Juggling Dynamite

Another sign of our aging demographics and economically trying times:  golf demand is contracting.  As the credit bubble built, new golf courses were popping up like chicken pox.  But since 2008, fewer people are finding the means to partake in a game expensive both in time and money.  See:  Golf market struck in bunker as thousands leave sport:

“It’s something that’s associated with boom times…Most of society’s not moving up, and golf is associated with moving up.”

Some interesting stats:

• According to the National Golf Foundation, 400,000 players left the sport last year,  (while some 260,000 women took up golf, some 650,000 men quit.)
• Chronically underemployed and over-indebted young people are opting out with an estimated 200,000 players under 35 abandoning the game last year. While Tiger inspired young people to the game up to 2009, his infidelity scandal turned some off.
• Only 14 new courses were built in the U.S. last year, while almost 160 shut down, marking the 8th straight year that more courses closed than opened.
• Those still playing are opting for nine holes rather than 18. In total, U.S. golfers played 462 million rounds last year, according to Golf Datatech–the fewest since 1995.
• Slow golf sales over the past 15 months have created a glut of inventory forcing retail outlets to slash prices on clothing and equipment.
• Equipment heavy-weights like Callaway (hasn’t reported an annual profit since 2008), TaylorMade and Adidas are all warning that results could come in at the low end of previous guidance for 2014 with the sector noting a 34% sales drop in Q1.

This clip starts out with the usual carnival-promoter comments from salesman Smith, but then quickly moves to a relevant discussion from Boockvar on the tightening effects of the QE taper withdrawing speculative liquidity from stocks. Keep in mind that having a big firm strategist predict a 10% “correction” is considered radical, so daring to speak of the likelihood of -20% to broad averages is a very brave call for business television.

“When the Federal Reserve ends its latest bond-buying quantitative easing program, stocks could drop 15 percent to 20 percent, said Peter Boockvar, chief market analyst at The Lindsey Group.

That’s how much the market dropped when the Fed ended QE1 and QE2, Boockvar said in an interview on CNBC’s “Squawk Box.”

“I think we’re going to see a repeat of that,” he said.

“I think we’ve already seen the rumblings of that in the Russell 2000 [and] a lot of high-flying Nasdaq stocks,” he continued. “And I do think it’s going to sprinkle into the bigger cap S&P and the Dow names that people have been hiding in.” Here is a direct video link.

Of course in reality, -20% would be extremely mild within the context of the steroid-fueled cyclical rally that QE has bought within the context of our ongoing secular bear that has once more pushed reliable historical valuations into the wild-blue yonder…

Danielle was a guest today with Jim Goddard of Talk Digital Network talking about recent trends in the world economy and markets. You can listen to audio clip of the segment here.