| |  | TOGETHER WITH |  | | | Good morning and happy Victoria Day to our Canadian readers.
While America’s unofficial beginning of summer coincides with the Memorial Day holiday next weekend, Canadians unofficially inaugurate the season one week earlier.
We understand it’s the (in)famous Canadian winter that calls for that extra week. | | | • | | Results from big-box retailers are flashing red alerts at investors concerned about the American consumer. | | • | | The Davos Conference may be a lot of smoke, but sometimes some things get done. | | • | | The US and its allies have a new plan to halt illegal fishing in the Pacific. | | | | |  | Retail | Walmart and Target Raise Fears About the Health of the American Consumer | | Even before the US Federal Reserve starts hiking interest rates more aggressively — a surefire way to discourage spending — some investors are already in a tizzy about the state of the American consumer.
The reason: last week’s results from big retailers suggest consumers are in worse shape under inflation than many realize. Not only is this stoking fears of a recession, but big retailers’ stocks — promoted as safe havens just two weeks ago — have suddenly turned in a Black Monday-worthy performance. | Big-Box Stores: From Stock Score to Bore | | Until last week, the S&P 500 Consumer Staples Index — which features big-box retailers like Target and Walmart, along with pharmacies and food producers — was one of only three segments on the S&P 500, also including energy and utility stocks, that hadn’t declined in 2022. Oh, how things have changed.
Last week, Walmart — considered by many a bellwether of the US retail sector, and thus a proxy for the state of the American consumer — surprised investors by cutting its earnings guidance. Rival Target issued a similar warning. Both stocks proceeded to have their worst day since the infamous Black Monday of 1987 and, by week’s end, the Consumer Staples Index was down 8.9% for the year. Such results lead to two concerns: that consumers have hit the cap on what they’re willing to spend, and that retailers can’t keep up with costs. The jury’s out on which one is weighing heavier on the sector: | • | | Last month, Visa’s spending momentum index, which tracks credit and debit card spending, fell to its lowest level since February 2021. Visa said consumers are spending more on food and gas, which hurts their ability to pay for discretionary items. “Their wallets are being squeezed,” said Kohl's CEO Michelle Gass, whose company also slashed its profit targets last week. | | • | | On the other side of the equation are companies absorbing equally significant hits: Walmart’s fuel costs in the last quarter were $160 million higher than planned. Another unexpected wallop comes from inventory: companies who paid the price for not having it on hand pre-pandemic are now paying the price for a lesson learned too well. Target’s inventory is up 43% from a year ago, Walmart’s — 32% (as any CFO will tell you, rising inventory is a drain on cash flow). | | | | Keep in Mind: “During most of the big sell-offs of my lifetime — 2009, the dot-com bubble or 1987 — almost every one of these times, within two years you saw very strong recoveries,” retail investor Richard Thalheimer told the Financial Times. Now, if only someone had a time machine to 2024. | | | | | | Global Economy | Is Davos Good For Nothing or a Little Bit of Something? |  | | It may be a perennial magnet for baseless conspiracy theories, but the big mystery at the heart of the latest Davos summit is whether it can draw enough big-name attendees.
This year’s World Economic Forum (WEF) Annual Meeting — the overreported gathering of the world’s rich and powerful in a Swiss Alpine resort town — kicked off this Sunday with a lot less fanfare than usual. One reason: fewer people want to be seen at swanky conferences hobnobbing with billionaires when times are tough. | The Private Jet Pledge | | Launched in the 1970s, the WEF has been criticized for having more fluff than a Versace pillow. Famous people show up, discuss big issues, and then nothing of substance happens. “It has become ridiculous,” a former UK cabinet minister vented, anonymously, to The Guardian. “You have executives flying to Switzerland in private jets, then pledging to plant millions of trees as a carbon offset.”
This year’s WEF will go ahead without US President Joe Biden, UK Prime Minister Boris Johnson, or French President Emmanuel Macron, who are among the politicians to pass on lunching with the uber-rich as their voters struggle back home. Organizers believe the event can rebound in future years, noting that meaningful developments do happen at WEF every now and again: | • | | The New Development Bank — launched in 2015 with $100 billion in capital from Brazil, Russia, India, China, and South Africa to fund infrastructure and development projects — was conceived at the WEF in 2011 by economists Joseph Stiglitz and Nicholas Stern and former Ethiopian Prime Minister Meles Zenawi. | | • | | Gavi, a global vaccine alliance launched at the forum in 2000, has administered some 900 million vaccines against seventeen infectious diseases to children worldwide. In 2020, Gavi established Covax, a global Covid-19 vaccine program that shipped 1 billion vaccines to 144 participating countries. | | | | “It can take a while to peel back the layers and maximize the opportunities that exist at Davos,” Jen Wines, a former vice president at Fidelity, told The New York Times.
Taxed Out: Politicians may be down on this possibly past-its-prime summit, but they might want to listen once in a while when its attendees speak: earlier this year, the WEF published a letter signed by 100 millionaires and billionaires asking governments to tax the super-rich more. | | | | | | Sponsored by Roofstock | And the Award for Biggest Shortage of 2022 Goes To… | …single-family homes. If you’ve attempted to purchase a house during the pandemic era, you are intimately familiar with just how tight the real estate market is right now. With the market forces as they are, the only sensible thing to do is move real estate to the other side of the balance sheet: the asset side. What are the big players doing? Private equity giant Blackstone, the $880 billion asset management behemoth, recently announced a $6 billion deal to scoop up single-family homes to capitalize on the supply-demand imbalance. So how do you get in? With Roofstock One, it’s never been easier for accredited investors to invest in single-family rental residential real estate: | • | | Investors can purchase shares of Roofstock One Tracking Stocks to isolate areas with high growth potential, including Atlanta and Indianapolis. | | • | | Looking for more diversification? Tap Common Stock for broader exposure and access to Roofstock One’s growing real estate portfolio. | | | | | | | | Security | ‘Quad’ Nations to Track Illegal Chinese Fishing | | You’ve heard of the trade war; now, how about a fishing war?
President Joe Biden and leaders from Japan, Australia, and India — the four member nations of the Quadrilateral Security Dialogue, or simply the Quad — are set to announce a new initiative to curb illegal fishing in the Indo-Pacific, specifically by Chinese fishers. It’s the latest move on the part of what’s known as the “Asian NATO.” | (Don’t) Go Fish | | The new security initiative is set to be announced this week at a summit in Tokyo, where Biden will engage with Asian-Pacific nations on a new “Indo-Pacific Economic Framework” to bolster economic relations with Asian nations.
Illegal, unreported and unregulated fishing costs the world $26 billion to $50 billion in legitimate trade, according to researchers at the University of British Columbia. The Quad alleges China is responsible for 95% of illegal fishing in the Indo-Pacific, something their new initiative is designed to stifle: | • | | The Quad’s initiative will synchronize existing surveillance systems to create a unified satellite-based tracking system that will work even when a vessel's transponder is deactivated, according to the Financial Times. | | • | | “China has become the world’s largest perpetrator of illegal fishing,” Charles Edel, Australia chair at think-tank CSIS, told the FT. “They have drastically depleted global fishing stocks and undermined traditional livelihoods of many countries.” | | | | The Quad’s plans come just after the group and its allies reportedly grew concerned Beijing is plotting a security pact with the 33-island nation of Kiribati — which military experts believe could lead to China establishing a naval base deep in the central Pacific, a move that would heighten international tensions. We’d rather everyone just go fishing. | | | | | | Extra Upside | • | | What’s old is new again: Crypto Exchange FTX is pushing into the avant-garde frontier of… stock trading. | | • | | Gamberetti on the barbie: Australia elected its first Labor government in a decade, and its first prime minister of Italian heritage. | | • | | Well, we found it: the newsletter that’s giving companies small and large an edge over the competition. Stacked Marketer delivers the breaking news, hacks, tips & tricks needed to dominate the entire digital marketing landscape 一 from native ads and SEO to Facebook, Google, Snap, TikTok & everywhere in between. And the best part? It's no cost to subscribe. Join the over 30K professionals reading Stacked Marketer daily.* *Partner | | | | | | |  | Just For Fun | | | | | Written by Sean Craig and Brian Boyle. | Disclaimer | | | | Roofstock One, Inc., a Maryland corporation, is not registered as a broker, dealer, investment advisor, investment manager, or registered funding portal under the U.S. Securities Act of 1933, as amended, or any other authority. Roofstock One securities offerings are made in reliance on an exemption from the registration requirements of the Securities Act and are available exclusively to accredited investors. Investments in Roofstock One can lose value, are illiquid, speculative, and not suitable for all investors. Prospective investors should read all offering materials in their entirety before making an investment decision. Diversification cannot ensure a profit or protect against loss in a declining market. It is a strategy used to help mitigate risk. | | | | | No longer want to receive these emails? Unsubscribe here. Copyright © 2022 The Daily Upside, LLC., All rights reserved. 1230 York Avenue, Box 154, New York, NY 10065 | | | | |
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