Retail negative
Old news, apologies - missed it during the week amidst the swathe of the other news - but I find this exercise useful for understanding the economy and stock market sectors, so bear with me.
There was absolutely no sign of a bounce in retail up until July, with turnover down by -0.1 per cent in the month to $27.4 billion.
Year-on-year retail turnover increased by just 2.4 per cent, with weakness in both prices and volumes.
Amazon Australia has made some inroads into retail prices, and next up will be the German no-frills giant Kaufland, which is has already commenced construction on its first Aussie branch.
Monthly inflation was already flat last month, so with CPI miles below target markets are convinced that interest rates must go lower to reduce the increasing spare capacity in the labour market.
Around the traps
The strongest year-on-year growth in retail turnover was seen in Queensland, driven by interstate migration, at 4¼ per cent.
At the other end of the spectrum, the Northern Territory continued its steady implosion with negative 1½ per cent year-on-year.
Most interestingly, with housing turnover floundering at multi-decade lows household goods continued to struggle, with department stores recording no fewer than 7 negative months in the past 10.
Folks still have some spare dosh, as reflected in relative outperformance in clothing and footwear (including personal accessories at 4½ per cent growth, while footwear retail turnover was up 7½ per cent year-on-year).
But nearly all of the housing-exposed categories have either been clobbered or prone to underperformance, from furniture, to electronic items, and other household goods.
As a European-born migrant it's intriguing to me that we're making it so damn hard for people to get a mortgage, with banks persisting with their insanely pedantic requirements well beyond the Royal Commission.
Every week I'm contacted by people crying out to get finance, but...computer says no.
Unsurprisingly, few people want to risk selling their homes either right now, for fear of never getting the finance to buy back in (and contrary to predictions of a rush of forced sales due to the interest-only reset, most borrowers managed the reset reasonably comfortably).
And so with housing turnover at recessionary lows, there is very little furnishing and related consumption to be done.
Unsurprisingly, few people want to risk selling their homes either right now, for fear of never getting the finance to buy back in (and contrary to predictions of a rush of forced sales due to the interest-only reset, most borrowers managed the reset reasonably comfortably).
And so with housing turnover at recessionary lows, there is very little furnishing and related consumption to be done.
Hardware sales have at least taken on some positive momentum into the 2019 calendar year.
Go, Harvey?
One of the more compelling stories this year has been that of Harvey Norman (ASX: HVN), which has been the subject some high-profile short theses, and with some of the media jumping on board in eager anticipation of dancing on another grave.
Yet even in the prevailing retail conditions the stock price has rebounded by close to 50 per cent from its 52-week lows of November, with 'comparable sales' in Aussie stores reported as only modestly lower year-on-year.
There was a $173 million capital raising recently, reportedly to shore up the consolidated balance sheet in case of a full-blown recession, and to reduce consolidated debt (it's unclear if this was a precautionary measure or a requirement).
In the prevailing no-yield environment some investors would no doubt be attracted by the income, with the full-year dividend as high as 33 cents.
