Trinket Talk

The Nikkei has hit a 5 year low in early morning trading in Japan.   An ocean away the ASX 200 was down over 4 percent and Topix was down close to 6 percent.  The rout cuts across all sectors.   The economic turmoil continues to slam the economies of the World.

This afternoon on a major business network owned by GE (hint hint) one of the on air reporters said his sources are telling him business essentially came to a halt on or about September 30th.  Our sources within the marketing industry tell us much of the same with dozens of ASI suppliers and distributors reporting slow sales at recent trade events.  Of course the figures released later this winter will show a growing industry in 2008 but those numbers can end up being about as accurate as the real estate numbers we kept hearing the last two years from NAR.  

Media advertising budgets continue to be ravaged by the economic stall.  Newspaper advertising sales are at decade lows with no end in sight as readership of the traditional print offerings has vanished.  Online advertising sales continue to grow but for the big print publications it will likely not be enough to offset the losses.  Compounding the problem is the demise of the US Auto Industry and as a result all of those weekend sales advertisements that helped support the bottom line. 

Consumer confidence is falling by record amounts, car sales are terrible, consumer sales are terrible but hey we have lower gas prices!  It is disgusting to see how far off the predictions have been for oil prices and oil consumption since the spring.  One has to think it was deliberate manipulation, how can any expert have predicted $200 for oil and actually believe it wouldn’t collapse demand?  How can everything have changed so quickly in just 70 days that oil prices have fallen 50%?  What are we doing to prevent such manipulation in the future?  All the candidates talk about it but will any of them refuse the money from the oil lobby to protect the citizens?

The equity markets are bi-polar, up one day down the next to such extremes that in the last 40 days the market has been up or down by less than 100 points only three times.  On Monday the market goes up and everyone is happy and talking about how it may not be that bad, by Wednesday we are back to hearing about just how bad the economy is now.   The bottom line?  Major corporations struggled for three weeks to fund operations.  While they were searching their market caps were smashed eliminating one possible avenue.   Budgets were slashed and expenditures cut.  The immediate effects were not felt until the last week or two when businesses further down the chain noted lost sales.  Retailers, car dealers and other front line businesses saw the initial shock instantly but it was tough to gauge as business has already fallen off in August.  As business fell at an incredible pace organizations began laying off, cutting back hours and pay of staff.  This process is accelerating now as we head into the crucial holiday season.  A bust of a holiday season will put some retailers out of business including large national brands that were symbols of our success in the 1990s. 

It is going to get much uglier before it gets better and it is going to happen quickly in the next few weeks.  Oil prices are not falling because the oil companies decided we needed a break, they’re falling because nobody is buying gas with 5% decreases in the last month versus the same month last year.  That decrease is the result of commerce stalling and Bernanke and company are right in realizing we need another stimulus immediately or the long road down will be another Depression.   Hopefully the assistance programs we have in place are enough to help but they will surely get tested barring an economic Houdini by the Federal Reserve and Treasury. 

From this point on the discussion will mainly center around the ad specialties industry, products, businesses and trade issues.