As I’m typing this little piece out, the NYC stock exchange is trying to recover something of the 1000 points the Dow lost after the index plunged at the opening today, cable news talking heads are having apoplexy, and various presidential candidates are screaming about how China is wrecking America. Words like “brutal “, “carnage “, “choppy “, etc. are punctuating the dialogue. The first minute of Monday’s market experienced a wave of panic selling, followed shortly thereafter by panic buying (one stock, Ford, suspended trading for several minutes, not because it went down too quickly, but because it went up too quickly).

One stock market veteran opined that he had not so much fear in the market since 2009, “and we’re only 4.5% off the market highs “. Of course, that is understandable, given our collective recent history. The popular dialogue seems to be that China is to blame. For example, one blogger for Mother Jones opined that, “markets are dropping because investors are afraid that China is about to go belly up… after weeks of increasingly bad news from China. “

Not being a stock analyst or a day-trader, I invoked my “Plan B – don’t look! ” after my first cup of coffee, and my mood immediately improved.

Cutting out the noise from the financial news network, the question remains, what’s going on in China and is it good or bad for consumers (and thus for Retail), at least in the short term? First of all, it seems that all the panic about the slowing Chinese economy, while a concern in the near term, is overblown for the long term. The government’s mid-August move to devalue the yuan amounted to a 3% adjustment, although some predict that it will decline 6.5% against the dollar by year-end. But that is after it has appreciated about 50% over the last ten years. So rather than a slash-and-burn attempt to grab more of the export market, this seems like a “tweak ” to many observers, an attempt by the Chinese to inch the currency a little closer to a market-determined value.

Good or Bad, Or No News At All?

So, is the devaluation good or bad for Retail in the short term? According to the popular press, it’s good for consumers because Chinese made products will be a little cheaper. I suppose that may be “a little ” true. If something had a cost-of-goods at $1 and the retailer wants to maintain a 50% margin, that item would cost the consumer $2.00 (cost/retail). But if the same item now costs $0.97, and applying the same margin percentage, the consumer now pays $1.94. So that’s good; pennies matter to consumers. If the retailer decides to keep the retail price at $2.00, that’s a bit of a windfall. But I would expect that retailers will likely adjust prices to maintain a target COG-to-Revenue ratio. So with the proviso that the Chinese currency devaluation remains at 3%, it’s probably a push for Retail and a “little ” better for consumers.

Perhaps a bigger concern for the short term has to do with orders already “on the water ” for the upcoming holiday season that haven’t yet been paid for.

How about in the long term? Some financial pundits seem to think that China is engaging in a “beggar your neighbor ” race to the bottom for export dominance. I have a tough time with that; China already has export dominance! China is the top exporter in the world ($1.9T), followed by Germany and the U.S. (the only other countries in the “more than $1T ” club), Japan, France, South Korea, Netherlands, Italy, Russia, and the U.K. In other words, concerns from India that China is doing an export grab seem a little hyperbolic.

Then, What?

I’m sure someone somewhere is developing a model to predict how every lever in every producing and consumer economy across the globe affects everything else, but all of the hand wringing about the Chinese devaluation seems like a tempest in a teapot to me. A far bigger impact from the devaluation might be that the U.S. Federal Reserve holds off on its highly anticipated interest rate adjustment – and if you’re buying a house or a car, that’s great news. But the biggest impact of all in recent days has been the stock market’s hyper-reaction to perceived instability in the Chinese economy. If your retirement accounts are anything like mine, you lost some money, at least on paper.

So much emotion! So few facts! All of this reminds me of a skit by comedian Trevor Noah (Jon Stewart’s replacement), riffing on sports in America:

“It’s the craziest thing I’ve seen in my life. It’s all about statistics! Have you seen sports in America? Non-stop! Guys just come out there… Blah blah! Numbers! Numbers! Stats, stats, stats! You guys know everything, every stat! And then you switch over to your business channels and your economy, and it’s like, ‘well, what’s going on in the economy, Bob?’ ‘Well, nobody knows… but hey! That’s the economy, you never know, right?’ “

The bottom line is, “Keep calm, and carry on. ” Oh, and turn off the financial news network.