We've been observing Howard Davidowitz for about 2 years now, and he is quite possibly (aside from Marc Faber) one of the most flamboyant speakers in the financial universe. Agree, or disagree - he is a hoot to simply listen to.
- [Aug 27, 2009: Howard Davidowitz Returns to Yahoo Tech Ticker]
- [Feb 17, 2009: Yahoo Tech Ticker - Howard Davidowitz: Worst is Yet to Come & Americans' Standard of Living Permanently Changed]
- [Aug 14, 2008: Howard Davidowitz - the Only Realistic Retail Analyst in America?]
- [Mar 30, 2008: Howard Davidowitz on US Consumer]
While he is a retail analyst by trade, he talks the big picture and seems to have a lot better grasp on economic issues than the majority of the celebrated pundits. That said, everything he is saying is being completely dismissed by the tsunami of paper dollars central banks are printing, and the buy buy buy punditry is back looking like genius. I thought there would be a disassociation between economics and market but wow, never in my wildest dreams did I think 9 straight months up... with no one fearing this won't just be the 10th. [April 3, 2009: The Current (and Coming) Disassociation Between Wall Street and Main Street]
At this point I am just viewing the market as a federally subsidized gambling parlor (gambling for dummies since all you need to watch is 1 entity, the US dollar) with free chips handed out by Ben Bernanke daily... very little to do with much of the real world anymore.
We have 3 videos (about 4-6 minutes) each from Davidowitz below via Yahoo Tech Ticker; I believe he gets more agitated in each iteration. Then again, Howard's statis level seems to be agitated. :)
(1) What Recovery? US Consumers Getting Dramatically Worse
According to the National Retail Federation, retail sales over the Thanksgiving holiday weekend were $41.2 billion, up slightly from a year ago, while about 195 million consumers shopped, up from 172 million last year.
Meanwhile, Coremetrics says the average online shopper spent 35% more on Black Friday vs. a year ago, while robust sales were predicted for Cyber Monday.
Against that backdrop, you might expect Howard Davidowitz of Davidowitz & Associates to backtrack from some of the bearishness he's professed on Tech Ticker (and elsewhere) in the past year. But you'd be wrong.
The consumer is in worse shape since I was here last in August, Davidowitz says, citing the following:
Unemployment has exploded: We've lost a ton of jobs since I was here last, Davidowitz says, noting the real unemployment rate is 17.5%. That's an astounding number.
Housing continues to sink: The consumers' biggest asset is down trillions in value while foreclosures are exploding and a huge percentage have negative equity -- 23% according to CoreLogic.
Record numbers of consumer bankruptcies: The American consumer has never been further behind...never defaulted more on mortgages, student loans, auto loans, and credit card bills, he says. (Mark's note - I can argue that is a POSITIVE, because just as people who are in default of their mortgage don't pay their bills, people in certain types of bankruptcy get their debts wiped away so they can start fresh and contribute to the US economy by shopping at full blast again - we just need everyone to declare bankruptcy and the US economy should be back to normal)
Poverty on the Rise: One in eight Americans and one in four children are receiving food stamps, as The NYT reported this weekend.
A lot of people were out on Black Friday -- you're always going to spend some money because it's Christmas, he says. [But] the consumer continues to get dramatically worse.
Davidowitz predicts the noise will be taken out about strong Black Friday sales in the coming weeks and a sobering reality will settle in: People will look a stores closing and a rash of bankruptcies after Christmas. People will start to look at this and say ‘wow, this is terrible,' he says.
(2) Howard Davidowitz's Winners of the Retail Apocalypse
Retail analyst Howard Davidowitz debuted on our show in February and declared the American consumer is toast, and that the U.S. standard of living is permanently changed. One of Tech Ticker's most popular guests ever, Davidowitz lit up our message boards.
With unemployment at 10.2% -- a 26-year high -- and Americans saving more and spending less, Howard, chairman of Davidowitz & Associates, remains bearish on the consumer. But not all retailers are created equal. In a fierce game of survival of the fittest, the most cost-effective, creative and nimble retailers are actually gaining market share in a weakened economy. Among the gold standard retail winners:
Kohl's (KSS): A low cost-to-run leader that's able to offer quality merchandise at lower prices.
Dollar Tree (DLTR): With $1 goods, the chain is so profitable new stores operate in the black right out of the gate.
Bed Bath & Beyond (BBBY): With competitor Linens N Things out of business, the retailer of home merchandise is gaining strength.
Wal-Mart (WMT): You know the story here. But now the behemoth is putting traditional food retailers out of business, too.
Amazon.com (AMZN): Shares of the online retailer hit an all-time high Monday as consumers turn to online shopping for bargain hunting and price-comparison shopping. Plus with no costs associated with running physicals stores, Amazon can compete with giant Wal-Mart.
And the retail losers? Sales trends so far aren't looking good for the luxury sector such as jewelry stores. While Tiffany's (TIF) recently topped analysts' profit forecasts for the third quarter, some-store sales fell 6%. (Quarterly profits were helped by overseas sales and cost cutting.) Longer term, Tiffany's needs to reassess its revenue model, Davidowitz says. (Mark's note - I actually disagree here; I think the very upper end retailer will do just fine as the US income and wealth strata bifurcates even farther... the top 2%+ will do even better in the years to come as capital is rewarded, and labor is stressed by global competition. This will actually be one of my investing themes in the next 10 years; as the US income devolves into a 3rd world division, you have to invest with the haves... many more have nots will emerge ... especially those who don't live under the protective umbrella of government work. As for a place like Tiffany's, its NY store enjoys foreigners coming from overseas to take advantage of the pathetic US dollar. So I think US retail will be dominated by the low end, and the very high end... its the middle 30-40%, who don't have jobs in government or healthcare, that will suffer in the next few decades)
(3) Howard Davidowitz Sees Our Future and it is Japan
Many economists draw comparisons between the United States now and Japan in 1990.
For those who aren't familiar with Japan's recent economic history, this is not a good thing. Japan's stock market peaked in 1989 at about 40,000. It now trades around a quarter of that level, or 10,000. GDP, meanwhile, has barely grown at all.
Economists used to refer to Japan's malaise as a lost decade. Now they're saying lost decades.
Our guest Howard Davidowitz sees a similarly horrific future in store for the U.S. He calls America's current path, rich in deficit spending and weak in currency a road to nowhere.
He also doesn't buy the arguments of those who reassure us that Japan's problems are cultural and demographic--and, therefore, that it's different here. (But Howard, we're #1 and we're nothing like any other country on Earth! - did you not take your Kool Aid today? Economic forces stop at our borders!) Japan's problems are the same as our problems (artificially low interest rates and a bailout culture), Davidowitz says. The only difference is that we're about 20 years earlier into the collapse.
If we are Japan, what is the outlook for the stock market (and your retirement savings)? Not good. If the DOW behaves the way Japan's NIKKEI has, the DOW will trade at about 4,000 in 2025.