Bill Counts continue to decline

[Thudz]

In retail, people try to minimize the amount of inventory they carry, but they still have to have some. Case in point, my wife went to macy's with a gift certificate and walked out with nothing. I asked her why, and she said the selection was terrible, and that the store had a "picked-over" feel about it. Companies all over are stretching everything they can. In this case, they were hurt by it because my wife didnt buy anything. But statistically speaking they are making out better than they would if they held the same inventory levels they would have otherwise normally had. But you're right that people are trying to minimize stock levels in retail. There are still massive distribution warehouses and the "flow through" is really just inventory in transit. So even in retail (which has been hit harder than most) they are living off inventory. By the way in the case of textiles (probably electronics and possibly most retail industries), most companies would have been contractually obligated to take the inventory they purchased during the market's downward turn. So they were sitting with large inventories from the start. If you figure many retailers were off by 60% or more, that's over a year's worth of additional inventory.

Look across the board, there has been incentive to reduce inventories for a 1/4 century. Necessity is the mother of all invention, and people are going to be a lot better at it after this recession/depression/whatever-the-hell-ya-wanna-call-it. Construction is a huge driver of material shipping too, and that industry has been decimated. I have a friend who owns one of the largest construction companies in my area, they did close to 1 billion in '07, about 650mil in 08, and they are down to just under 290mil projected for the end of this year. But even a behemoth company like this is seeing a turn in future, and have projects running much further out into the future than you'd think, and some absolutely massive projects in future. I have to be very careful about what I say in this regard because it is publicly traded. One thing I can say start watching for large power companies to invest in green initiatives (nevermind your political views, just keep your eyes peeled).

Anyway, way off topic here. Regarding forcasting in Sept-Nov, the people I speak with are taking into account season fluctuation, and don't talk in total revenues. they talk in trends (typically in trailing 12 month averages to get rid of the fluctuation). John Muadlin is a guy I recommend people trying to get his news letter. He typically deals with people whose net worth is in excess of 1.5mil, but he really knows what he's talking about, and publishes a newsletter every week. He's really quite prolific, and surrounds himself with some real powerhouse opinions - not the kind of people on CNN or NBC mind you. The other thing we are going to see though is some crazy spikes over the next several months - a real rollercoaster ride, and you can bet your bottom dollar that the drama queen media is going to shout out about the end of the world again (which may actually have a huge affect on the speed we recover). The one really good thing we have going for us versus other countries, is that we cannot help ourselves from spending money, so at the first glimmer of good times, people will be back to their old ways.

Don't get me wrong, I don't want you to think that in a few months to a year we're going to be back to normal (I'm hearing everythign from 2-5 years depending on the industry). But in all honesty, and I am probably the last person who should say this right now given my company's state, I hope it takes longer than that. We need to learn our friggin lessons here, and there's nothing like severe pain to indelibly imprint a notion into people's minds. And the only time people change is when the pain exceeds their threshold to ignore it.

Regarding Supply/Demand signs of recovery, you can definitely make an arguement, but once that argument is made there's a counter, and you can keep spiraling outward from micro to macro. The thing is, that ultimately supply can be first, but if it is, then it is an invention never seen before, and it creates a demand - in most cases (enough to make generalizations about where recovery will be seen first) demand will be the driver.

In your wife's particular case the store made out because the gift certificate is already paid for and since she didn't use it the store hasn't had to give up any inventory, yet.