Can Xmas Be Saved?

Predictions of a weak Christmas appear to be overblown as shoppers this weekend hit the stores in force, the New York Times, Wall Street Journal, and Business Week report this morning. Ah, but there's a catch. The reason for the better-than-expected start to the holiday shopping season can be pinned on "massive discounts like 'buy one get one free' sweaters at Gap Inc. stores, $200 iPod Touch music players from Amazon.com Inc., and 26-inch LCD TVs at Target Corp. sites for $299," the WSJ writes. Still, there is an upside to all this discounting. The always-reliable American consumer is spending more than last year. "In a survey of 3,370 shoppers, the National Retail Federation estimated shoppers spent an average of $372.57 over the weekend, up 7.2% over last year's $347.55," the newspaper writes.

The NYT though sees "troubling signs in the early numbers." Yes, the bargains are luring in shoppers, but at what cost to retailers' bottom lines? "The bargains that drove shoppers to stores were so stunning, analysts said that retailers—already suffering from double-digit sales declines the last two months—would probably see their profits erode even further," the NYT writes, adding that foot traffic trailed off on Saturday and Sunday after the initial blowout deals expired. Business Week is equally pessimistic about retailers' outlooks. "Sales growth was anemic," it writes. "Shopper Trak, a firm that follows mall traffic, reported that Black Friday retail sales totaled $10.6 billion, up 3% from a year earlier, compared with 7% growth for the same period in 2007."

Detroit's struggling automakers take another crack this week at filling their tanks with $25 billion in federal bailout money, but the Big Three are not heading to Washington with a unified blueprint for the future, the NYT writes. General Motors is likely to disclose it will need to shrink significantly its North American operation to survive. Ford, meanwhile, which is in a slightly more comfortable cash position, will propose making "more symbolic moves" like cutting executive pay, the newspaper writes. Chrysler will admit it needs to merge. The WSJ reports that GM was working through the night with its board, hammering out specifics of the plea it will make to Congress this time around. After the rough handling two weeks ago, the automaker is not taking any chances. It is even building in a contingency that it gets turned down. "At the same time, directors—unlike chief executive Rick Wagoner—are also insisting that all options stay on the table, including a Chapter 11 bankruptcy filing, if a bailout doesn't come through," the newspaper writes.

Not surprisingly, the outlook for GM's and Ford's overseas units looks to be getting more desperate. According to the Financial Times, the two automakers "have approached Sweden’s government about financial aid for their loss-making Saab and Volvo brands." The newspaper writes that the government has been mulling an aid package of roughly $248 million to devote to the recovery of the auto lines. Still, even if the aid comes through, Ford and GM are poised to sell the lines off to the highest bidder, the FT adds.

What's the point of having a powerful cartel if the members won't act in concert? That's the conundrum facing Saudi Arabia as it tries to persuade Iran and Venezuela to cut crude production in order to protect a new OPEC "fair price" of $75 a barrel. "OPEC has a spotty record when it comes to managing oil supplies to maintain a set price band. Lack of compliance with production cuts has been a core theme throughout the organization's 48-year history," writes the WSJ. This time, as during the major oil glut of the early 1980s, some OPEC members are so addicted to their own oil revenue that they are loath to turn off the taps. Nevertheless Saudi Arabia will attempt to install new production cuts when OPEC meets in Algeria in two weeks' time.

"Microsoft is in talks to acquire Yahoo’s online search business for $20 billion," the Times of London reported over the weekend. The only problem is that no other media organization has been able to confirm these talks. The WSJ's "All Things D" site quotes Ross Levinsohn, a former president of Fox Interactive Media (and a purported key player in the deal), dismissing the report as "total fiction." While some deal between the two Web giants is still on the cards at some point, the move by top investor Carl Icahn to increase his Yahoo holdings last week "should be enough of a reason for there to be no Microsoft-Yahoo search deal imminent, given Icahn would be more than well aware of it and buying up almost seven million Yahoo shares—now at historic lows—only days ago would smack of insider trading," writes the WSJ.

Finally: Ever wonder how lawmakers and Washington, D.C., bean counters decide on just how big a number to affix to a federal stimulus package? The NYT this morning provides a bit of insight. Warning: It's a depressing read. The logic is straightforward enough. "The size of a possible stimulus plan rises as the economy contracts," the newspaper writes. This means that when the economy shrinks at a quicker rate than expected (the size of the economy is decreasing at a rate eight times faster than it was this summer, for example, the newspaper writes), the stimulus package required to offset the contraction expands. The goal for policy-makers now is to generate a large enough stimulus package to achieve "zero growth."