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News Analysis for the Investor on September 17, 2013

 Holiday shoppings estimates are not so jolly and gas prices have been over $3.00 for more than 1,000 days.  The new normal?

| BY Catherine McBreen

 Holiday shopping season not so jolly

An early forecast indicates the holiday shopping season will be the worst since 2009, according to a prediction by ShopperTrac.  The Wall Street Journal reports that ShopperTrac measures traffic in 60,000 locations worldwide and crunches other data to come up with its forecast.  It expects retail sales to rise by 2.4 percent from a year earlier, less than the 3 percent increase in 2012 and the 4 percent gains in 2011 and 2010.  While the forecasts are often incorrect, the estimate is based on the recent weak back-to-school shopping trends.  Retailers have reacted by kicking off the holiday shopping season earlier than ever.  Sears, for example, started promoting its layaway services 105 days before Christmas.


Consumer prices rise only 0.1 percent in August

The Associated Press is reporting that consumer prices barely rose last month with the consumer price index increasing only 0.1 percent.  The increase follows a 0.2 percent increase in July.  In the past 12 months, prices have risen only 1.5 percent, down from the 2 percent year-over-year increase in July and below the 2 percent inflation target of the Federal Reserve.  The report could persuade the Federal Reserve to begin to pull back on its low interest rate policies.  Most economists expect the Fed will announce that it will begin to reduce its bond buying by about $10 billion on Wednesday. 


Millennials shy away from home buying

Millennials may be the first generation to become “serial renters”.  According to USA Today, the youngest adults are delaying home buying in order to pay off student loan debt.  From 2006 to 2011, 25 to 34 year olds experienced the largest decline in home ownership compared with any other age group.  Renters in that age group increased by more than a million from 2006 to 2011, while the number who own a home fell by nearly 1.4 million.  An iffy job market and the need for flexibility are also blamed for the renting trend.


JP Morgan agrees to London Whale fines

JP Morgan Chase and Company is expected to agree to pay at least $800 million in penalties and admit wrongdoing as part of a broad regulatory settlement over its handling of the London Whale incident.  Both the US and the UK regulators will cite the bank for deficient internal controls.  Traders placed inaccurate values on their own transactions.  The bank lost $6 billion due to the trades.  According to the Wall Street Journal, US prosecutors recently filed criminal charges against the two former traders involved in the incident.  The bank is also in the process of settling credit-card related lawsuits, expected to cost $60 million, with the OCC and the Consumer Financial Protection Bureau.


Argentina, Russia and Algeria have more shale oil opportunity than the US

Shale oilfields in countries such as Argentina, Russia and Algeria hold larger reserves than the regions in the heart of the US.  In an analysis by IHS, and reported on by the Financial Times, fields in the Vaca Muerta in Argentina, the Bazhenov in Siberia, and the Silurian fields in Algeria could produce more than the Bakken shale in North Dakota and the Eagle Ford in Texas.  The oil fields outside of the US hold approximately 175 billion barrels of extractable oil and may be able to produce more than 5 million barrels per day in the 2020s.  The fields outside of the US, however, may be harder to extract than in the US.


Gas prices set record, 1,000 days above $3 per gallon

USA Today is reporting that the AAA has come up with a sobering statistic.  The average price of gasoline will surpass $3 per gallon today for the 1,000th consecutive day.  That’s never happened before.  The current streak began on December 23, 2010.  Today the national average for a gallon of regular gas is $3.52.  The CEO of AAA comments, “Paying less than $3.00 per gallon for gasoline may be automotive history for most Americans, like using 8-track movies or going to the drive-in.”


China to open its 1,000th Starbucks           

Early in 2014, China will replace Canada as Starbuck’s second-largest market.  USA Today reports that Starbucks plans to open its 1,000th store in China sometime before the end of 2013.  Starbucks has been experimenting with its interior and exterior designs to appeal more to Chinese customers.  There is already a 24-hour Starbucks in Beijing.  There are 12,000 US locations and 4,000 locations across China and the Asia Pacific.  Unlike the US, where 70 percent of their business is conducted before 10am, the Starbucks in China do more than 70 percent of their business in the afternoon and evening.  The challenge is to move a tea-drinking culture into a coffee drinking culture.

About the Author

Catherine McBreen

Catherine S. McBreen is President of Millionaire Corner.  McBreen plans and develops content for Millionaire Corner.  Catherine balances editorial content to meet the informational needs of both new and seasoned investors.  She designs special monthly surveys on topical issues affecting the economic environment.

McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law.  She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.

Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences.  She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth.  Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.

McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)

Catherine is the mother of four and is involved in many school and community events.