Working Capital Management

Working Capital Management (WMC)

Market Update

Weekly Recap – Week ending 26-Dec-08

From an investor’s standpoint, Wall Street didn’t bring any Christmas cheer this week.  Amid light trading conditions, the market dropped 1.7%, bringing its year-to-date decline to 41%.

It was a typical week in that we received another batch of dour economic news, saw oil prices continue to decline, and heard the Fed invoke its emergency powers again to lend stability to the financial system.  

In a front-end loaded week for economic data, it was reported that November existing home sales declined 8.6% from October and that new home sales of 407,000 units on an annualized basis hit their lowest level in 17 years.

Initial jobless claims surged to a 26-year high of 586,000, durable orders declined 1.0% in November, and personal income and personal spending fell 0.2% and 0.6%, respectively, in November.

Separately, MasterCard Spending Pulse said Friday that holiday sales from Nov. 1 to Dec. 24 declined as much as 4%, excluding autos and gasoline. (AMZN) for its part said 2008 was its best holiday season ever.  What that means for its income statement remains a mystery, but at least Amazon saw record order activity of its own.

Unfortunately, Amazon will be the exception and not the norm this holiday season.  Consumers have clearly become guarded with their spending activity in the face of concerns about rising unemployment, falling home prices, and much lower stock prices.

The final Q3 GDP report released this week indicated as much.  Real personal consumption expenditures declined 3.8% in the third quarter and knocked 2.8% off real GDP growth, which was negative 0.5% for the quarter. more… 


December 29, 2008 - Posted by | Assets, Business Flow, Capital, Working Capital, Working Capital Management | , ,

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