Want a post-pandemic recovery trade that stands a much better chance of success than theme parks, restaurants and air travel? Try clothing.
The apparel stocks, both on the retail and production side, are on a bona fide uptrend, and for good reason. We can debate the extent to which we all go back to work at the office full-time. We can debate whether we will travel by air or eat out as much as we did before. We can decide whether we will go the movies or stay home and watch Netflix on the fancy video systems we bought this past year. We can ponder whether we need to renew our gym memberships now that we have Peloton bikes in the basement.
But there is no doubt that once we’re all vaccinated, we will be heading out and about. The era of only doing video calls while wearing sweatpants may not end totally, but will surely subside.
And here is the issue: As we go back out and engage socially or professionally, we are going to need new clothes. While we cut back dramatically on services (mostly because they weren’t available to us), in the past year we did buy more cars (up 10 per cent), sporting goods (up 15 per cent), pharma products (up 6 per cent), furniture (up 3 per cent), groceries (up 9 per cent) and building materials (up 17 per cent). The one merchandise item that declined was clothing – sales slumped 16 per cent over the past year to a level that is lower today than it was in June, 2011 (these are from U.S. retail sales numbers, but the trends in Canada are similar).
So we need new apparel for two reasons. The first is that this is an area of spending that has been totally neglected. The second is that we can’t fit into our existing wardrobes (see that 9 per cent growth in the grocery bill). We ate too much during lockdown and exercised a lot less. And so we have a situation where, according to a recent survey commissioned by Boston-based biotechnology company Gelesis, more than 70 million Americans gained weight during the pandemic. (And don’t think our lazy habits are going to change that quickly – in a year with limited entertainment or social options, only 17 per cent of respondents said they would be willing to give up their favourite TV or streaming service.) Rates of drinking have increased as well, and smoking has gone up for the first time in years. So many things have changed – and while we spent so much money sprucing up our homes, we gave short shrift to our own appearance.
Another survey from Weight Watchers, showing that 36 per cent of respondents said they had gained weight during this past year, means the number is likely actually closer to 100 million. So there is no way many of us are going to fit into our old clothes postpandemic. The shopping that will result isn’t just about replacing items owing to natural wear and tear or rushing to buy the latest fashions, as we normally might. It’s about replacing the whole darn wardrobe – and that means spending on clothing is going to be the one area of the reopening and recovery trade that we can rely on.
And this is also not a case of buying into a part of the retail sector that needs to find a bottom – rather, it is about buying into an existing tailwind that very likely has further to go. In fact, I can easily see a situation, once we attain the holy grail of herd immunity, where clothing sales soar between 20 per cent and 30 per cent.
David Rosenberg is founder of Rosenberg Research, and author of the daily economic report Breakfast with Dave.
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Source:- The Globe and Mail
Bitcoin hits three-month low
Bitcoin dropped to a three-month low on Monday as investors sold cryptocurrencies in the wake of Tesla boss Elon Musk’s hinting over the weekend that the carmaker is considering or may have already sold some of its bitcoin holdings.
Musk has boosted crypto markets with his enthusiasm for the asset class, but has lately roiled trade by appearing to cool on bitcoin in favour of its one-time parody, dogecoin. The gyrations are beginning to spook even steeled traders.
“This has gone from clear FOMO (fear of missing out) to fear of not getting out, and you’re seeing a lot of people dumping,” said Chris Weston of brokerage Pepperstone in Melbourne, adding that he was looking at the 200-day moving average just below $40,000 as the next key test for bitcoin.
“Why would I want to buy bitcoin right now — even if I’m bullish — until the liquidation is over and you see some consolidation in price?”
Bitcoin fell more than 9% on Monday to as low as $42,185, its lowest since Feb. 8, while ether, linked to the ethereum blockhain, fell even more to as low as $3,123.94. Dogecoin fell nearly 7% to $0.48, and all three are well under recent records.
On Wednesday, Musk said Tesla would stop taking bitcoin as payment, owing to environmental concerns about energy use to process transactions. Defending that decision on Sunday, he suggested Tesla may have sold its own holdings.
In response to an unverified Twitter account called @CryptoWhale, which said https://bit.ly/2QsUQkw: “Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him…,” Musk wrote: “Indeed”.
It is not clear whether he was confirming sales or whether he referred only to the fact that he had faced criticism.
Musk said Tesla would not sell its bitcoin, but the cryptocurrency has dropped by almost a quarter since Musk’s reversal on Tesla taking it as payment.
On Tuesday, Reuters reported Tesla is seeking to enter the multi-billion dollar U.S. renewable credit market, hoping to profit from the Biden administration’s march toward new zero-emission goals.
Dogecoin is also yet to fully recover from Musk describing it as a “hustle,” although he did boost the price last week by saying he was working to improve its efficiency.
For an asset class that has surged this year, with dogecoin up about a hundredfold, ether up more than fourfold and bitcoin gaining 45%, some are beginning to call time on the wild ride.
“Our weekend trading has kicked up, and we’re looking at some serious liquidations through the exchanges,” said Pepperstone’s Weston.
“I am closing the short-bitcoin/long-ethereum trade and moving to the sidelines,” he added. “I feel the dust really needs to settle here.”
(Reporting by Tom Westbrook in Singapore. Additional reporting by Radhika Anilkumar in Bengaluru and Vidya Ranganathan in Singapore. Editing by Gerry Doyle)
U.S. stocks rebound following rout, bond yields dip
U.S. shares rebounded on Thursday after falling for three consecutive days and benchmark Treasury yields dipped, as investors snapped up technology stocks and shrugged off worries about rising prices, for now.
After posting their biggest slump in at least 11 weeks on Wednesday, U.S. shares bounced back as cash-flush investors looked past concerns that accelerating inflation may prompt quicker interest rate hikes, and deployed their funds once more.
So intent were investors on leaving inflation worries aside that financial markets barely responded to Thursday’s data, which showed U.S. producer prices posting their biggest annual gain since 2010 in April.
“It’s rebound Thursday,” said John Augustine, chief investment officer at Huntington Private Bank, which manages $20 billion. “Given the money on the sidelines, investors are going to be coming back in.”
Still, Augustine said investors should re-deploy their funds in a measured way because “inflation concerns are not going away”.
By midday, the Dow Jones Industrial Average had added 1.4%, while the S&P 500 and the Nasdaq Composite narrowed earlier gains to be up 1.3% and 0.9%, respectively.
The MSCI world equity index, which includes 50 countries, also bounced slightly, gaining 0.2%.
U.S. stocks had tumbled earlier this week after data showed U.S. consumer prices unexpectedly jumped by the most in almost 12 years in April.
Some investors now worry that quickening price pressures could lead the Federal Reserve to tighten monetary policy sooner than expected, and reduce its supply of cheap money that has been propelling financial markets higher.
For now, however, inflation woes took a backseat.
Benchmark 10-year Treasury yields, which had spiked 7 basis points overnight in the biggest daily rise in two months, edged down by more than 3 basis points to 1.6625% as investors took a breather.
Benchmark two-year Treasury yields also pulled back to 0.1589%.
Against a basket of major currencies, the dollar was steady at 90.727, holding gains eked out on Wednesday when expectations of rate hikes burnished the currency’s appeal.
A firm dollar capped gains in the euro, which edged up 0.1% to $1.20875. [USD/]
The pull-back in Treasury yields helped gold to recoup some of Wednesday’s losses, when the jump in bond yields dampened the allure of non-yielding bullion. Spot gold climbed 0.7% off a one-week low to $1,825.61 per ounce.
A recent rally in oil prices also paused on Thursday as investors turned their attention to the coronavirus crisis in India, and as a key U.S. fuel pipeline resumed operations.
Brent crude slumped 3.5% to $66.93 a barrel, while U.S. West Texas Intermediate crude lost 3.8% to $63.53 a barrel.
Among cryptocurrencies, bitcoin, which tumbled 13% overnight when Elon Musk said Tesla would stop accepting it as payment because of its high energy use, fell below $50,000 again on Thursday following reports that the U.S. Justice Department is investigating crypto exchange Binance.
By midday, bitcoin had dropped 2.2% to $48.314.
(Reporting by Koh Gui Qing; additional reporting by Tom Wilson and Marc Jones in London; Wayne Cole in Sydney; Editing Nick Macfie, Dan Grebler and Cynthia Osterman)
Dogecoin dropped after Elon Musk calls it a ‘hustle’ on ‘SNL’ show
By Alden Bentley and Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) -The value of dogecoin dropped sharply in early U.S. hours on Sunday, after Tesla chief and cryptocurrency supporter Elon Musk called it a ‘hustle’ during his guest-host spot on the “Saturday Night Live” comedy sketch TV show.
Dogecoin was quoted as low as $0.47 on crypto exchange Binance, down 28% from levels around $0.65 before the show.
The billionaire Tesla Inc chief executive hosted the show at 11:30 p.m. EDT on Saturday (0330 GMT on Sunday).
Cryptocurrency enthusiasts had for days been eager to see what he would say, after his tweets this year turned the once-obscure digital currency into a speculator’s dream.
Asked ‘what is dogecoin’, Musk replied, “It’s the future of currency. It’s an unstoppable financial vehicle that’s going to take over the world.”
When a show cast member Michael Che countered, “So, it’s a hustle?”, Musk replied, “Yeah, it’s a hustle.” And laughed.
Musk is the rare business mogul to have been asked to host the venerable comedy TV show. The timing puts Musk back in the spotlight just as Tesla’s stock is losing steam following last year’s monster rally.
The unconventional CEO has posted numerous comments about cryptocurrencies on Twitter and criticized regular old cash for having negative real interest rates.
“Only a fool wouldn’t look elsewhere,” he said in February.
His cryptic tweets “Doge” and “Dogecoin is the people’s crypto” that month kicked off a rally in dogecoin – created as a parody on the more mainstream bitcoin and ethereum.
On Thursday, Musk tweeted: “Cryptocurrency is promising, but please invest with caution!” with a video clip attached in which he said, “it should be considered speculation at this point. And so, you know, don’t don’t go too far in the crypto speculation …”
But he also said, in the video, that cryptocurrency has a “good chance” of becoming what he called “the future currency of the Earth.”
On crypto data tracker CoinGecko.com, dogecoin has jumped more than 800% over the last month and is now the fourth-largest digital currency, with a market capitalization of $73 billion. It hit a record high Thursday above $0.73.
It has overtaken more widely used cryptocurrencies such as litecoin and tether.
Tesla said in February it bought $1.5 billion worth of bitcoin and would soon accept it as a form of payment for its electric cars, a large stride toward mainstream acceptance that sent bitcoin soaring to a record high of nearly $62,000.
Tesla shares closed 1.3% higher at $672.37 on Friday.
(Reporting by Gertrude Chavez-Dreyfuss and Alden Bentley in New York, and Noel Randewich and Hyunjoo Jin in San Francisco Additional reporting by Joe White and Vidya RanganathanEditing by Matthew Lewis & Simon Cameron-Moore)
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