However, over 65% of the respondents indicated a willingness to buy if there were discounts over 20%.

This explains why FMS survey respondents were so wary about companies being able to improve their balance sheets: with discounts come lower profit margins. 

Mastercard’s SpendingPulse forecasted a 15% jump in sales on Black Friday overall, led by an 18% rise for in-store retail sales. Net sales were below these estimates at 12% and 14% respectively. Overall, crowds in the malls have been thinner and the driving force of sales have been discounts. A large portion of sales in this holiday season is estimated to be for the purposes of inventory reduction as retail stores and e-commerce companies improve their balance sheets: both Amazon and Shopify have laid off staff in the past couple of months. News reports indicate that Amazon intends to cut a further 10,000 jobs with recent “workplace optimisation” programmes in their India operations attracting the ire of the government for improper termination, i.e. without cause or adequate compensation. Legal notices have been sent; if found guilty, the consequences can be severe. 

This highlights the weakness in the consumer discretionary sector as evident in the Fund Manager Survey. Between the standard defensive sectors – healthcare and consumer – respondents indicated that they were overweight in favour of “healthcare” over “consumer”.