US Regional Economics Part II: Retail Exposure

Not all states are created equal when it comes to unemployment. We analyzed trends in all 50 states, and weighted every retailer’s real estate portfolio accordingly. Some surprising results…

Employment is clearly the hot topic in the market today. Yes, the aggregate unemployment rate matters, but as noted in my 12/2 post (US Regional Economics: It Matters… A Lot) we need to look at which states are seeing the greatest sequential changes in employment trends. We all know that markets like California, Florida and Nevada have been tough – but the key today is that the next round of states are starting to roll over.

We took our analysis a step further and looked at every retailer in the US with more than 5 stores – public and private – that sells apparel/footwear. We weighted each company’s store portfolio with the incremental change in employment by state.

We grouped them into three groups 1)The Good, 2) The Bad, and 3) The Ugly. I wasn’t thrilled with the Clint Eastwood metaphor and pics below, but my Analyst Zach Brown is a big fan, and he did such a dang good job on this that I had to give in.

The charts below (click to enlarge) speak for themselves, but here’s a few quick callouts.
1) Out of the 80 companies plotted, Liz Claiborne retail has the lowest risk on the list, while Jones New York comes in dead last (highest risk).

2) Department stores, and anyone with heavy mall exposure were right in the middle of the pack. Not a huge surprise, given the lack of regional focus.

3) But Sears??? Near the top of the ‘safe’ list?? That one surprised me.

4) TJX at the safe end, and Ross Stores polar opposite?

5) VF Corp retail is way up the list too. But retail is such a small percentage of total company sales such that this does not help the fundamental story much.

6) Skechers looking really bad.

7) DSW – an ultimate zero – is on the risky list too.

We have this analysis run for many companies that are not listed on the charts below. Ping me or someone on my team for assistance.

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more

Capital Brief: 5 Things to Watch Right Now In Washington

Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

read more

Premium insight

[UNLOCKED] Today's Daily Trading Ranges

“If I could only have one thing of the many things we have it would be my daily ranges." Hedgeye CEO Keith McCullough said recently.

read more

We'll Say It Again: Leave Your Politics Out of Your Portfolio

If your politics dictates your portfolio positioning, the Democrats and #NeverTrump crowd out there have had a hell of a week.

read more

Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more

Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more