no sign of robust demand, some price categories may remain under pressure, but a period of continued, low inflation is the likely price scenario. At minimum, the current producer price index trend will enable the Fed to maintain its so-called "extended period" low-interest rate monetary policy to stimulate the economy. At this juncture, rising inflation just isn't a threat.
Much as I don't like deflation, there is something that's worse, stagflation. If you want a good example of stagflation, check out the current economic mess in Venezuela.
So, inflation - don't like it but at least it means that business is booming along with prices going up. I don't think we are going to get this one.
Deflation - Prices go down because people can't afford price hikes. Business builds but very slowly. Prices rise as employment goes up (and people can afford things). Can get dicey because raw material prices are independent of it (except petroleum). This is where I see things headed.
Stagflation - Prices go up and no one can afford anything on the market.
Then the worst, Hyperinflation: Your currency is steadily turning into monopoly money. Attempts to tamper with the natural movement of currency (ahem Venezuela) makes this worse as it creates a shadow market.
Last edited by Silverbird; 05-19-2010 at 08:44 AM.
"All the prophets of Doom, Can always find room, In a world full of worry and fear..." - Protest Song, Monty Python
You got it SB. From other places I read, deflation could turn into hyperinflation overnight. Might not even go through the stagflation phase before we get there. Question is how long for deflation before we transition to one of the other two possibles.
Some people are saying we're building right shoulder between now and 2016, of the biggest H+S in our history. I can believe that. If it plays out that way, the market self-destructs just as I approach retirement window. If it doesnt happen sooner. Oh joy. Forget ever retiring, I'll just be happy to have a decent job for as I can keep working.
"life can only be understood backwards, but it must be lived forwards" - soren kierkegaard
Wally World once again makes the Deflation headlines. True believers think that prices are being lowered out of goodness or heart for the strapped consumer. I say it's deflation.
Got Gold? I don't.The cost of living in the U.S. unexpectedly dropped in April for the first time in more than a year, reinforcing forecasts that the Federal Reserve will keep interest rates near zero for much of 2010. The 0.1 percent fall in the consumer price index was the first decrease since March 2009, figures from the Labor Department showed today in Washington. Excluding food and fuel, the so-called core rate was unchanged, capping the smallest 12- month gain in four decades.
There goes my Cost of Living (COLA) raise, again!!! Last I looked it was running at +.1%.
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