- The first is Carl Edwards, who UA endorsed earlier this year. UA added its' logo to the hood of Edwards' #60 Ford Fusion for the Camping World RV Sales 200 in Loudon, New Hampshire. This partnership with Roush-Fenway represents UA dipping its toe in the water with NASCAR. Edwards placed an impressive 5th out of 43.
- On July 10, those of you who are bass fishermen might have been watching the college bass championship in Little Rock. Lead sponsor? You guessed it... Under Armour.
- The funny thing here is that most people on Wall Street look at things like NASCAR and Bass Fishing, and think that it is a ridiculous place to spend money from a brand relevance perspective. I can't say that I have a strong view that this approach will work, but we need to keep ourselves honest and look at the possibility that marketing to Middle America might actually pay off in building longer-term brand loyalty.
With that, I've got to highlight Friday's import statistical release from OTEXA (the government office of textiles and apparel) which shows that apparel import prices into the US for the month of May posted a 0.9% year/year increase. That might not seem so bad, but given the preceding three months were down an average of -1.8% -- this unfavorable 270bp delta is not looking good for go-forward margins.
I'm not against cost increases - as long as the consumer is funding these costs. But unfortunately the CPI for apparel is down about 1.5%. This is spot on with levels have been year-to-date. So costs are going up, but revenues are not. What does all this add up to? Margin compression.
The chart below shows the consumer price less the consumer price (a positive value means that consumer prices are going up at a faster rate than cost inflation). Unfortunately, the trends in this spread are making lower highs and lower lows. I think we'll see that trend through 2009. That's a loooong time to wait.
More quantifiable analysis to come on this.
This still makes me very wary about GIL, WRC, GES, VFC and PVH. RL and LIZ are the way to go here given company-specific growth and ROIC levers that can weather the storm.
Interestingly, per the article (link below), almost 1/4 of the Catholic Church's offerings annually come from Americans.
The US Peso's decline is proving to have far reaching effects within the contruct of the many geopolitical factors contributing to economies and organizations.
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Putin's Russia joined arms with China vetoing a UN Security Council proposition to impose sanctions on Zimbabwe's Mugabe.
The US and the UK are lashing out against this move this weekend, and they should.
The higher energy prices go, the more amplified Putin's geopolitical power becomes.
Don't think for one minute that the Russians have enjoyed being subservient to US rhetoric for the past 20 years. That was approximately the length of the bull market in US stocks too. When everyone is making money, a lot of risks can get swept under the rug - when people stop making money is when you realize they are still there.
It is global this time, indeed.
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