Today’s Agenda
- The Retail Apocalypse isn’t so apocalyptic for some retailers.
- A U.S. trade war with China could turn into the real thing. And China’s economic hiccups are bad news for developing countries, luxury brands and the country’s own citizens.
- The federal government is still failing to curb coal emissions. Other forces are stepping in.
- Trump’s central bank criticisms don’t matter.
Amazon, Schma-mazon
(Bloomberg Opinion) -- For everyone who says Amazon is destroying retail — including, ahem, the president of the United States — there is a three-letter rebuttal: TJX.
The U.S. retailer, which owns bargain-hunting stores T.J. Maxx, Marshalls and HomeGoods, has almost entirely ignored that thing called the internet. Yet TJX Cos. just posted its 16th straight quarter of increases in customer traffic. It has gained ground with younger shoppers, and its stock price has doubled in five years. The solid sales performance that TJX reported Tuesday is typical for the retailer, Sarah Halzack writes.
It turns out that it’s a terrific time to be a U.S. retail company — as long as the retailer is good at what it does. Americans are feeling optimistic and eager to buy new stuff for their closets and the rest of their homes. Stores need to do their part by hitting all the basics: smartly managing inventory, selecting desirable merchandise and boosting consumer-data capabilities. Just look at TJX. One of the secrets to its success is carrying clothes that people want to buy. Weird, right?
Sarah warns that shunning internet sales may not work for TJX forever. Today, online shopping accounts for just 10 cents of every dollar of U.S. retail spending, but that number is sure to keep climbing. Americans are also splurging more on eating out and travel, leaving less cash for clothing and shoes.
But if the solidly analog retailers such as TJX and Primark in the U.K. can turn in stellar sales right now, it becomes harder to blame Amazon for the woes of some sad stores such as J.C. Penney. If retailers are having trouble in this environment, it’s not Amazon’s fault. Click here to read the whole thing.
(Trade) War, What Is It Good For
There’s a belief in some U.S. quarters that China has more to lose from a prolonged trade war than the U.S. does. Don’t be so sure, writes Kevin Rudd, a former prime minister of Australia and president of the Asia Society Policy Institute. China has more cards to play that could damage the U.S., such as a possible tax on any U.S. component used in global supply chains. And Chinese President Xi Jinping hasn’t been inclined to back down when he wants to grab the upper hand in internal politics. The worst-case scenario is a non-metaphorical war, Rudd warns.
For a different, still terrifying view on China: China has been the go-to lender for distressed economies such as Venezuela and Turkey, but China’s shaky domestic economy may mean Beijing’s days of playing banker to the developing world are over, Shuli Ren writes. As economic strains and the trade skirmish with the U.S. start to bite, “it becomes harder to justify extending a helping hand to other nations,” she says.
If economic growth in China slows further, it will also hurt global luxury brands including Swiss watch makers, says Andrea Felsted. Big-ticket brands have enjoyed a stellar two-year run, in no small part due to demand from China. Consumer confidence has already weakened there, and recent jolts to China’s stock and property markets won’t help citizens’ willingness to spend. Farfetch U.K. Ltd., which enables e-commerce for fashion boutiques, looks like it’s trying to cash in on demand for luxury handbags and shoes before the cracks start to show.
The EPA Can’t Fight Progress
The U.S. Environmental Protection Agency’s new plan to loosen restrictions on coal-fired power plants is unlikely to ever be put into practice, Bloomberg’s editors write. States are expected to sue to block the plan, but the dead-on-arrival rules are an unwelcome sign that the federal government will continue to do nothing to curtail emissions from the power sector. Happily, the editors say, “the marketplace has taken its own action against coal,” with the closure of nearly 300 coal plants nationwide amid falling prices for natural gas, wind and solar power.
The Joys of a Predictable Central Bank
U.S. President Donald Trump hasn’t been shy about airing his distaste for the Federal Reserve’s interest rate increases. But the best insulation from Trumpian noise is the modern Fed’s flood of public information, Daniel Moss says. Frequent statements from central bank officials, plus the Fed’s regular release of economic projections and best guesses on the direction of the benchmark interest rate help investors know a pause in rate increases was likely no matter what the president says.
Bonus Reading: Interest rates are the lowest in human history. – Barry Ritholtz
The Fed may not be united on whether to pause its increases in interest rates. – Conor Sen
Chart Attack
The recovery in U.S. home prices since the financial crisis has transferred wealth from the have-nots to the haves, writes Noah Smith.
Europe’s banks have been a disastrous investment. It’s odd that the world’s biggest sovereign wealth fund has nearly one-quarter of its stock holdings in the financial sector, Mark Gilbert says.
Quick Hits
Europe’s leaders are in denial about the Iran nuclear deal. – Bloomberg’s editors
Industrial giant United Technologies Corp. is embracing a strategy it previously scorned. – Brooke Sutherland
The White House counsel’s cooperation with Robert Mueller’s investigation is another sign of how not-normal the Trump administration is. – Noah Feldman
The U.S. Senate has always been an unrepresentative body. – Justin Fox
Nationalizing Italy’s infrastructure isn’t the best response to the deadly collapse of a highway bridge in Genoa. – Lionel Laurent
The world’s largest cement mixer will have a tough time selling $2 billion worth of its Indonesian assets. – Anjani Trivedi
“Good old paper-based and oral communication” is the best way to thwart Russia’s efforts to hack American political groups. – Leonid Bershidsky
Australia’s failed energy policy has pushed electricity users to ditch the grid.– David Fickling
ICYMI
Former Trump lawyer Michael Cohen is pleading guilty to federal criminal charges. The S&P 500 hit a fresh record (again). Where wealthy New Yorkers find $20,000 French fossils and taxidermied penguins.
Kickers
Following yesterday’s news of goats invading a New York subway track, here’s a lovely tale about pigeons becoming savvy subway commuters. (Hat tip to Jonathan Landman)
And a followup: The renegade subway goats have been moved to a rescue center, thanks to — (triple-checks my notes) — the comedian Jon Stewart.
Europe’s 18th-century print makers invented images of colonial America.
Lehman Bros. nearly ripped the world apart 10 years ago. The perfect commemoration is … a giant party?
Dolly Parton is queen of the meme.
Note: I’m pinch-hitting this week for slugger Mark Gongloff. Please send bird seed, suggestions and kicker ideas to Shira Ovide at sovide@bloomberg.net.
***
New subscribers can sign up here.
Like Bloomberg Opinion Today? Subscribe to Bloomberg All Access and get much, much more. You'll receive our unmatched global news coverage and two in-depth daily newsletters, The Bloomberg Open and The Bloomberg Close.
To contact the editor responsible for this story: Stacey Shick at sshick@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Shira Ovide is a Bloomberg Opinion columnist covering technology. She previously was a reporter for the Wall Street Journal.
©2018 Bloomberg L.P.