This is why Amazon will need to keep unions out of its grocery business. The Chicago Tribune explains the bankruptcy of Central Grocers: After almost 100 years of doing business, Joliet-based Central Grocers filed for Chapter 11 bankruptcy Thursday and will lay off about 550 employees at the company's Joliet warehouse. Central Grocers is a grocery cooperative that has long operated as wholesaler for more than 400 independent grocery stores in the Chicago area — including chains like Treasure Island, Pete's Fresh Market, Angelo Caputo's Fresh Market and Sunset Foods — distributing … [Read more...]
What is Driving the Stock Market Higher?
The proliferation of the no-thought required approach to investing (index investment) along with other quantitative and algorithmic based strategies has created some disturbing cross-currents for the dwindling group of fundamental investors. Here J.P. Morgan (via Zerohedge) estimates that only 10% of trading volume originates from fundamental discretionary investors. That is a truly stunning statistic If 90% of the volume in stocks is driven by value-agnostic investors, the obvious implication that we see is bigger booms and much bigger busts that are far removed from underlying … [Read more...]
Fast Fashion and Higher Margins Keep this Retailer Strong
Retail is in a transformational period. The dawn of e-commerce and rapid delivery have changed the way people buy products. Some older companies, like J.C. Penney for instance, are having a hard time dealing with the new reality. Meanwhile companies like Amazon and Bonobos (recently purchased by Wal-Mart) have been able to thrive as online retailers. But some brick and mortar retailers seem to have cracked the code to success in today's fashion market. H&M has long been a poster-child for what has become known as "fast fashion" strategy. The technique uses rapidly changing … [Read more...]
Amazon’s Purchase of Whole Foods: the Investment Implications
You need food to survive. And as it turns out, so does Amazon. With the purchase of Whole Foods, Amazon has determined how it will get into a customer’s home. More important, it has figured out a way to welcome customers into its home. Whole Foods is Amazon’s “Welcome Home” mat. Obviously the purchase is great news for Whole Foods with its 30% increase in stock value Friday. I love the move for Amazon too. But to me, this is a beautiful move for retail in general. Retailers have been put on notice: You’re in play. Getting into customers’ homes is the future. It’s what Amazon, Apple, … [Read more...]
Pouring Fuel on the Fire in Financial Markets
If you thought the last nine years of manipulation, misallocation, and mispricing that was aided and abetted by misguided monetary policy was a problem, you ain’t seen nothing yet. As the FT reports, the Fed and other global central banks are re-evaluating their 2% inflation targets with an eye toward raising them. Why are Yellen & Co., thinking about raising their inflation targets? The theory is that if central banks can lower inflation adjusted interest rates more than they have in the past, they will be able to provide stimulus to the economy during the next recession. Sounds … [Read more...]
Wal-Mart Employs Guerrilla Tactics in Retail War
Last week Amazon announced the purchase of Whole Foods, diving into the brick and mortar grocery business. Grocery has been the one bright spot in retail lately, and obviously Amazon wants in. Meanwhile big companies like Wal-Mart and Target have been trying to catch up to Amazon. Wal-Mart is taking an unusual step by asking store workers to deliver packages on their way home. The Wall Street Journal reports: Wal-Mart Stores Inc. WMT -4.63% is testing a program in which store workers deliver some orders placed on Walmart.com or Jet.com, a sign of how the retailer hopes to use its 4,700 U.S. … [Read more...]
Bezos Buys Whole Foods
It would seem Mr. Bezos is moving beyond the Internet and into the brick and mortar realm. Amazon is buying Whole Foods for $13.7 billion in an all cash deal. Based on both companies' 2016 results Whole Foods will account for over 70% of profits in Amazon’s retail business. Who knew the grocery business could trade at such lofty multiples? Amazon said in its press statement today: SEATTLE & AUSTIN, Texas--(BUSINESS WIRE)--Jun. 16, 2017-- Amazon (NASDAQ:AMZN) and Whole Foods Market, Inc. (NASDAQ:WFM) today announced that they have entered into a definitive merger agreement under … [Read more...]
Summer Plans? Total Solar Eclipse and the Moon House
What are you doing this summer? I’d love to hear about it. One client that lives is Jackson Hole told me they’re preparing for a huge spike in visitors for the total eclipse of the sun on August 21st. Jackson will be a great viewing spot. Here’s ten more great places for viewing. [pdf-embedder url="https://www.youngresearch.com/wp-content/uploads/2017/06/Best-places-to-view-reduced.pdf" title="Best places to view reduced"] In another conversation I was told about a rare opportunity a client had visiting the “Moon House”: An American Stonehenge. He suggested I check out Astronomy magazine … [Read more...]
New UPS Hub in Phoenix Will Cost $180 Million
A new UPS hub in Goodyear, AZ (near Phoenix) will bring 1,500 jobs to the area, and cost $180 million. The hub will expand Saturday deliveries in the Phoenix and Mesa areas. DCVelocity reports that the regular Saturday delivery will be expanded to more markets. In a related development, UPS will begin regular Saturday ground pickup and delivery services in Phoenix on June 3. In April, UPS launched regular Saturday ground service in response to the growing demand for e-commerce deliveries. It has long offered regularly scheduled air services on Saturdays. The program will cover nearly 4,700 … [Read more...]
Slowing Auto Market Signals Late Cycle Dynamics
Although the current economic expansion has been underwhelming for many industries, the auto market was the exception. The auto market was hit hard in the last recession, but carved out a V-shaped recovery with steady growth for much of the expansion. But change is now afoot. The used car market is over supplied. Used car prices are contracting and growth in new car sales has stalled. General Motors has decided to extend its typical summer factory shutdown to clear bloated inventories. GM’s inventories are almost 44% higher than a year earlier. Slower production in the auto sector is … [Read more...]
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