Every bubble eventually bursts, a lesson President Trump may be reminded of when it comes to the stock market in the near-term.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="And in this instance, the pin holder is none other than Trump’s frequent target of Twitter criticism — his hand-picked Federal Reserve chief Jerome Powell. The Dow Jones Industrial Average tanked more than 1,000 points on Thursday following the latest decision from the Fed on interest rates. Bank stocks such as Wells Fargo and Bank of America were being crushed in intraday trading. So were hot stocks of the bubblish moment that has ensued in equites since late March such as new public company Nikola and COVID-19 blasted Carnival Cruise Line.” data-reactid=”17″>And in this instance, the pin holder is none other than Trump’s frequent target of Twitter criticism — his hand-picked Federal Reserve chief Jerome Powell. The Dow Jones Industrial Average tanked more than 1,000 points on Thursday following the latest decision from the Fed on interest rates. Bank stocks such as Wells Fargo and Bank of America were being crushed in intraday trading. So were hot stocks of the bubblish moment that has ensued in equites since late March such as new public company Nikola and COVID-19 blasted Carnival Cruise Line.
The sharp downward action in markets naturally caught the attention of Trump.
“The Federal Reserve is wrong so often. I see the numbers also, and do MUCH better than they do. We will have a very good Third Quarter, a great Fourth Quarter, and one of our best ever years in 2021. We will also soon have a Vaccine & Therapeutics/Cure. That’s my opinion. WATCH!,” Trump tweeted.
Trump administration official and confidante Peter Navarro also ripped the Fed.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“What I would say is that Jay Powell and his remarks yesterday, I think probably the worst bedside manner of any Fed chairman in history. You think the best strategy for Jay Powell going forward would simply to provide the data and let us know where interest rates are going and keep his mouth shut,” Navarro told Yahoo Finance editor-in-chief Andy Serwer in an interview. “I mean, there’s the old joke I’m an old business professor, and the old joke in the marketing thing is if Jay Powell was going to market sushi, he’d sell it as cold, dead fish.”” data-reactid=”21″>“What I would say is that Jay Powell and his remarks yesterday, I think probably the worst bedside manner of any Fed chairman in history. You think the best strategy for Jay Powell going forward would simply to provide the data and let us know where interest rates are going and keep his mouth shut,” Navarro told Yahoo Finance editor-in-chief Andy Serwer in an interview. “I mean, there’s the old joke I’m an old business professor, and the old joke in the marketing thing is if Jay Powell was going to market sushi, he’d sell it as cold, dead fish.”
Burn.
So what exactly triggered this latest beatdown of Powell by the Trump administration? The verbal lashings have been few and far between in recent months as the market ripped more than 40% higher off the March 23 lows… in large part because of the Fed’s aggressive actions to drive an economic rebound from a major health scare.
While the Fed continued to reiterate a Trump favorite — low interest rates — it was Powell’s comments on the jobs outlook that spooked the market.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Powell said “millions” of people will not return to work for some time because of the aftershocks to businesses from the COVID-19 pandemic. The Fed chief suggested the lack of jobs would be rooted in the reality that companies were unable to survive the pandemic or the role no longer exists in the new world order.” data-reactid=”25″>Powell said “millions” of people will not return to work for some time because of the aftershocks to businesses from the COVID-19 pandemic. The Fed chief suggested the lack of jobs would be rooted in the reality that companies were unable to survive the pandemic or the role no longer exists in the new world order.
WASHINGTON, DC – APRIL 29: In this screengrab taken from the Federal Reserve website, Chair of the Federal Reserve Jerome Powell issues the Federal Open Market Committee statement on April 29, 2020 in Washington, DC. Powell said the Federal Reserve will continue to use its lending powers “forcefully, proactively and aggressively, until we’re confident that we are solidly on the road to recovery” from the economic downturn caused by the coronavirus pandemic. (Photo by Federal Reserve via Getty Images)
By extension, that would suggest a certain kind of structural unemployment that may continue to weigh on U.S. growth unless workers get re-trained for new jobs.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“We believe perhaps 60% of the jobs lost because of the global coronavirus recession will be regained by the end of the year. But that remaining 40 is a lot of jobs that will still need to be regained over multiple years,” Oxford Economics chief U.S. economist Gregory Daco said on Yahoo Finance’s The First Trade.” data-reactid=”38″>“We believe perhaps 60% of the jobs lost because of the global coronavirus recession will be regained by the end of the year. But that remaining 40 is a lot of jobs that will still need to be regained over multiple years,” Oxford Economics chief U.S. economist Gregory Daco said on Yahoo Finance’s The First Trade.
<h3 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="‘Feeling that you couldn’t lose’” data-reactid=”39″>‘Feeling that you couldn’t lose’
And if in fact this will be a painfully slow recovery as the Fed strongly hinted at Wednesday, then indeed the market has rallied too hard too fast off the lows. Numerous pros Yahoo Finance have talked with lately have suggested the market has priced in a V-shaped economic recovery later this year that extends into 2021. That thesis has had investors hardcore buying beat-up cruise lines stocks and airlines like Delta the past month while also pushing up high beta tech plays like Netflix.
Even bankrupt companies such as Hertz and J.C. Penney saw hot money flow into their stocks, a very bizarre move considering, well, the companies have filed for bankruptcy.
But Powell’s commentary puts that entire risk on at all cost thesis into question. In effect Powell took his mighty pin, stuck it between his two middle fingers to show Trump and then popped the bubble. He in not so many words said the stock market is overvalued at current levels given a sane outlook for the U.S. economic recovery.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“I think most likely you will see a 10% correction from here,” BNY Mellon chief investment strategist Alicia told The First Trade. “I wouldn’t say we’re in a bubble. I will say this, and I might date myself a little bit. Last week was the first time in 20 years where I’ve felt like it was the late 1990s. It just had that feeling that you couldn’t lose. When you get that feeling you should be scared. You saw it when the companies filing for bankruptcy were rallying a crazy amount.”” data-reactid=”47″>“I think most likely you will see a 10% correction from here,” BNY Mellon chief investment strategist Alicia told The First Trade. “I wouldn’t say we’re in a bubble. I will say this, and I might date myself a little bit. Last week was the first time in 20 years where I’ve felt like it was the late 1990s. It just had that feeling that you couldn’t lose. When you get that feeling you should be scared. You saw it when the companies filing for bankruptcy were rallying a crazy amount.”
Ultimately, Trump should be among the scared. The last thing a president with sinking approval ratings needs is yet another market rout ahead of a re-election bid. Dust off your armored suit, Jay Powell.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.” data-reactid=”49″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
