Black Friday & Cyber Monday
The biggest shopping days of the year arrived and haven’t disappointed. As has been the trend over the past few years, more people are starting to do their shopping online.
According to Bloomberg, Black Friday had a record of $7.4bn in US online sales this year. That would be the second biggest US online sales day, behind 2018 Cyber Monday. We’ve previously talked about how key the consumer has been to the economy, so the hope would be that consumers continue in their strength, especially with the holiday shopping season upon us.
It seems like every year “Black Friday” deals start earlier and earlier. The New York Times recently put out an article about the origin of Black Friday and how it’s become more of a “synonym for a sale” rather than the day being as significant in itself. “Just a few years ago, Black Friday had the aura of a FOMO event. Now it seems more symbolic than significant in the pantheon of retail holidays,” PwC wrote in their holiday shopping study, per the NYT article.
Regardless of when Americans are spending around the holiday season, the online share of that spending is going up year after year. Cyber Monday numbers are expected to break the online sales record again this year. Sales are expected to rise 19% from last years $9.4bn, according to Yahoo Finance (citing Adobe Analytics).
Hong Kong Turns Peaceful After Elections; Retails Numbers Hit Hard by Protests
While Americans were shopping on Black Friday, the protests in Hong Kong continue. The protests have heavily affected the Hong Kong economy, as one would expect. Per South China Morning Post, retail sales plunged 24.3% in October, the largest year-on-year decline for a single month on record. The article also states that Financial Secretary Paul Chan Mo-Po told a Legislative Council financial affairs panel meeting that GDP was expected by 1.3%. Additionally, it’s likely that Hong Kong would run a budget deficit for the first time since 2004-2005. That’s partially due to the government rolling out measures worth HK$21billion in order to help businesses and low-income groups during their economic slump.
Despite the economic impact, protests in Hong Kong continue. After the huge gains by pro-democracy candidates in the recent election, the Strait Times reported about a peaceful rally in the city center. Despite that, SCMP reported that it again turned hectic over the weekend with the Hong Kong police using tear gas on a march that included the elderly and children. The police have been under scrutiny for using tear gas, especially since a reporter from Stands News contracted a skin condition, chloracne, after being exposed to it.
In a sign of support for the protestors in Hong Kong, Donald Trump signed the Hong Kong Human Rights and Democracy Act into law last week. The President signed it despite warnings from China that there would be consequences if he signed it into law, a warning that is especially prescient considering the current precarious nature of trade talks between the two countries.
On Monday, China announced the first wave of ‘consequences’ against the US, sanctioning rights organizations like the National Endowment for Democracy, Human Rights Watch and Freedom House, per Bloomberg. The article notes that Chinese Foreign Ministry spokeswoman Hua Chunying, who announced the sanctions, didn’t specify how they would be imposed.
ISM Data Slumps Again; Trump Initiates Tariffs on South America
A slew of ‘bad’ news came in for the US on Monday.
First, the President announced that he is reinstating tariffs on steel and aluminum for Argentina and Brazil before the market opened on Monday. The President tweeted about it just before 5:00 am CST, accusing the countries of a “massive devaluation of their currencies, which is not good for our farmers.”
He also looped the Federal Reserve back in for blame, saying “the Federal Reserve should likewise act so that countries, of which there are many, no longer take advantage of our strong dollar by further devaluing their currencies.” Brazil and Argentina aren’t the first countries that Trump has accused of devaluing their currency, nor is the first time he has blamed the Federal Reserve for ‘letting it happen’. Despite that, equity markets opened higher to start the day.
Then, the Institute of Supply Chain Management showed the factory purchasing managers’ index (PMI) declined to 48.1. PMI’s below 50 indicates contraction and economists expected a rebound to 49.2 from last month’s 48.3. Stocks dropped immediately on the news, as the manufacturer continues to be weaker than expected.
This just further reiterates the pressure the consumer is under to continue to hold up the economy. As factory data continues to turn sour, consumer data becomes more important in contributing to GDP.
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