September ends the quarter. Many financial disclosures are made because of that. As we are heading into the Christmas season retailers are ramping up. We have to remember that the term Black Friday, meaning the Friday after Thanksgiving, is not called that because crowds of shoppers descend on poor little cashiers and blot out the sun. Black Friday is when the retailer, whether it is Nordstrom’s or Target, goes from debt for the year into surplus. Yes, for most sellers of paper towels, jewelry and Gameboys, their annual costs of payrolls, rents, medical, insurance, utilities, taxes, fuels and inventories are MORE than they are making until Christmas season begins in earnest and begins well. Those who earn their pay managing this delicate pivoting operation have made their sentiments known. The big retailers have announced their plans for the holiday shopping season just beginning and they will not, repeat not, be adding the usual part time and temporary jobs they need to handle the traditional Christmas rush. While their costs have all gone up the sales projections have all gone down and that is not all. What volume of sales they DO expect will be on much smaller margins, that is to say discounting will be extreme. You love that of course, but absent the profits, what is the point of opening the doors? Many many retailers are teetering on that fulcrum with only a massive spike in overall sales able to save them. Not likely. So Black Friday is destined to come and go leaving retailers AS A SEGMENT OF THE ECONOMY still in the red and mightily imperiled. I hate to be the one to inform the nation but as an economic event, friends, Christmas is canceled.

If you don’t think Best Buy is indicative, necessarily, of anything take the pulse at a larger artery; UPS. Our homegrown free-market alternative to the post office, yes is hiring. 50k temps, they say and that sounds like a lot, and it is but it is down twenty percent from last year, which was also bad. And these jobs, taxing both mentally and physically are paying $8.50, which as I recall was precisely what I was making doing that twenty-five years ago. If UPS is not the throbbing aorta of American retailing of all sorts, tell me what is? FedEx? Yes, they will lay on 14k temps when last year it was 7k. Look for this fact to be flogged but remember it is the measure of a much smaller, boutique player in the field. In any event all these decisions are not being made on the spot but rather in anticipation; on projections of what is to be.

Whether you feel yourself the intellectual equal of the Bureau of Labor Statistics or as well informed as Wal-Mart’s business director, you also have to make plans based on what you see coming down the road. Each and every walking, talking adult must do so. For the most part we rely on the newsies not only to tell us what has happened but what WILL happen. The newsies mostly rely on the BLS, its numerous brothers and sisters, or industry publications or academics. Georgia State University was and is an unlikely seeming center for economic foresight but it is one thanks to Prof Don Ratajczak (and is also an international center for astronomy, thanks to computer-run interferometry). The most recent of his tested and respected forcasts is here. Not cheery. But as an academic or now as a corporate analyst, Doctor Don is not supposed to have a vested interest either in anything improving or declining. His career is made on his accuracy disregarding how it might play for any particular audience. And even with that presumption, if you do go and read his weekly rumblings, you see that he is hoping to transmit some good news. Everyone wants that, right? I mean, who wants bad news? Who wants to BRING anyone bad news? And yet, as a few courageous voices do dare, the news must be told; bad news first. Bad history also must be faced and as far as market history goes, for stocks October is horrid.

Well, what do you care, right? You’re no day trader. You have a 401(k) plan so no problems there. Yeah, well even in the unlikely event that you are totally in bonds of some sort, the bonds also have to be paid out one day. Despite the PR, whether Treasuries, munis or corporates, bonds are far from a zero risk investment. What being the bondholder means is that you, unlike holders of equity, will have the right to sell off the computers and coffee cups from the defunct entity, if it goes defunct. And actually in sovereign bonds you do not even get that. But whether you are in it or not, the stockmarket is to the economy at large what UPS is to retailing; the most readable pulse. And that pulse is slowing, weakening and becoming thready; muddied and difficult to detect.

While the hard numbers are more difficult to avoid than the Superbowl score, few are addressing their true import. Unlike the demonstrably disinterested Don Ratajczak everyone who reports these numbers and the devastating indicators like unemployment and growth have a predisposition to be cheery in demeanor regardless of the script. There are a few out there who are committed skeptics but they are safely contained on multi-player panels so their doomsaying gets diluted and brayed into the background. Profits are UP, doofus! And so they are but what is then done with those profits? Overwhelmingly they are jealously guarded against a fiscally rainy day that EVERYONE outside of professional happy-talkers seems to see coming. They are not used for expansion. They are not used for any but the most liquid investment. And even today’s meager stock prices have to be discounted because some $1.6t has been printed and used to prop up those prices in Quantitative Easing 1 and 2. QE2.5 now throws another half a trillion into the bucket in yet another genius Fed play called “The Twist”. If there is no more Federal price support for stocks you will see a return to what the market rationally values equities which, with only the grossest of calculations, implies about a 20% drop. Given the market softness we have already experienced I don’t see how this can take more than a few weeks.

The jig is up across the board, though. In Europe; in Greece presently but coming shortly to nearly every capitol, the hot potatoes have no where else to go, not at interest rates anyone wants to pay. Secretary Geithner tries to export the US plan of Tax ‘n Spend fiscal rectitude to Germany and is laughed off the stage. Timmy must feel slighted, after all he thought they had TAKEN these policies from Europe, and they did, meaning that Europe now has far superior familiarity with their outcomes. They have learned that they do not work. Team Obama has not although the requisite muggings do continue. But everyone who is not paid or adulated due to their public ignorance knows that simple money shifting has run its course. There is no “solution” to the Greek crisis any more than there are “solutions” for any of the rest of them. The only thing left is resolution and the interlocking frauds used to hide that fact for decades is waivering on its last few and failing supports. Look for utter fiscal and currency collapse in Europe before this month is out.

So where is the Silver Lining? Friends, it is just where you DON’T want it to be. With equities crumbling, corporates and even munis uncertain, there is really only one place on the earth for that money to go, other than gold, and that is Treasuries. Yes, although we dropped our birthright triple A rating US Treasury bonds are STILL considered the safest investment except for inflation risk but THAT President Clinton solved long, long ago. Tim Geithner will be tempted to sell all the bonds he can at the low rates this inflow produces meaning that we also are going to bump our little heads on the Debt Ceiling again quite quickly. It is too much even for me to predict that Team Obama will rip through their $.9t credit line before the 31st, but just barely. As I’ve said before, they will certainly run out of money long before next year’s election (their goal line). March, I had said. Then before New Years. Whether they manage to empty their pockets in thirty days or not, the fact that they will want ANOTHER debt increase quite soon will be plain before you start applying your zombie make-up.

If there is some early pushback on burgeoning Octoberphobia among the investor class, it will come as follows: don’t worry about October, sure it has a rep as a Bad Motha…. I’m just talkin’ about October! but its actually not as bad as September and we just lived through one of those, obviously! But that is considering only a century long average. Yes, the average has September as a bit worse for equities than October but the great calamitous market plummets, the historical ones like in 1929 and 1987 were Halloween treats. No these were not caused by October but the events that DO cause these things tend to accumulate around this time because it is NOW that the Bigwigs start to understand fully what their numbers for the year are likely to be. Watch the news but with a cynic’s eye and ear. Watch the numbers but be prepared for them to be revised as they always are; down and sharply. Be wary of corporations and other entities you rely on or work for. The only useful advice is the same as Luanne’s tornado warning: hold your babies tight. For in the year when Christmas is canceled you can be certain that Hallow’s Eve will be a real bitch.

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