November 9, 2016

Strong dollar hurting luxury market sales to foreigners

Things are reasonably fine. Yes, insurance and other prices are rising, but employment is good and wages are rising. In Las Vegas, as an example, it is clear we are at or near full employment. 

Consumption in the U.S. by foreigners, which counts in GDP, is awful. The U.S. dollar is strong. This is killing the luxury sector, especially in Miami and New York City. At the margin, this is impactful. 

On the other hand in NYC, while shopping at Christmas for luxury goods you may be able to hear English in the stores. In the last few years it has been difficult. It will also be less crowded, but for out-of-town guests, hotel prices may get back down to earth.

The worst may be priced into the stocks. For example, Macy's looks like it has bottomed and it is reasonably cheap. The company reports in less than two weeks.

September was the warmest in 35 years and October was probably close. In Chicago, at least until Nov. 15, temperatures will remain above 55 degrees. This is killing the apparel business and hurting other businesses as traffic for shopping is down

The weather eventually will cool, though not before a lot of markdowns are taken, and the Christmas calendar is optimal. The fourth-quarter retailing comparisons are easy. Results for retailers will be out before the next Fed meeting and may impede any rate reduction. This, of course will make it tougher for the financial sector.

While the "Curse of the Billy Goat" has been lifted, the "Chinese Curse" remains: "May you live in interesting times."