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MCD – RAISING PRICES AROUND THE WORLD TO PROTECT MARGINS!

Speaking to the press in Japan, Eiko Harada Chairman and President of McDonald's Co. (Japan), said "rising food prices will force McDonald’s to raise prices for the second time this year. We'd like to implement it (the price hike) as soon as possible"

According to Mainichi Daily news, McDonald’s will rise by less than 5%, as the cost of purchasing meat, bread, potatoes and other ingredients is expected to increase by about 10 billion yen during fiscal 2008.

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?

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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

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

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