Historically speaking, the inventory-to-sales ratio is very low (see chart below).
The latest data is from March. I excluded auto dealers because they are having one heck of a time due to chip shortages.
Elsewhere we see "just-in-time" on steroids with an inventory-to-sales ratio of 1.12.
Recently, inventories have been rising faster than sales. And what if sales falter?
Top 20 Importers
"List of top 20 container importers into US. Many on this list have excess inventories, which likely means their maritime volumes will drop as they work off excess inventory. The top 20 container importers represent approx 25% of maritime container volume imports into US."
What About Amazon?
Supply Chains Won't Return to Normal
The Big Kicker
"A lot of items in excess inventory are seasonal & big-ticket. Rather than heavy discounting, we are more likely to warehouse these goods until they sell. It will mean slower shipping volumes, probably most notable in Q4/Q1."
Let's discuss the recent data.
Target Plunges 25%, What About Yesterday's Big Retail Sales Blowout?
The advance retail sales reports by the commerce department were stunning. Reports by Target and Walmart strongly suggest something else.
For discussion, please see Target Plunges 25%, What About Yesterday's Big Retail Sales Blowout?
New Home Sales Plunge 22.5% In April, 16.6% From Deep Negative Revisions
What will that do to demand for appliances, carpet, furniture, lawn mowers, etc,?
Frantic Discounts Coming
"Rather than heavy discounting, we are more likely to warehouse these goods until they sell."
I expect that idea to explode in a big wave of frantic discounts.
This post originated at MishTalk.Com.
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