The world awoke to a new political and economic regime on January 20 as Donald J. Trump took the reins of power from Barack Obama and announced a populist, America-first agenda. Mr. Trump enters the White House with a 37% approval rating while Mr. Obama never saw lower than a 38% approval rating (and entered with a 70% rating). Perhaps this is why investors are taking a measured view of their new president after pushing stocks sharply higher in the weeks following the election. The US stock market plateaued last week, with the Dow Jones Industrial Average falling 58.48 points or 0.3% to close short of the 20,000 mark at 19,827.25. The S&P 500 dropped 0.1% to 2,271.31 and the Nasdaq Composite Index lost 0.2% to end the week at 5,555.33. Ten year Treasury yields rose slightly to 2.47%. The initial repricing of financial assets triggered by Mr. Trump’s election may be over.
The most significant market move occurred in the US dollar last week, which dropped sharply after then President-elect Trump told The Wall Street Journal that the dollar is “too strong.” After these comments, the US Dollar Index (DXY) fell sharply to 100.81, giving up a significant portion of its post-election gains.
This first assault on the dollar might be just the beginning.
In the coming months, President Trump could very well reverse the dollar’s rally completely – and he may do it on purpose.
If that happens, here’s what to do.
It was a great holiday season in the retail world – for Mr. Grinch!
As retailers begin to preannounce year-end results, we are learning that the assault on department stores and other traditional retailers from ecommerce, price sensitive consumers and a tepid economy continues to batter revenues and profits. Each holiday season it gets a little worse as retailers race to cut prices and downsize faster than consumers flee their venues for the comfort of shopping on-line. This past year, that trend continued.
Department store sales have dropped $7.2 billion from 2001 to $12.7 billion today according to BMO’s Jack Ablin (and that’s nominal so in inflation-adjusted terms the drop is much more severe). Troubled women’s apparel retailer Limited Stores announced last week that it is closing all 250 of its stores nationwide and will try to operate purely as an online company. According to RetailNext, a retail tracking company, sales at brick-and-mortar stores sunk by 10.3% in December compared to 0.4% in 2015. The National Retail Federation expects holiday sales excluding cars, gas and restaurants to rise 3.6% to $655.8 billion in 2016 with online sales surging 19% to roughly $98 billion and brick-and-mortar sales dropping by tens of billions of dollars.
ith numbers like that, it’s no surprise that the nation’s largest retailers are announcing massive store closings and job cuts. And this store is experiencing one of the biggest meltdowns.
Here’s how to profit…