Motley Fool Money: 10.09.2009
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Welcome to Motley Fool Money. I'm Chris Hill, and I'm joined by Motley Fool senior analysts Seth Jason, James Early, and Shannon Zimmerman. Guys, happy Friday. Happy Friday to you, Chris. On today's show, Dr. Doom warns that we haven't hit the bottom, Dell and Google take on the iPhone, and McDonald's gets artistic. Or as my friends in Boston say, artistic. But we begin with better than expected retail numbers for September. Retailers announced the first increase of same-store sales since August of 2008. Seth, there's got to be good news.
Well, I don't know.
Come on.
First increase in over a year? If you read past the headlines, most of the stories do mention that I've seen on this that there was a Labor Day holiday shift. So some places moved back to school dates a little bit later. And so they took some business from August and moved it into September. Some of the retailers I follow over at Hidden Gems, like Zoomies, was a beneficiary of that. So I would take this. With a grain of salt. There was also some conflicting news. So I would say the data are inconclusive. Consumer credit continued to contract. So we're being urged to believe that somehow people are spending more at the same time that they're spending what they're borrowing less to spend. But as we know, most of that spending boom over the past half decade was debt based.
So I don't think we're out of the woods.
And second point, let's see where the margins are, too.
Did September retail same‑store sales really improve and why does it matter?
I mean, these are just sales. We don't know exactly how profitable they were yet. And they were the low-end stores, to a large degree. The low-end stores, yeah, TJ Maxx and Kohl's. I had to teach someone how to drive stick shift once, and we thought, where can we find nobody? So we went to the Kohl's parking lot.
I shop at Kmart for that reason. The checkout is fast because there's nobody there.
Yeah, well, you know, with all this doom and gloom, I want to be reflexively contrarian and say something positive, but I can't. I mean, the news is up from what, though? From catastrophically low levels, manipulating the calendar, and how profitable were they? Who knows?
What caveats did analysts give about the retail sales uptick (Labor Day shift, margins, credit)?
Hey, it could be worse.
Let's be positive. It could have been worse.
Well, it was an actual increase. I feel better already. Up 0.6%. The forecast was being down 1.1%.
That's a lot better than that. All right, let's do a golf clap, everybody.
All right, let's move on. Shannon did not golf clap. Economist Nouriel Roubini said this week the housing market may still fall another 10%. Roubini, who was one of the few to actually predict the financial crisis, said that losses in the commercial real estate market will make matters worse. James, do you agree with Dr. Doom?
When I hear 10%, I think, that's it? I mean, this guy's been Dr. Doom, but he actually wants to change his nickname to, was it Dr. Realist? Dr. Realist. Yeah, so he's back with a realistic forecast. Now, 10% is sort of forgettable, I think.
A lot of people would be happy with that.
Yeah, I don't think it's a problem, really. He is right about commercial real estate. That is an issue, and a lot of those loans are not marked to market, so we don't know what the true exposure there is.
Yeah, that part of the banking collapse or the banking woes, that story is not completely unfolded yet. And so the banks that are going to be more heavily hit when that does begin to unfold are the regional banks that have much more exposure to commercial real estate projects in their areas than the big boys do.
I don't see how that ties in directly to housing prices, however. I mean, there could be economic aftershocks that could do things, but they're really, let's probably stay for the record here, or you guys can disagree. They're really not that tightly connected. Commercial real estate is going to do very worse by some measures, but these are businesses, so presumably they can handle it better than people.
But residential real estate would be the prelude to this story.
Yeah, and again, they're not directly linked. They're kind of linked through a spider web, but the moral of the story is everyone borrowed too much for everything.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:05–1:26
2
Did September retail same‑store sales really improve and why does it matter?
1:26–1:59
3
What caveats did analysts give about the retail sales uptick (Labor Day shift, margins, credit)?
1:59–7:44
4
Why does Nouriel Roubini warn housing could fall another 10% and is commercial real estate a risk?
7:44–16:55
5
How valuable could Twitter's real‑time data licensing be to Google or Microsoft?
16:55–19:09