Monthly Archives: November 2015

Black Friday Retail Dud; Online Share Shift Accelerates

November 28, 2015
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Black Friday Retail Dud; Online Share Shift Accelerates

Bah humbug. Black Friday jumped the shark sometime around the turn of the century. Nonetheless, a disproportionate amount of retail and media focus continue to emphasize Black Friday’s importance as an event. While declining over several years, this year got markedly worse, to the point where media reports were forced to highlight the “normality” of shopping on Black Friday and the notable empty parking lots. This year, the Grinch brought store based retail sales over to online. Sources of information are disjointed but echo the same themes enough to draw some early conclusions: WSJ: “Early Sales Thin Black Friday Rush “Driving up to a nearly empty parking lot at a Wal-Mart in Houston Friday morning, Dora Rodriquez, 39, stopped her silver hatchback in surprise and called out her window...

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Tiffany (TIF) Tourism Business Slows; Strong Dollar Constraints Evident

November 25, 2015
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Tiffany (TIF) Tourism Business Slows; Strong Dollar Constraints Evident

Yesterday, Tiffany & Co. (TIF) reported lackluster results for the third quarter, reducing annual earnings guidance for the second time in 3-months. Tiffany is a useful barometer for the global luxury consumer; business spans across all developed geographies, across multiple price points, in a variety of retail formats. Tiffany is iconic for its branded diamonds but over the years, product expansion into accessories broadens assortment to more consumers into different income strata. Expansion into luxury watches is even underway with a multi-year marketing budget to build dual-gender brand over the next several years. While American public companies dominate most global sectors, Europe wins in luxury. Tiffany is the purest true luxury company America has to offer and a success story over several years. Tiffany holds a certain panache from its scarcity...

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Qui n’avance pas, recule

November 16, 2015
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Qui n’avance pas, recule

We all eat at restaurants, go to stadiums, and walk down the street. The tragically successful terrorist attacks in Paris highlight the vulnerability of the human condition at any instant. While this has always been the case, and will continue to be so, civilization, and human progress, over past centuries and decades, reduces the chance of random death from a vulgar, inhumane cause. Radical Islamic terrorism is so deplorable because the aim is to destroy, to undo, to move backwards in time, and to return to a harsher world. The impossibility of the ultimate success of the radical Islamic movement is matched with the fervor of the very small percentage of the world population that supports this movement. To create the scale necessary to carry out such large scale...

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Midsummer Issues Persist; Divergent Global Central Bank Actions Create Challenges

November 10, 2015
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Midsummer Issues Persist; Divergent Global Central Bank Actions Create Challenges

The market moves fast. Thankfully, in the rest of the world, trends of all kinds, generally move at a measured pace. The market overreacts to events and day-to-day happenings based on crowd think and behavioral issues. A change in trend will often start with a subtle data point or indicator, which in hindsight, ignites a big, and sustained move in the market. Now is not one of those times. Late summer fears of China slowdown and EM collapse look to have been overblown, and the severity of the selloff too harsh. But the rally of the past two months also contains elements of overreaction; the underlying drivers and risks from the summer aren’t resolved. The world is fundamentally caught in a new dynamic. Credit expansion reached limits in every...

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The Chickens Come Home to Roost; More Fraudulent Business Practices Exposed at Iconix Brand Group

November 6, 2015
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The Chickens Come Home to Roost; More Fraudulent Business Practices Exposed at Iconix Brand Group

Usually, the juicy, salacious stuff comes to the fore during recession or crisis, when past misconduct can no longer be concealed. Recently, between Valeant Pharmaceuticals, and Volkswagen, there are plenty of good fraud stories to go around. Yesterday, sigh, Iconix Brand Group (ICON) revealed that its accounting statements, since 2013, were presented with smoke and mirrors. The revelation comes after the former CEO, and founder, Neil Cole (Kenneth Cole’s brother) left abruptly in August to “pursue other interests”. Perhaps there is a good backlog of dodgy accounting, and insider shenanigans to expose after the 6-year recovery since the financial crisis. The story of Iconix is a fascinating one, and rhymes with other high profile deceptions over the years, such as, Valeant, Enron, and WorldCom; beware of acquisitive growth that...

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On Sentiment; How the Market Mini-Crashed and Exploded Right Back

November 4, 2015
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On Sentiment; How the Market Mini-Crashed and Exploded Right Back

The stock market is on fire. As negative, dour, downbeat, and gloomy was August, the market this fall (early fall), is contrastingly, positive, nonchalant, optimistic, and even euphoric. So it goes; a fast 11% sell off over 6 trading days, on little more than poor sentiment, and a 3% Chinese currency devaluation, followed by an incredible global recovery on dramatic global central bank stimulus and, well, things not being quite so bad in China (for now). In retrospect, it’s always easy. The economic machine works as a process (using Ray Dalio’s terms), and short of a deep freeze of liquidity, economic activity doesn’t shut down over night. The global economy isn’t ready to slow dramatically; the US is still too strong, and global central banks still too eager to...

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