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Advance retail sales for the
month of October declined -2.8% m/m and are down -3.3% y/y/. The core
ex-autos estimate fell -2.2% m/m and is up 1.7% y/y. On a monthly basis
ex-gas was down -1.5%, ex-autos and building materials have fallen -2.4%,
ex-autos and gas -0.5% and ex-good service -3.1%. On a three month annualized
basis sales in the retail and food service sector have fallen -10.9% with the
ex-auto estimate down -7.4%.
Inside the data sales were down
just about across the board. The sale of motor vehicles and parts declined
-5.5%, furniture -2.5%, electronics -2.3% and clothing 1.4%. Sales at
department stores dropped -1.3% and non-store retailers dropped -1.8%. Purchases
at gasoline stations declined -12.7%, while that of good and beverages was
flat. The only major group that saw an increase in sales for the month was
the health and personal care category that increased 0.4%.
 
The decline in retail sales in
both the headline and the core exceed the very bearish expectations of the
market in just about manner possible and is the worst posting on record. It
On an annual basis sales of motor vehicles and parts are down 23.3%,
furniture -13.2%, electronics -5.7% and clothing -3.0%. On a three month
annualized basis ex-food sales are down -12.4%. This sets the stage for what
will be a sharp contraction in overall economic activity during the fourth
quarter of 2008 that we think will be -4.1%. If it was not clear before in
Washington that the stimulus packages that the new Administration and
Congress are going to pass should be well planned, implemented efficiently
and be outsized it should be now.
Joseph Brusuelas
Chief Economist
VP Global Strategy
Merk Investments LLC
Merk
Investments LLC is the manager of Merk Mutual Funds, including the Merk Asian
Currency Fund and the Merk Hard Currency Fund. The Merk Asian Currency Fund
invests in a basket of Asian currencies. Asian currencies the Fund may invest
in include, but are not limited to, the currencies of China, Hong Kong,
Japan, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea,
Taiwan and Thailand.
The Merk
Hard Currency Fund invests in a basket of hard currencies. Hard currencies
are currencies backed by sound monetary policy; sound monetary policy focuses
on price stability.
The Funds
may be appropriate for you if you are pursuing a long-term goal with a hard
or Asian currency component to your portfolio; are willing to tolerate the
risks associated with investments in foreign currencies; or are looking for a
way to potentially mitigate downside risk in or profit from a secular bear
market. For more information on the Funds and to download a prospectus,
please visit www.merkfund.com.
Investors
should consider the investment objectives, risks and charges and expenses of
the Merk Funds carefully before investing. This and other information is in
the prospectus, a copy of which may be obtained by visiting the Funds'
website at www.merkfund.com
or calling 866-MERK FUND. Please read the prospectus carefully before you
invest.
The Funds
primarily invest in foreign currencies and as such, changes in currency
exchange rates will affect the value of what the Funds own and the price of
the Funds' shares. Investing in foreign instruments bears a greater risk than
investing in domestic instruments for reasons such as volatility of currency
exchange rates and, in some cases, limited geographic focus, political and
economic instability, and relatively illiquid markets. The Funds are subject
to interest rate risk which is the risk that debt securities in the Funds'
portfolio will decline in value because of increases in market interest
rates. The Funds may also invest in derivative securities which can be
volatile and involve various types and degrees of risk. As a non-diversified
fund, the Merk Hard Currency Fund will be subject to more investment risk and
potential for volatility than a diversified fund because its portfolio may,
at times, focus on a limited number of issuers. For a more complete
discussion of these and other Fund risks please refer to the Funds'
prospectuses.
This report
was prepared by Merk Investments LLC, and reflects the current opinion of the
authors. It is based upon sources and data believed to be accurate and
reliable. Opinions and forward-looking statements expressed are subject to
change without notice. This information does not constitute investment advise
nor a solicitation or an offer to buy or sell any products or services.
Foreside Fund Services, LLC, distributor.
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