2009 Predictions can be found at:
The below was written on December 25, 2007 for 2008:
More 2008 Predictions from Craig Eisele:
RETAIL: As I write this the bulls are still either saying it is a good season or hoping that last minute shoppers will make it one. Lets look at this in another way. I have been shopping EVERY weekend from Thanksgiving on… and what I have seen is dismal. This year, I have NEVER had to look for a parking space or needed to walk from the far end of the parking lot… I have seen LESS people in the Mall this year and many many more sales. Sometimes so bad I thought that it was March weekend shopping (meaning low numbers of people). I was extremely unhappy with FoxBusiness TV today when the announcer in a shopping mall was saying that the people were starting to flood in and I barely saw 10 people shopping in a wide-angle shot. Only later did ONE gust on the show tell it like it is… MANY of the retail Companies are having LOWER sales… and those sales that are moving are either in Electronics (lower profit margins) or in SALE merchandise… hence LOWER Profit margins… so even if you see higher sales… which is unlikely… the PROFITS WILL BE LOWER!
Credit Card Evaluation by Moody’s is showing a huge number of defaults in the 90 day ranges… and as those of you with Credit Cards you will know that ONE missed payment can mean a jump to 29 percent annual interest rates or higher. Capital One and Bank of America are shown as being at worse rates and possible doubling since their October numbers in their November reports. This does not bode well for Retail and some say as much as two thirds of our economy is consumer spending driven.
Remember that Saving Rates in the USA are AGAIN Negative (meaning we are spending more than we are making), Homeowners no longer have access to their home equity that they had in the past because of declining values and Credit card companies have been increasing interest rates based on your total credit report meaning that if you take out another credit card or even cancel some credit cards or are late on payment to ANY other creditor you can be hit with high interest rates on your credit card balance.
Because of the new bankruptcy laws these credit cards may still have to be paid off entirely but your interest payment may be stopped…. I predict a change in the Laws by a Democratic Congress to make it easier to have these and Mortgage related debts forgiven to better protect the consumer and to allow for MORE consumer spending fostering a recover in the economy. This does not favor the Financial Companies.
Talking about Financial’s… there is great excitement about foreign funds coming to the rescue of the various Financial Businesses… but what you generally do not hear is the COST of those investment… many are for PREFERRED STOCK…. With GUARANTEED rates of 8 to 12 percent… remember that Preferred Stock Holders are often given their payments before there is dividends to the Common Stock holders… and there are still more write offs to come for many companies.
Personally as I said earlier the “credit” market especially for the consumers will be tight and unless you have stellar credit there is most likely no way you will get a loan or if you do your rates will be high. Even Fanny Mae and Freddie Mac have indicated continued price and value declines through 2008 and MAYBE a slow recovery starting in 2009. When Housing prices do go up (and some analysts and pundits say the opposite of me here) the price increase will be slow because of the Credit requirements that will have to be slowly reduced as well as many people who will be wary of a repeat of the last 2 years and finding out that it is actually CHEAPER to Rent a home than to own it and risk their equity on another potential downturn. And for Zero Down Mortgages.. forget it… those days better be over!!
Simply ALL of those rosy predictions of a good 2008 are for the benefit of companies who want to keep your money in stocks without regard to the real possibility that this economy is in for a rocky 2008.
Recession: Do not expect to be told that this economy is in a recession until it is either extremely sever or until there is a reversal of the current trend, at which time you will be told that we WERE in a Recession. The “powers” behind the Financial information as well as the Government does not believe you are rational human beings capable of knowing the truth until after the fact. They are afraid you will panic and that is not good for business. Right or wrong that seems to be the way the general population of the United States is treated.
I stand by my predictions in the previous post, for the Euro vs. Dollar exchange and the price of Oil for 2008.