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Advance Retail Sales: Record Low

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Merk Fund
Published : November 14th, 2008
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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

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 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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Bridging academic rigor and communications, Joe Brusuelas provides the Merk team with significant experience in advanced research and analysis of macro-economic factors, as well as in identifying how economic trends impact investors. As Chief Economist and Global Strategist, he is responsible for heading Merk research and analysis and communicating the Merk Perspective to the markets. Mr. Brusuelas holds an M.A and a B.A. in Political Science from San Diego State and is a PhD candidate at the University of Southern California, Los Angeles. Before joining Merk, Mr. Brusuelas was the chief US Economist at IDEAglobal in New York. Before that he spent 8 years in academia as a researcher and lecturer covering themes spanning macro- and microeconomics, money, banking and financial markets. In addition, he has worked at Citibank/Salomon Smith Barney, First Fidelity Bank and Great Western Investment Management. Mr. Brusuelas lives in Connecticut with his wife and St. Bernard.
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