Goldman Sachs Global Retail Conference
October 3, 2010 by Andy Weiner
I recently attended the 2010 Global Retail Conference held in September in New York City with many of the leading retail executives. My notes are enclosed.
How to handle the Sovereign Debt Explosion
March 15, 2010 by Andy Weiner
We are in the second or third inning of a great global de-leveraging. State and city finances are in a multi-year process of a painful readjustment of reducing expenditures with lower revenues. At the national level, the re-balancing of spending with receipts that has started in Greece will affect all countries, including the US, that are dramatically out of balance. Mohamed El-Erian, the chief executive of Pimco, an investment house based in London, is one of the world’s most astute observers of political economy. He identifies the issues and implications of global indebtedness. The US, among other countries, is in for a very painful period of difficult spending reductions and increases in taxes. We as a country will not be able to live without the consequences of overspending. A must read.
Storms on the Horizon
February 12, 2010 by Andy Weiner
Does the U.S. Government have negative net worth? As one looks at the liability of unfunded social security, medicare, and medicaid as described in Richard Fisher’s (President and CEO of the Dallas Fed) sobering article “Storms on the Horizon”, we must ask ourselves — how long can we go on without consequences? Our gut says that promising entitlements without a willingness or ability to tax at a level to pay for our obligations is a ticking time bomb that has to affect our standard of living and that of our children. The readjustment is coming, and we hope that we have strong leaders who can navigate this dangerous path. A must read.
The Great Consumer Crash of 2009
February 12, 2010 by Andy Weiner
As a result of the Panic of 2008 and the Great Recession, we are in a five to ten year period where the consumer has dramatically slowed down consumption. James Quinn, Sr. Director of Strategic Planning at the Wharton School of Finance, provides an excellent analysis of the new frugal consumer with his article “The Great Consumer Crash of 2009″. As a result of this consumer crash, we have seen dramatic falls in same-store sales across most segments of retail, with the largest decreases associated with the more discretionary spending categories. In addition, retailers have lowered their inventory levels on average 15%-20% since 2008 and have shifted their assortments to more opening price point products and private label. The impact of a more frugal consumer for the shopping center industry has been a combination of retailer bankruptcies and pressures to lower rent. A must read article.
The End
February 12, 2010 by Andy Weiner
Michael Lewis, author of Liar’s Poker, describes the seminal events that led to the Panic of 2008. The popping of the asset bubble is a historic event causing dramatic falls in home, commercial real estate, and overall business values. We are only partway through the period of adjustment. In the shopping center industry, rent deflation and increased vacancy continues to have impact on shopping center prices. Strong tenants will ratchet their occupancy costs downward in a painful process for shopping center owners. A must read.