Takeaway: Weak watch demand. Weak global demand at every price point. That's a bad omen for TIF ahead of 2Q, where we should see another guide down.

The Swiss Watch Exports numbers are the best indicator that we can find to gauge the global demand for luxury items - particularly jewelry. Of course watches have their very own demand constraints and TIF is underexposed to the category  -- but the iWatch, FitBit, and other connected fitness wrist wear we'd argue don't compete with items priced above $3,000, which oh by the way was down 19.5% for the month.

Here's what we think it means for TIF:

Looking at the trend in TIF comp sales vs. the global Swiss Watch exports numbers paints a pretty tight correlation between the two metrics, with the two most recent Swiss Watch export numbers showing a sequential deceleration in the YY trend. The only problem is that TIF Consensus estimates currently expect a reacceleration in comp trends sequentially on a 1yr and 2yr basis for 2Q16 and the balance of the year. With a positive comp bogey embedded in numbers for 4Q. We think that's a pipe dream.

All in, we think TIF takes numbers down again which will mark the eighth time in two years that the company readjusted guidance to the downside. We're at $3.23 in 2017 vs. the street at $3.92. And we think the TIF story from here is much more tied into weak consumer demand for the core product offering with a FX/tourism kicker. So what's a company putting up the worst comp numbers in retail (ex-Lumber Liquidators) worth? Because it's TIF, we'll give it a little bit of a luxury buffer - so low teens P/E multiple gets us to a $42 dollar stock on 2017 numbers. That's 30% downside from here.

TIF | Watching and Waiting - 7 21 2016 TIF chart1