Random thoughts on job numbers, Super Bowl

Here’s some random thoughts on today’s news.

January’s jobs numbers blow away estimates. New jobs at 304K vs. 165K estimate with average hourly earnings rising 3.2% in line with estimates.

Labor Department says unemployment rate ticked up to 4.0% on the government shutdown.

Look for stocks to soar as job growth gains while the Fed is dovish on rate rise.

Why is now a Super Bowl week tradition that news comes out about people being arrested for human sex trafficking at the site of the game? The last four years or so I have seen these stories.

It’s disturbing on so many levels because it’s not limited to just adult women being imported. Disgusting.

Democratic presidential hopeful Sen. Elizabeth Warren called out Sears/Kmart owner Eddie Lampert for what he has done to the once iconic retail chain.

The Massachusetts senator wants the billionaire hedgie to answer eight questions by Feb. 14 about his plan to buy Sears out of bankruptcy.

Now of course Warren is grandstanding, since Lampert is not compelled to answer to Warren about anything. And of course Warren is so out of touch since the federal bankruptcy court in White Plains, NY is likely to decide the fate of the retailer on Feb. 4.

While Warren says she is sticking up for the workers, if Lampert does not take control again of the retailer, then the creditors will liquidate the chain and no one will be working.

But don’t let that business mumbo-jumbo stop Warren from pounding the table for a cheap sound bite.

This is for some of my new readers. Deutsche Bank is teetering on the brink of a huge reorganization in order to wind it down.

Take a look at this award-winning video I did on this long-time troubled financial firm.


More dismal news coming out of the retailers

Tuesday brought more bad news for America’s biggest retailers.

Macy’s reported that margin loss was accelerating as the troubled department store continues with deep discounting of merchandise to stem eroding sales.

I have been documenting much of the hurt going on with the struggling consumers staying home instead of going to the mall.

Shares of Macy’s fell 8.2% in Tuesday’s trading as the company said it could see a 40% in margin levels as it battles with high inventory coming out of the 2016 holiday season.

Most retailers were down big on the Macy’s news. JCPenny was down 4%, Kohl’s fell 5.8% and Nordstrom was off 3.6%.

Many big box stores saw weak holiday sales forcing deep discounting, which squeeze already reduced margins and come right down to the bottom line.

In other retail retaliation, Sears came out after the bell on Tuesday to say it was closing an additional 72 stores this year. Earlier this year CEO Eddie Lampert announced he was closing about 180 Sears and K-Mart stores along with some Sears Auto Centers.

These new announced closures bring the number of Sears’ store to around 1,200, down from 2,080 fin 2012. Sears shares were off more than 1% in Wednesday pre-market trading.

So what can retailers do to stem the outgoing tide?

“We don’t need the massive parking lots that we had in the 1970s,” Doug Sessler, the head of Macy’s real estate division, told analysts during the company’s investor day on Tuesday, my New York Post colleague reported.

This is a huge departure for these big box stores. They have acres of parking lots, which sit idle for many months, and the Macy’s and others are looking to create strip malls and standalone properties to bring in rental revenue.

It appears the new model, which I doubt has legs since it’s doubling down on the thought that brick and mortar can still work. Macy’s says they are looking for restaurants and other businesses like medical facilities to take up the space.

Macy’s is already selling space inside its stores to different brands in order to bring in revenue. So now they will compete with the mall operators, who are looking at open storefronts inside the mall, to attract tenants.


Tale of two retailers: Amazon, Sears

Here’s the other side of the demise of the shopping mall, Amazon’s shares may rise to $1,000 a share on Friday.

The web-based retailer’s shares are up 32.5% year-to-date with a market cap of $480B, while brick and mortar retail chains file for more bankruptcies so far in 2017, more than any other year.

Since its 1997 IPO CEO Jeff Bezos has seen his shares rise roughly 57,400%, which has made him the second richest person in America and is poised to pass Microsoft co-founder Bill Gates to become number 1 on the list.

Ironically, Bezos’ next retail act is opening stores. Amazon is launching book stores — after decimating the industry — and is taking on the grocery store business by opening smaller food stores to take on Wal-Mart.

On the brick and mortar retailers, Sears reported a quarterly profit for the first time in over 2 years, while CEO Eddie Lampert battles to keep the once-proud American retailer struggles to remain viable.

Sear’s share “spiked” Thursday up 13% to close at $8.48 with a market cap of $870M.

If you look into Sears’ “earnings” however, the profit was not derived from selling more clothing to customers, but Lampert selling its Craftsman brand and beginning a program to slash $1.25 billion in costs.

That’s not how you grow a business.

Deutsche chief Cryan sees “fatal consequences"

Deutsche Bank chief John Cryan fired his latest salvo not at his usual target Mario Draghi and the ECB, but directly to the German people.

The chairman of the largest European bank told the press in a passion plea that if the ECB continues its negative interest rate policies, it could led to  “fatal consequences” for savers and pension plans.

“The ECB’s policy is squeezing the margins of Europe’s struggling banks, making it harder for insurers to find profitable investments and dangerously distorting financial market prices,” Cryan told reporters.

Cryan pointed out that 90% of Germans have their savings in the bank and are getting no return on their investments.

Cryan has also faulted ECB chief Draghi for his policies of telling banks to increase reserves, yet the bank makes no interest on those reserves with negative returns on German sovereign debt trading below zero.

I’m not sure I have ever heard a bank chairman use the term “fatal consequences.” You could put Cryan’s comments in the column with other big name investors predicting dire consequences due to central bank policies.

Thursday morning we got news from both ends of the retail sector — Tiffany and Sears both reported horrible quarters.

Sales were down almost double digits at Tiffany year-over-year and Sears continues to lower sales comps quarter-over-quarter since hedgie Eddie Lampert took on the CEO role in 2013.

Tiffany blamed China, Lampert doesn’t comment. Yet it is more amble proof that the US consumer on both ends of the spectrum is pulling back and squirreling away the meager discretionary income they have for staple products.

Asian manufacturers squeezing troubled US retailers

I’m hearing from two sources that there is a tremendous amount of holiday retail product sitting off the coast of the US.

The excuse for the bottlenecks outside of West Coast ports is said to be union problems on the docks, but I’m told it has more to do with payments to Asian manufacturers and factors here.

It appears US retailers’ credit is in question by its Far East factories and the US middlemen working with large retailers like Macy’s, Wal-Mart, Sears/Kmart et al.

The fact that these manufacturers do not wish to extend letters of credit and want more tangible assets as payments. In one instant a transaction had to be paid with US treasuries notes before the product was unloaded.

We have also seen Kmart recently announced changing its operations by putting product right on the sales floor without storing product in the back rooms of the chain. While the retailer said the move was to make product available to consumers right away.

As we know the Sears/K-Mart chain run by hedge fund mogul Eddie Lampert has been in a long battle of dwindling sales and challenging financials.

This supply chain squeeze is putting pressure on the “Just in time” distribution model used by large retailers. As the holiday products sit of the coast we may begin to see empty shelves in our biggest retail chains.

As a side note to my latest reports, Deutsche Bank is looking like it will open at a all-time low on Wednesday $10.49.