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Chart Of The Day: Chinese Producer Price Inflation

Why is the Chinese stock market down -9.7% in the last 2 days of trading? This stagflation picture is certainly one of the reasons.

China had a surprisingly strong inflation report this morning. Their highest PPI report since 1996 in fact, at +10% year over year. See the chart by Andrew Barber below.
KM

JCG: Promos Win Our Award for Least Creative

No news to anyone that J Crew's business has slowed, but do you think that just maybe they could be more creative than simply re-using last year's ads?

Singapore Slows Down, Big Time!

The Port of Singapore is one of the most relevant Global Trade ports in the world. In 2005, in terms of shipping tonnage, it surprised some economists when it was named the busiest port in the world. Singapore is also one of the four “Asian Tigers” – when it slows like we forecasted it to, you should pay attention. Commodities are deflating because global economic growth is slowing expeditiously.

Alongside a massive slowdown in their quarterly GDP growth rate, last night the government of Singapore issued a warning that their export growth could come in as bad as -4% year over year. Provided that local inflation remains elevated, this all but assures Singapore of reporting flat to negative real growth in the coming quarters.

Economic growth in Q2 slowed materially, to +2.1% versus the +6.9% seen in Q1 of 2008. The Singapore Dollar has been under fire in recent months – now the masses know what the locals knew. At 1.41 per US$, Singapore’s currency is trading at a 5 month low.

Export growth in Singapore has not been negative since 9/11/01. That slowdown was prefaced by a global terrorist alert – this one is purely based on the reality that what goes up, must eventually come down.

It is global this time, indeed.
KM

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RL Online Promo Levels in Check?

This 70% off coupon for Ralph's summer merchandise raised a yellow flag with me. But turns out that this compares to a 65% discount at this time last year. 'Free Shipping' hurdles are 10% higher this year as well. Overall, not a bullish promotional level -- but in the same ballpark as last year. That's better than I can say for other brands who are seeing 2x the rate of markdown activity as last summer.

Eye on Protectionism...

Suffice to say, whether it is Olympic or Obama driven, the nationalistic juices are starting to flow again. It’s not just local this time either; it’s global. Germany announced today that they are drafting a law that would give the German government veto power over any proposed “foreign acquisitions” of their domestic assets.

The vote is scheduled for August the 20th, and this timing is being expedited I think in response to the Chinese bidding for Dresdner Bank. The 3rd largest German bank is in play and the Development Bank of China is currently bidding against Commerzbank AG for the prize. Commerzbank is Germany’s 2nd largest bank by assets.

This isn’t an Olympic swim meet. Protectionism is a negative “Trend” that is developing as world economic growth slows and governments lean to the left of the political spectrum.

KM

Huge Leap for Li Ning

Anyone watching the opening ceremony on Friday saw the final torchbearer being hoisted up 100 feet to capture the world’s attention for a full four minutes while he lit the torch in perhaps the most dramatic fashion in Olympic history.

The problem for Nike and Adidas is that the person was none other than Li Ning, the Chinese gymnast and national hero who won 6 gold medals at the 1984 games in LA, and subsequently started his own sneaker company. Li Ning is the 3rd largest brand in China behind Nike and Adidas. The identity of the final torchbearer was kept hush hush, but leaked out during the day on Friday which sent Li Ning’s stock up 3.4%. That probably pales in comparison to the percent change in blood pressure at the marketing teams for the bigger brands when they saw the ceremony.

You can’t buy this kind of brand exposure folks. I don’t think that the impact on Li Ning’s business in China is terribly relevant here. But now the free world knows about the company and the brand. I still think that an emerging theme will be Chinese brands exporting content to developed countries. This just gave Li Ning a nice jump start.

If you have not seen it that part of the ceremony, check it out on You Tube. The rest of the world did…

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