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European Banking Monitor: Further Improvement

Below are key European banking risk monitors, which are included as part of Josh Steiner and the Financial team's "Monday Morning Risk Monitor".  If you'd like to receive the work of the Financials team or request a trial please email .

 

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European Financial CDS - Swaps widened modestly in Europe last week, rising by an average 4 bps (median: +2 bps).  

 

European Banking Monitor: Further Improvement - z. banks

 

Sovereign CDS – Sovereign swaps showed further improvement across Europe with the exception of Germany, which widened by 3 bps, though still trades well inside of the US. Interestingly, the US widened again last week, adding 3 bps and rising to 37 bps. 

 

European Banking Monitor: Further Improvement - z. sov 1

 

European Banking Monitor: Further Improvement - z. sov2

 

European Banking Monitor: Further Improvement - z. sov3

 

Euribor-OIS Spread – The Euribor-OIS spread tightened by 1 bps to 11 bps. The Euribor-OIS spread (the difference between the euro interbank lending rate and overnight indexed swaps) measures bank counterparty risk in the Eurozone. The OIS is analogous to the effective Fed Funds rate in the United States.  Banks lending at the OIS do not swap principal, so counterparty risk in the OIS is minimal.  By contrast, the Euribor rate is the rate offered for unsecured interbank lending.  Thus, the spread between the two isolates counterparty risk. 

 

European Banking Monitor: Further Improvement - z. euribor


MACAU HEADED FOR 30%+ GROWTH

While slower than recent weeks due to seasonality, Macau put up another strong week, up 23% YoY.  Our October GGR growth forecast remains at +30-32%.  We continue to hear positive anecdotal evidence of a strong Mass month with consistently high casino traffic.

 

In terms of market share, the Asian companies continue to dominate this month.  SJM and Galaxy are posting share well above their recent trend.  LVS’s share has improved but remains below trend.  We’re pretty sure the LVS properties held low in the first half of the month.  While Wynn’s share looks low – also likely hold-related – we think that property is becoming more aggressive on the Mass side and should see Mass share gains going forward (possibly at the expense of MGM).

 

MACAU HEADED FOR 30%+ GROWTH - macau1

 

MACAU HEADED FOR 30%+ GROWTH - macau2


MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA

Takeaway: China's interbank lending rate rose 109 bps W/W to 409 bps. Sovereign and institutional swaps widened, reversing their recent trend.

Risk Monitor / Key Takeaways:

A few of the notable callouts on the risk front this morning include China's interbank lending rate, Shifon, rising 109 bps W/W to 409 bps and a broad-based reversal in CDS at both the institutional and sovereign level.

 

* Chinese interbank rates rose 109 basis points last week, ending the week at 4.09% versus last week’s print of 3.00%. 

 

* Sovereign swaps showed further improvement across Europe with the exception of Germany, which widened by 3 bps, though still trades well inside of the US. Interestingly, the US widened again last week, adding 3 bps and rising to 37 bps. 

 

* High Yield rates fell 7.4 bps last week, ending the week at 5.92% versus 5.99% the prior week.

 

Financial Risk Monitor Summary

 • Short-term(WoW): Negative / 4 of 13 improved / 4 out of 13 worsened / 5 of 13 unchanged

 • Intermediate-term(WoW): Positive / 8 of 13 improved / 2 out of 13 worsened / 3 of 13 unchanged

 • Long-term(WoW): Negative / 2 of 13 improved / 2 out of 13 worsened / 9 of 13 unchanged

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 15

 

1. U.S. Financial CDS -  In the US, swaps widened for 16 out of 27 financial institutions. The average and median increase were both 3 bps. On a M/M basis, however, swaps remain tighter by 7-8 bps. The large cap banks all worsened on the week with JPM, BAC and C all widening by 6 bps. WFC, GS and MS, however, all tightened by 1 bp.

 

Tightened the most WoW: AXP, COF, PRU

Widened the most WoW: C, UNM, ALL

Tightened the most WoW: AXP, COF, CB

Widened the most/ tightened the least MoM: MBI, GNW, GNW

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 1

 

2. European Financial CDS - Swaps widened modestly in Europe last week, rising by an average 4 bps (median: +2 bps).  

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 2

 

3. Asian Financial CDS - Chinese banks widened last week following the blow-out in the interbank lending rate. Indian banks, meanwhile, went the other way, tightening by 13-22 bps. Japanese Financials were largely unchanged on the week.

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 17

 

4. Sovereign CDS – Sovereign swaps showed further improvement across Europe with the exception of Germany, which widened by 3 bps, though still trades well inside of the US. Interestingly, the US widened again last week, adding 3 bps and rising to 37 bps. 

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 18

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 3

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 4

 

5. High Yield (YTM) Monitor – High Yield rates fell 7.4 bps last week, ending the week at 5.92% versus 5.99% the prior week.

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 5

 

6. Leveraged Loan Index Monitor – The Leveraged Loan Index rose 7.0 points last week, ending at 1818.

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 6

 

7. TED Spread Monitor – The TED spread fell 1.2 basis points last week, ending the week at 20.4 bps this week versus last week’s print of 21.56 bps.

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 7

 

8. CRB Commodity Price Index – The CRB index fell -1.8%, ending the week at 283 versus 288 the prior week. As compared with the prior month, commodity prices have decreased -1.5% We generally regard changes in commodity prices on the margin as having meaningful consumption implications.

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 8

 

9. Euribor-OIS Spread – The Euribor-OIS spread tightened by 1 bps to 11 bps. The Euribor-OIS spread (the difference between the euro interbank lending rate and overnight indexed swaps) measures bank counterparty risk in the Eurozone. The OIS is analogous to the effective Fed Funds rate in the United States.  Banks lending at the OIS do not swap principal, so counterparty risk in the OIS is minimal.  By contrast, the Euribor rate is the rate offered for unsecured interbank lending.  Thus, the spread between the two isolates counterparty risk. 

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 9

 

10. Chinese Interbank Rate (Shifon Index) –  The Shifon Index rose 109 basis points last week, ending the week at 4.09% versus last week’s print of 3.00%. The Shifon Index measures banks’ overnight lending rates to one another, a gauge of systemic stress in the Chinese banking system.

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 10

 

11. Markit MCDX Index Monitor – Last week spreads tightened 4 bps, ending the week at 85 bps versus 89 bps the prior week. The Markit MCDX is a measure of municipal credit default swaps. We believe this index is a useful indicator of pressure in state and local governments. Markit publishes index values daily on six 5-year tenor baskets including 50 reference entities each. Each basket includes a diversified pool of revenue and GO bonds from a broad array of states. We track the 16-V1.

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 11

 

12. Chinese Steel – Steel prices in China fell 0.5% last week, or 19 yuan/ton, to 3480 yuan/ton. We use Chinese steel rebar prices to gauge Chinese construction activity, and, by extension, the health of the Chinese economy.

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 12

 

13. 2-10 Spread – Last week the 2-10 spread tightened to 221 bps, -6 bps tighter than a week ago. We track the 2-10 spread as an indicator of bank margin pressure.

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 13

 

14. XLF Macro Quantitative Setup – Our Macro team’s quantitative setup in the XLF shows 1.4% upside to TRADE resistance and 2.3% downside to TRADE support.

 

MONDAY MORNING RISK MONITOR: KEEPING AN EYE ON CHINA - 14

 

Joshua Steiner, CFA

 

Jonathan Casteleyn, CFA, CMT

 


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#GrowthSlowing Signals

Client Talking Points

VIX

This happens infrequently, so pay attention. With the Financials (XLF) down -0.2% and Russell 2000 lagging at +0.3% last week (versus the slower growth Dow +1.1% and Utilities +2.0%), the VIX was actually UP +0.4% on the week, making a higher low. Not good.

GOLD

The long-term love affair with Ben Bernanke has been epic. Since the no-taper decision, it's been Dollar Down, Gold Up. Gold was up +2.7% last week. It officially moves out of crash mode for the year-to-date at -19.8%. I'm still waiting for my levels to confirm before buying it. Stay tuned.

UST 10YR

If you ask the bond market, Ben Bernanke is going to pander to the Bond Bull Lobby (check out 2.52% on the 10-Year this morning, below @Hedgeye TREND resistance of 2.60%, not a good US growth signal). Slow-growth styles loved this development last week. Utilities, MLPs and REITS all were up around 2% across their subsector ETFs. Isn’t this great?

Asset Allocation

CASH 62% US EQUITIES 6%
INTL EQUITIES 16% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 16%

Top Long Ideas

Company Ticker Sector Duration
DAX

In line with our #EuroBulls Q4 theme, we’re long the German DAX via the etf EWG. With European fundamentals showing improvement off low levels, we expect outperformance from Germany, and in turn for the region’s largest economy to pull the rest of the region higher. ECB policy remains highly accommodative and prepared to aid any of its sovereign members to preserve the Union. Inflation remains moderate and fundamentals are positive: confidence readings and PMIs are up since June, with factory orders trending higher and retail sales inflecting to push the trade balance higher. Finally, the unemployment rate has held steady at the low level of 6.9%, all of which signals to us that Germany’s economic climate is ramping up.

WWW

WWW is one of the best managed and most consistent companies in retail. We’re rarely fans of acquisitions, but the recent addition of Sperry, Saucony, Keds and Stride Rite (known as PLG) gives WWW a multi-year platform from which to grow. We think that the prevailing bearish view is very backward looking and leaves out a big piece of the WWW story, which is that integration of these brands into the WWW portfolio will allow the former PLG group to achieve what it could not under its former owner (most notably – international growth, and leverage a more diverse selling infrastructure in the US). Furthermore it will grow without needing to add the capital we’d otherwise expect as a stand-alone company – especially given WWW’s consolidation from four divisions into three -- which improves asset turns and financial returns.

TROW

Financials sector senior analyst Jonathan Casteleyn continues to carry T. Rowe Price as his highest-conviction long call, based on the long-range reallocation out of bonds with investors continuing to move into stocks.  T Rowe is one of the fastest growing equity asset managers and has consistently had the best performing stock funds over the past ten years.

Three for the Road

TWEET OF THE DAY

I'd need to see 10yr Yield close (and hold above) 2.61% to get back on the bear Treasuries train @KeithMcCullough

QUOTE OF THE DAY

"Better to go to bed supperless then wake up in debt." -Ben Franklin

STAT OF THE DAY

American Purchasing Power (U.S. Dollar) down -3.4% in the last three months to now negative -0.7% year-to-date. Euro +0.8% last week versus USD, now +4.0% year-to-date.


David and Goliath

This note was originally published at 8am on October 14, 2013 for Hedgeye subscribers.

“Even when you have three strikes, you’re still not out.  There is always something else you can do.”

-Tony La Russa

 

This weekend I read Malcolm Gladwell's most recent book, "David and Goliath - Underdogs, Misfits and the Art of Battling Giants." Now many of my academic friends are critical of Gladwell suggesting he cherry picks studies, but I sort of take his books for what they are: a compendium of interesting studies. Ultimately, it is up to the reader to accept or not accept his conclusions.  

 

As the title denotes, his most recent book is about perceived underdogs overcoming serious odds. He discusses why certain learning disorders may actually improve the chances of success of individuals (causes them to focus more intently), discusses the long term impact of California's three strikes laws (not positive for communities), analyzes how unconventional tactics in basketball can lead to outsized success (more full court pressing!), and a number of other interesting topics. 

 

One of the topics I found most interesting was the long run analysis of success in military conflicts.  As Gladwell writes, suppose you were to look at the conflicts that happened between very large countries and much smaller countries over the past 200 years.  In fact, let’s assume the size difference was 10x. How often would you assume the larger country wins?

 

Logically, and intuitively, it would seem likely that with that type of size advantage the larger country would dominate and likely win the conflicts close to 100% of the time. The reality is much different as the weaker countries have won almost 29% of the time. 

 

Even more insightful is the fact that the weaker side wins 64% of the time when employing unconventional, or guerrilla attacks.  Put another way, if the United States were to go to war with my home country of Canada (about 1/10 the population of the United States), you should put your money on Canada to win if the Canadians employed guerrilla tactics

 

Back to the global macro grind ...

 

We've had our own David and Goliath battle this year at Hedgeye as our Senior Energy Analyst Kevin Kaiser has taken on a couple of billionaire CEOs by making short calls on Linn Energy and the Kinder Morgan companies. As always, even though we believe our research supports a revaluation lower of both companies, time and Mr. Market will determine whether this call, versus the views of the energy Goliaths, is the right one. (Ping us at sales@hedgeye.com if you’d like to learn more about subscribing to the energy vertical.)

 

More practically, in investing, a bet against Goliath is often a bet against consensus.  Internally we run a number of screens to assess whether we are with or against consensus on any of our Best Ideas. As an example, is if company has 30 ratings from Wall Street and 29 of them are Buys that is likely more supportive of a short thesis, and conversely make us question whether we have differentiated enough insight to justify it as a stock to own.  Thinking unconventionally in investing is just as important as it is in warfare. 

 

The conventional thought according to the global macro pundits this morning is that some form of U.S. default is imminent.  This chatter has reached such an extreme that this morning Bloomberg was actually comparing the U.S. to the last major nation to completely stop paying back its debt – Nazi Germany.  Certainly, we have a good degree of respect for Bloomberg (in fact we all use their terminals), but a comparison like that seems erroneous, at best. 

 

In the Chart of the Day, we once again look at credit default swaps for 5-year U.S government debt.  Not only are CDS not at the same heightened levels of 2011 when they peaked at near 65 basis points, they are actually well off recently levels and currently trading at 34 basis points.  Given all of the fear mongering this weekend and headlines of discord in Washington D.C. perhaps they will spike again, but, certainly there is literally no chance that the U.S. government turns her back on the U.S. government debt obligations according to this market tell.

 

That all said, just because the probability of debt default is unlikely doesn’t mean you should be aggressively long of risk assets.  We trimmed the exposure in our real-time alerts products late last week going from a 3:1 long/ short ratio to 1:1.  Now most money managers can’t move this fast for reasons of scale, but the fact remains this is a market that will reward those who trade around positions. 

 

This is especially relevant broadly to the hedge fund industry this year.  According to Cambiar Investors LLC, shares that have been the most shorted are up 38% since the start of the year.  This is almost double the return of the SP500 in the same period.  Furthermore, according to the HFRI Equity Hedge Fund Index, hedge funds are up only 9.2% in the year-to-date. So far anyway, this has been a tough year for hedge funds to earn their 2 and 20.

 

In part it has been challenging for hedge funds and other active managers to out-perform because the variance between sectors has been abnormally low.  In our Q4 themes deck we show this graphically and the data indicated that this year is the second lowest year going back to 1990 for variance between sector returns at 0.50%.  The lowest was 2006 at 0.27%.  The historical mean since 1990 is 2.25%. So if there is one asset allocation bet you might want to consider, it is to #GetActive as sector variance is likely to only increase from these abnormally low levels.

 

Good luck out there today and feel free to ping us if you want to discuss how this week might play out from a catalyst perspective down in the nation’s capital.

 

Our immediate-term Risk Ranges are now:

 

UST 10yr Yield 2.61-2.71%

SPX 1683-1708

ShangHai Comp 2191-2247

VIX 15.19-18.98

USD 80.11-80.69

Brent 110.04-111.99

 

Keep your head up and stick on the ice,

 

Daryl G. Jones

Director of Research

 

David and Goliath - U.S. CDS

 

David and Goliath - z. vp 10 14


What's New Today in Retail (10/28)

Takeaway: Nike puts out another $25k shoe. Watch the H&M spawn. Nike and Adidas battle w/ new apparel lines. More hints of Alibaba dominance.

EVENTS TO WATCH OVER THE NEXT 24 HOURS

 

ICON - Earnings Call: Tuesday 10/29 10:00 am

 

COMPANY NEWS

 

NKE - Converse Collaborates With Nate Lowman and Just One Eye

(http://www.wwd.com/footwear-news/markets/converse-collaborates-with-nate-lowman-7247040?module=Footwear%20News-Markets-second)

 

  • "...a new collaboration spearheaded by Los Angeles concept shop Just One Eye has turned the iconic sneaker into a canvas for Nate Lowman.  The New York-based multimedia artist created 21 unique high-tops using two of his own deconstructed works."
  • "Priced at $25,000, each limited-edition pair is lined in Italian calf leather and required 180 hours of work."

 

What's New Today in Retail (10/28) - chart1 10 28

 

Takeaway: That's $139/hr in labor. Pretty reasonable for an up and coming artist.

 

HMB - COS Builds Base for Expansion

(http://www.wwd.com/retail-news/specialty-stores/cos-eyes-us-7248984?module=hp-topstories)

 

  • "The much-anticipated younger sibling of H&M is opening its first U.S. store, a 4,500-square-foot flagship at 129 Spring Street in SoHo here, in spring 2014."
  • "COS, which stands for Collection of Style, is eyeing other locations in Manhattan, and plans to enter markets across the U.S. such as Chicago and California as it moves closer to a rollout in this country."
  • "COS, whose prices start where H&M’s leave off, offers modern, stylish and timeless collections produced from materials such as leather, fine suiting and cashmere. Prices range from $39 to $390 for dresses and $225 to $450 for men’s outerwear.  In addition to men’s and women’s wear, a full children’s collection launched in 2009."

 

Takeaway: Anytime HMB does anything, we watch and listen. The most notable factor here is that COS is testing the upper echelons of the price spectrum. That's not a slam-dunk by any means. If you asked 100 consumers why they shop at H&M, 50 would say its stylish, but the other 50 would say it's cheap. We're curious to see how the new M.O. resonates with consumers.

 

JCP - JCPenney picks shopkick mobile app to reward customers

(http://www.fibre2fashion.com/news/garment-company-news/newsdetails.aspx?news_id=154602)

 

  • "J. C. Penney Company, Inc. announced that it has teamed up with shopkick, the most widely used real-world shopping app that rewards shoppers for simply walking into stores."
  • "Just in time for the key holiday shopping season, JCPenney shoppers will be able to earn 'kicks,' shopkick's proprietary reward currency, along with special offers from JCPenney, when visiting the retailer's nearly 1,100 store locations across the country. To celebrate the launch, JCPenney will be offering shopkick users additional kicks for a limited time when they visit a JCPenney store."
  • "When a shopkick user walks into a participating store, the app detects the shopkick signal emitted from a patent-pending device, which is picked up by the shopper's smartphone. The app then deposits kicks, which can be collected and redeemed for gift cards, song downloads, movie tickets, Facebook credits, donations to charities and more."

 

Takeaway: Yet another new initiative that no one will give JCP one iota of credit for.

 

KER - Puma's Revenues Slide in Q3 

(http://www.sportsonesource.com/news/article_home.asp?Prod=1&section=4&id=48494)

 

  • "Puma's Q3 revenues slid 7.6 percent in the third quarter to £824.8 million ($1.14 bn) from £892.2 million, according to a revenue update from its parent, Kering. Puma’s sales for the quarter were down 0.8 percent on a comparable basis. The decline was due to lower footwear sales. Accessories and apparel were up 7 percent and 4 percent, respectively."
  • "By country, Kering noted in its presentation with analysts that sales in North America, representing 20 percent of Puma's sales, grew 5 percent. In other regions, Western Europe (representing 34 percent of Puma's sales) was down 2 percent; Japan (8 percent), was down 6 percent; Asia Pacific (13 percent), slipped 1 percent; and Other Countries (25 percent) was also off 1 percent."

 

Takeaway: At least Puma put up a +5% number in the US.  It might not be its biggest region, but it's one of the most important.

 

HBC - Hudson's Bay Co. Taps Michael Crotty and Russ Hardin

(http://www.wwd.com/retail-news/people/hbc-names-crotty-and-hardin-7250656?module=hp-topstories)

 

  • "Hudson’s Bay Co...has named Michael Crotty executive vice president and chief marketing officer, and Russ Hardin senior vice president and chief creative officer."
  • "Crotty has more than 25 years experience in multichannel retailing, marketing and brand management...Rodbell [incoming President of the HBC Department Store Group] said Crotty will be responsible for the overall marketing strategy for Hudson’s Bay and Lord & Taylor."
  • "Hardin recently worked at Kohl’s...Rodbell said Hardin will be responsible for building all creative elements for Hudson’s Bay and Lord & Taylor, and lead social media, public relations and event activities."

 

Takeaway: If HBC can source such talent, can someone explain to me why JCP can't find a CEO?

 

NKE - Nike unveils Hi-Vis winter apparel collection

(http://www.fibre2fashion.com/news/garment-company-news/newsdetails.aspx?news_id=154652)

 

  • "...Nike has created the Hi-Vis Collection of winter apparel, footwear and equipment enabling athletes to train and play at the same intensity throughout the season and with zero distractions.  The Hi-Vis Collection features bright and contrasting color combinations of Volt, Electro Purple, Green Glow and Electric Green on the apparel, footwear and equipment."

 

What's New Today in Retail (10/28) - chart3 10 28

 

Takeaway: This is a big deal for Nike, as it has been absent in large part from cold-weather gear since it backed away from its All Conditions Gear (ACG) line.

 

ADS - Adidas & NBA to debut new on-court collection

(http://www.fibre2fashion.com/news/garment-company-news/newsdetails.aspx?news_id=154651)

 

  • "As tip-off nears on Oct. 29, adidas and the NBA will debut an all-new premium collection of on-court apparel. The NBA On-Court Collection will outfit all 30 NBA teams…"

 

What's New Today in Retail (10/28) - chart2 10 28

 

Takeaway: Nike hates this kind of press. That said, it would rather focus its efforts on what people wear on their feet -- not their warm-ups.

 

LVMH - Kenzo Opens Shanghai Store

(http://www.wwd.com/retail-news/designer-luxury/kenzo-opens-shanghai-store-7249308?module=hp-topstories)

 

  • "Located in the newly opened L’Avenue mall in the city’s western district of Hongqiao, the 2,500-square-foot store is the brand’s seventh point of sale in China’s financial capital."
  • "L’Avenue is a joint venture between LVMH Moët Hennessy Louis Vuitton’s real estate arm, L Real Estate, and Hong Kong real estate developer Stanley Ho. It’s populated with some of LVMH’s leading brands, including Louis Vuitton, Dior, Fendi, Céline and, now, Kenzo."

 

INDUSTRY NEWS

 

Western Retailers See Online as Ticket to China

(http://online.wsj.com/news/articles/SB10001424052702304799404579157081461605904?mod=WSJ_business_whatsNews)

 

  • "The promise of e-commerce in China has attracted foreign companies for years. Yet Western companies, such as eBay Inc.,  Google Inc., and Groupon Inc., have struggled in China, partly because of competition from domestic giants. Western retailers also have had concerns about the difficulties of distribution in the country and its Web shoppers' insistence on low prices."
  • "But China's e-commerce—which, by some measures, overtook the U.S. this year as the world's largest online retail marketplace—has become too big to ignore. Online retail sales in China are expected to reach about $540 billion by 2015, compared with roughly $345 billion in the U.S., according to consulting firm Bain & Co. China's online retail sales have increased more than 70% annually since 2009, compared with 13% in the U.S."
  • "After closing branded stores in China, do-it-yourself home retailer Home Depot Inc. and electronics chain Best Buy Inc. this year opened stores on Alibaba's Tmall, the country's leading online consumer marketplace."
  • "China's shoppers also have come to expect heavy discounts, putting pressure on profit margins. In a Bain survey of 1,300 online shoppers in China this year, half the respondents said price was the No. 1 reason they shopped online."

 

Takeaway: Watch out for the Alibaba IPO. We've never seen such a dominant business model in anything that touches the consumer.

 

UPS forecast confirms e-commerce growth

(http://www.retailingtoday.com/article/ups-forecast-confirms-e-commerce-growth)

 

  • "A compressed shopping season coupled with the continued growth of e-commerce has UPS forecasting that peak season daily package volumes will grow by 8%."
  • "UPS said it expects December 16 to be its highest volume day of the year with package pick-up expected to total 34 million. To put the growth of e-commerce in perspective, UPS said this year it expects there will be five delivery days within the peak season when package volume exceeds its busiest day last year. For example, after December 16, UPS said its next busiest volume day is expected to be Cyber Monday, December 2, when package volumes are forecast to total 32 million."

 

Takeaway: Unlike all those 'dart-throw' surveys by the NRF and various consulting firms, the UPS forecast is about as accurate as it gets.

 

What's Selling: Comfort

(http://www.wwd.com/footwear-news/retail/whats-selling-comfort-7247699?module=Footwear%20News-Retail-main)

 

THE COMFORT SHOE SOURCE, Glen Burnie, Md.

  • Propét Alta tall fleece boot
  • Cobb Hill Elaine embellished flat
  • Aravon Wendy loafer

Top fall trend: “More people are coming in looking for a casual shoe,” said Pam Dulaney, store manager. “However, the weather is still nice.”

DANCY’S, Boone, N.C.

  • Alegria clogs and Mary Jane styles
  • Aetrex Valerie stretch-vamp skimmer
  • Orthaheel 

Top fall trend: “Boots are taking off,” said GM Russell Gullet. “GoLites [are popular] in winter because they’re comfortable, warm and waterproof.”

WHEN THE SHOE FITS, Vancouver, Wash.

  • Dansko Tamara clog-based slip-on
  • Keen Toyah lace-up style
  • Merrell Encore clog series

Top fall trend: “Customers want to be a little dressier with comfort [features],” said President Alan O’Hara. “They prefer a little heel, and brands such as Pikolinos, Taos and Earthies have options in this [area].”

ELEMENTS, Berkeley, Calif.

  • Earth Catamount wedge boot and Bellweather skimmer
  • Fly London Yoko platform wedge
  • Bernie Mev woven upper on memory-foam outsoles 

Top fall trend: “Ankle boots are a new trend this season,” said manager Penelope Adibe. “We are also doing well with wedges.”

HARRISONS FOOTWEAR, Poulsbo, Wash.

  • Wolky Rosa lace-up style
  • Pikolinos ankle boots
  • Brooks Addiction

Top fall trend: Ankle boots are performing at the store, said owner Chris Harrison. “Women already own knee-high boots, and they last a long time.”

 

Cambodia: 22% Spike In Garment Exports

(https://www.sourcingjournalonline.com/cambodia-22-spike-garment-exports/)

 

  • "Cambodia’s garment export sector is booming according to numbers recently released showing a healthy increase of 22 percent in the nation’s shipments of clothing to foreign customers from the first of the year through September."
  • "Total value of the exported apparel during the nine-month period hit $4.1 billion, substantially higher than the previous period last year of$3.44. As usual in recent years, the US was Cambodia’s best customer for their apparel, importing about $1.21 billion in goods."
  • "Cambodia is one of the latest countries of Southeast Asia to emerge as a major sourcing center as international firms send more business to that part of the world, attracted by low labor costs and a government and political environment hospitable to business."

 


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