Winners in this crisis: Ecommerce – for retailers that don’t sell men’s office & formal wear – and for sure, lawyers.
By Wolf Richter for WOLF STREET.
Tailored Brands, a holding company for men’s apparel stores, including Men’s Wearhouse and JoS. A. Bank, is considering filing for bankruptcy, according to sources cited by Bloomberg on June 8. Bankruptcy would allow the company to shut weaker locations while keeping other stores operating, the sources said.
The company confirmed in an SEC filing on June 10 that it may have to file for bankruptcy:
“If the effects of the COVID-19 pandemic are protracted and we are unable to increase liquidity and/or effectively address our debt position, we may be forced to scale back or terminate operations and/or seek protection under applicable bankruptcy laws. This could result in a complete loss of shareholder value,” it said.
But its problems started years ago, including the misbegotten $1.8 billion acquisition of JoS. A. Bank in 2014, whose revenues promptly went into a death spiral. Overall revenues fell every year since 2016.
In an update on June 10, Tailored Brands said that total revenues in the first quarter (ended May 2) collapsed by 60% year-over-year, with even ecommerce sales plunging 32%.
The company started re-opening its stores on May 7, and had 634 stores open by June 5. So how well are these reopened stores doing?
In the week ended June 5, for stores open at least the entire week, average comparable sales at Men’s Wearhouse were down 65%, at Jos. A. Bank 78%, and at K&G 40%.
That total ecommerce sales, including rental services, plunged 32% in the second quarter through June 5th – when retail has largely switched to ecommerce, and everyone else’s ecommerce sales are booming – is a sign that work-from-home has crushed demand for clothes worn to the office; and that the postponements of events such as weddings have crushed the demand for renting formal wear.
Children’s Palace announced on June 11 that it would close “300 additional store locations” – 200 of them in the current fiscal year, and 100 in the next. This would amount to about one-third of its 920 or so locations in the US and Canada. “This initiative will greatly reduce our reliance on our brick-and-mortar channel,” it said.
“We are targeting our mall-based, brick-and-mortar portfolio to represent less than 25% of our revenue entering fiscal 2022,” it said.
In the same breath, the company announced that total revenues had plunged 38% in the quarter, as many of its stores were closed due to the pandemic, with brick-and-mortar revenues collapsing while ecommerce revenues soaring by 300%. Ecommerce won big.
Signet Jewelers said in an update on June 9 that by the end of its fiscal year, it will close “at least” 300 stores in North America – of which “at least” 150 stores won’t reopen at all, and “at least an additional 150 stores” will re-open but will close by the end of the fiscal year. And it plans to accelerate the shift to ecommerce.
The company has about 3,200 stores under six brands: Kay Jewelers, Zales, Jared, H.Samuel, Ernest Jones, Peoples, and Piercing Pagoda. It also has JamesAllen.com. It said there are currently “over 1,100 stores open.”
Macy’s said in a June 9 update that net sales in its second quarter plunged 45%, generating an operating loss of nearly $1 billion. Sales at stores that had been reopened were about half of where they’d been before the pandemic, CEO Jeff Gennette said at a virtual conference. The company expects to have re-opened 400 stores by now. The good thing is it was able to raise $4.5 billion from investors, which to burn over the coming quarters.
About 4,000 store closures have already been announced this year through June 5, according to Coresight Research. Among the biggest names that are closing stores while in bankruptcy are JCPenney, Pier 1 Imports, J.Crew, Neiman Marcus, and Stage Stores.
Other retailers are delaying filing for bankruptcy protection until they can reopen their stores for liquidation sales. Lord & Taylor, the iconic department store, has already announced that it would liquidate in this manner. Other companies are still trying to dodge a bankruptcy filing by closing large numbers of stores, including L Brands, which owns among other brands, Victoria’s Secret.
Between 20,000 and 25,000 stores, mostly in malls, are expected to be closed permanently in the year 2020, according to Coresight Research. This is up from its prior estimate of 15,000 store closures for the year.
The year 2019 – the Good Times – had already been an infamous record year: nearly 10,000 stores were closed. But the pandemic of 2020, is going to compress two or three years of brick-and-mortar meltdown into one year.
Department stores and clothing stores are on top of the list. Department stores typically serve as anchor of a mall, and when that anchor shuts down, foot traffic therefore dwindles further, and store closings than cascade through the mall.
CBL Property Group, a mall REIT with over 100 malls in 26 states, many of them in less affluent areas, issued a “going concern” warning on June 5. It said in its 10-K filing with the SEC that it had “substantial doubt about our ability to continue as a going concern within one year,” as it failed to make an interest payment on June 1, and it said that it “will fail to meet another covenant” in Q3 2020, and another in Q4 2020, and another in Q1 2021. And it only collected 27% of its rents for April by the end of May. This REIT is toast.
Simon Property Group, the largest mall-REIT in the US, announced on June 10, that it had terminated its $3.6 billion merger with another mall-REIT, Taubman Centers, and that it has filed suit against the company. The deal had been announced with great fanfare on February 9, a month before the lockdowns in the US.
SPG cited two reasons, that the pandemic “has had a uniquely material and disproportionate effect on Taubman compared with other participants in the retail real estate industry,” and that “Taubman has failed to take steps to mitigate the impact of the pandemic as others in the industry have, including by not making essential cuts in operating expenses and capital expenditures.”
Taubman Centers in turn called the termination of the deal agreement “invalid and without merit.” So this is going to be a legal battle.
It seems this deal became ugly for SPG, in terms of price and costs. But there is nothing in this business that price cannot solve. So it could be a negotiating tactic to push Taubman into accepting a much lower price.
Or it could be the realization that the mall business is a lot more seriously screwed now than it was in February, at which point it had already been hit hard by years of brick-and-mortar meltdown. A year earlier already, long before the pandemic, SPG CEO David Simon lamented just how painful the process of hundreds of tenants conking out on him had become.
SPG’s lawyers have been busy. In early June, SPG – in whose malls are 412 Gap, Banana Republic, and Old Navy Stores – filed suit against Gap over unpaid rent and other charges, alleging that Gap has withheld rent for April, May and June. This follows Gap’s announcement in late April that it had stopped paying rent on its closed stores.
There are some clear winners in this crisis, including ecommerce – for retailers that have succeeded in building a vibrant presence over the years and that don’t sell office clothing and formal wear – and for sure, lawyers.
What’s so insidious about the Fed’s bailouts of investors in hedge funds, mortgage-REITS, stocks, bonds, leveraged loans, and other often risky assets? The destruction of capitalism (transcript of my podcast). Read... America Convulses in Pain, Fed Bails Out the Wealthy
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Luckily for former owners of CBL US12505JAD54 and CBL US125581GV41 (both unsecured trash), Jerome has bought some off their hands, last trading at 32.25 and 31.614 cents on the dollar.
Hopefully Jerome can continue to leverage tax payers debt money and avg down his purchases down to 0 cents on the dollar!
Why isn’t the scoundrel Powell in jail? And why does none of our fake news corporate media teneographers ask him why he’s breaking the law buying junkety junk? Get Kramer & Blitzer on it pronto! Think of the ratings boost you’d have, fake news corporate medias!
But he is, just a banker “doing God’s work.”
Lloyd Blankfiend says so:
“We’re very important,” Lloyd C. Blankfein said in an interview with The Times of London. “We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It’s a virtuous cycle.”
The dominant Wall Street bank posted third-quarter earnings of $3 billion and plans to hand out more than $16 billion in year-end bonuses.
“We have a social purpose,” he told the newspaper.
This was in 2009 I should add. “God” had not even totally perfected his technique yet. Practice makes perfect!
Every merchant and banker in Renaissance Italy headed his account ledger:
‘FOR GOD AND PROFIT’
Important people indeed: they might even pray and be kind to non-human animals, small children, etc.
For those who would like to know how it all started, I recommend ‘The Merchant of Prato’ by Iris Origo, a fascinating read,
Came to me in a fever dream last night, if the market crashes, Trump will win, if the market hits new highs, Biden. In bad times people don’t want change. If they feel good about themselves they might give Joe a turn. Trump renegotiated his prenup so he is looking ahead, if you have stocks, sell em…
He is only the tip of the iceberg. The “Federal” Reserve bank cartel has directors appointed by presidents that are loyal to and approved by the controlling persons that own the banks: the banksters. They will always act to bail out and funnel money to their little banksters.
A lot of the retailers are also owned by the ultra-rich, so expect more bailouts to be proposed for them. While I feel sorry for the little guys, who own small, mom and pop stores that are going bankrupt, the decimation in the wealth of the ultra rich that is happening (who own most large retailers) is inevitable. They should not be bailed out.
Other mechanisms can be used to create viable, small businesses, including tariffs and other impediments on the importation of select items, such as high technology items and low interest loans to manufacturers, so a domestic industry is fostered. Of course, in the USA, that is only viable with massive use of robotics, etc. Thus, we will have a problem with a massive number of persons being permanently unemployed.
That isn’t buying junk debt. Most of these reits are heading into abandoned status fast. Property that will be vacant decades until either renaturalized, New growth markets emerge.
Junk debt is basically worthless and run on, making such bond, dead. Where it lands is irrelevant.
Yeah, totally irrelevant that a central bank is providing a marginal bid for the owners of such a debt that would have no one else to dump on without such… getting 33 cents on the vs 0 on the secondary market is totally irrelevant… lol
So what you’re saying is, if I issue Timbers Bimbers Not Junk Bonds because I price them at 0.33 on the dollar, it’s not junk? Honestly don’t know the proper legal term for junk but to me…it’s junk. Also a frsud, ripoff, and just wrong in every sane way!
Isn’t “Jos A Bank” were supposed to be money changers rather than outfitters for lawyers? I have seen a store named “Jos A bank” which I thought was just another FDIC insured retail bank. So, what did they do to fail in a spectacular way? Did they loaned all their clothes for softbank credit to Wework employees via uber delivery and charged them to the US treasury bond yields?
JC penny was bankrupt even before. Macy was little bit slower…
By the way, increase in divor ce cases was reported in MSM last week due to COVID lock down. If some stupid wo men is ready to marry me, my test would be to survive a lock down with no fight after the love bombing period. Guess what I have to be single for this lifetime…
“if there’s one lawyer in town he will go broke, if there are two they will both get rich”
Well sure, if they’re laced into white shoes that is..
Will the lawyers be able to wear online purchased sweat pants and hoodies to bankruptcy court once real suit shops are gone?
Yes, but only if the hoodies and sweat pants come with holes already in them. These new hoodies and sweat pants will serve as the new professional attire, and be appropriately priced, higher than a traditional suit.
Lawyers don’t buy suits in shops. They go to tailors.
Of course tailors are expensive, but with all the Covid-related disputes coming up, lawyers have as good as a license to print money.
Contrary to the schmucks trying to actually build, raise or otherwise create something.
I’ve always felt that the psychopathic criminal parasites, that is to say, the elites, resented the employees wearing “corporate” business dress. Suits, ties, shirts with cuff-links were always meant as the mark of the owner class. It was only the nearly intolerable period of faux democratization of the work place created by the short lived emergence of a middle class that called for the insufferable dissolution of the social ranking. That is over now, so who needs Men’s Warehouse et. al..
Sounds like they need to issue new stock.
Anyone else notice how high end the thrift stores, Goodwill, Salvation Army and other charity shops are getting?
And also, how crowded they are with “middle class” folks? With nice cars in the parking lots?
Haven’t noticed any difference yet, in my average mid-size Midwest city.
You’re behind the times. This trend started in 2008, when people losing their homes were both broke and downsizing. But their prices are all up by all accounts.
Most children do well enough with hand-me-downs other than shoes. I was raised on that for a large part. One of the worst experiences was getting a shirt in some slithery cloth that had a bathing beauty print. As a six year old boy I was mortified. It is no wonder that when I got it that it was essentially new.
Anyway, a print shirt like that worn to a Pride Parade would sure as hell Trigger nearly all. It could be back in style after sixty-odd years.
I shop more at thrift stores than ‘regular’ clothing stores. Not because I’m poor, but I do love a bargain. And to echo 2banana, a lot of the merchandise at thrift stores still have their new tags on them. Brand new clothes being sold at a discount.
Most of the new things are donated by businesses. I bought a bunch of new stuff from Goodwill over the years.
My daughter is a size zero. Retailers donate their inventory of leftovers that often include the smaller sizes in some quantity and variety. She used to buy expensive silk designer dresses for pennies on the dollar….. at Goodwill…. new, with tags.
The nice cars are the managers of the non-profit thrift shops.
Who wears suits these days anyway? This question is in addition to everything else going haywire.
The ZZ Top take:
They come runnin’ just as fast as they can
‘Cause every girl crazy ’bout a sharp dressed man
Should read (for June 2020):
They come runnin’ just as fast as they can
‘Cause every girl crazy for a solvent man.
Corporate america could reverse retail and REIT investments in a New York minute. Just change the dress code. Casual and jeans will slowly disappear once we get through this Covid crisis. Fashion and keeping up with the Jones always drives investment and eventually profits. Everybody loves to shop and free shipping does not always sell when touchy-feely is required.
During wars and economic disasters fashions do improve, or at least people spend much more effort on their appearance, but that presupposes that people have at least a little bit of cash to spend; unemployment is still meeting, if not surpassing, the Great Depression with small and medium size businesses still crashing. Since Congress refuses to actually stimulate the economy, aside from putting trillions into the wealthy and big finance, expect a continued collapse and a loooonnnng, hot, tear gas filled Summer.
A trillion, maybe two trillion, of direct payments to the bottom 90% would probably keep things going, but that’s the Evulz Socialuzm or Coddling Welfare Bums, unlike the trillions just given to companies and investors for their bonuses and stock buybacks. Oh well. Maybe Congress will actually have some sense frightened into them this Summer.
It depends on who will go to the office. If everybody is working from home except the smucks and real top management than dressing up means you are a smuck as the top can choose what they wear. And you don’t want to be a smuck
I can tell you from experience that some of the CIOs of large US companies could care less how the IT people that advice them dress. Actually an over dressed enterprise architect would probably make them nervous that the person does not know how the real underlying systems work.
Quite so. In fact,I’ve just a badge made:
‘Solvent property owner’.
They can see I still have my own hair, un-dyed.
I anticipate a great Summer!
Fleece vest is the new corporate uniform.
Meanwhile I just learned the term “self help” evictions. sheesh. So many in the news.
I thought the hospitals were busy, but it looks like the courts are going to be jammed too! Let’s not forget the oil & gas BK’s going on!
Don’t forget the hotel, airline, rental car, and service industry BKs. Not to mention the overleveraged banks. They will start to implode soon.
Shhh… the stock markets still going up (lol)
Anyone want to buy American Airlines stock when they declare Chapter 11?
I can already foresee a number of new businesses coming down the line:
1. Bernanke’s Warehouse. Buy junk bonds, get one suit free.
2. Yellen’s Palace. Buy junk bonds, get one children accessory for free.
3. Greenspan Jewellers. Buy junk bonds, get a jewel of your choice. Value capped at 100 dollars.
4. Last but not least, Powell’s Secret Property Group. Buy a property and choose whatever you desire from the Victoria Secret catalogue.
4a) Victoria Sercet Models included with each purchase of LB US532716AU19 (unsecured 99.25 cents on the dollar), LB US501797AJ37 (unsecured 94.7605 cents on the dollar), LB US501797AU81 (unsecured 94.7605 cents on the dollar), LB (unsecured 101.25 cents on the dollar), LB US501797AN49 (unsecured 82.7315 cents on the dollar), and LB US501797AR52 (unsecured 90.119 cents on the dollar).
Limited time offer! Don’t you want to become a co-owner with Jerome!
Whoops forgot a cusip for the 101.25 (LB US501797AU81), don’t want to leave you folks out from acquiring an extra model!
Bankruptcies are deflationary, and the Feds response will be inflationary.
The hour glass is horizontal, but balanced like an old weight measure with deflation on one side, and inflation on the other. Eventually, in time it will become an hour glass again, with one of them more weighted down at an inflection moment. The gravity of the situation speeds up the event time.
Feds response will be inflationary’
Remember they are trying since ’09 and Japan for over 2 decades!
De-leveraging Deflation first.
The backbone of America used to be independent small business owners. Anyone who works for a chain ain’t a free person. Let the chains break apart.
No it wasn’t
The backbone of America was debt into factories.
and there you have it, right there:
Double B: independence and choice
Reg: enslavement
Who will prevail, or will it be clearcut?
Double Bluff,
For the employees, working for a chain usually pays at least slightly better and usually has more consistent rules. Independent business are across the board and not necessarily any better for employees.
As for businesses themselves, it varies by industry, if a local store depends on large wholesalers, it isn’t necessarily any more free or local than a chain store.
Wolf , a while back you mentioned Destiny Mall in Syracuse in the context I think how rating agencies don’t take into account REIT’s that have all there eggs in one basket. Destiny owners have been in the news crying for the state to allow them to open, “their survival depends on it.” How many more of these one act trusts are out there?
Quite a few. This is is a slow-moving train wreck. These things drag out.
Destiny’s business model has always seemed to be getting tax breaks from local government.
Why do they need to open?
I would hope that Jos Banks and Men’s Warehouse would go completely out of business. Those cheap suits made in Bangladesh, China, and other low wage countries are an absolute mess. Off the rack takes a new meaning with this level of tripe. I understand that they are employing people in low countries, but inflating the price here by 3000% (ok, hyperbole on my part) is a quid too much.
I have 4 bags of suits and those cheaply sewn shirts in a bag for those who might want them and they will be located at the thrift store. Like many people say, who wears suits these days? Ok, I do because of my business, but I got rid of those Banks rags. Downsizing feels real good.
Gold’s Gym filed for bankruptcy. Chuck E. Cheese pizza may need to reorganize. GNC was already in trouble due to online competition.
What sort of bad business concepts junk bonds was the Fed buying? I would not want the Social Security trust fund invested in bad business concepts. Trump wanted to cut Social Security and fund small business loans to the politically connected.
If it’s anything like the Hertz bankruptcy mania, the best time to buy stocks is right after they file. What world do we live in where the share value explodes upon filing bankruptcy?
Someone got a tiny violin to play?
Demographics is a contributing factor. A Ponzi scheme economic system needs an expanding young generation to replace a contracting old generation. That’s not happening anymore. I think I am typical of oldsters in that my living expenses are about half from when I was paying a mortgage and raising a family. I have a closet full of dress clothes that I have no more use.
Even without the lock down, retailers were facing a contraction.
Consumers are oversaturated with “good enough” stuff. Even as a 32 y/o tech buff I currently have next to no interest in buying new stuff unless existing ones get broken; there’s too little marginal utility increase for too much money.
For instance, I’m still using a computer SSD that was bought 6 years ago, and its still just as fast as the ones sold today. Then there’s my 4 year old iPhone which I gave to my mom which still works well with an aftermarket battery change.
Also thanks to the Internet the used goods market is stronger than ever. I haven’t paid money for new clothes for some time now, why should I do it when I have much cheaper new secondhand ones from impulsive people who don’t have discipline to control their spending and ending up with too much inventory?
Why hasn’t UberSues already cornered the Law Market? And where are the Law ETFs?
Many of these clothing retailers have missed the biggest trend of all, fat Americans. The women’s clothing lines have started to address this but lost decades of revenue ignoring the facts.
The men’s stores have totally ignored this demographic and are now paying the price. Men with money tend to be older and heavier, and American men are larger in general. Even guys who work out are larger. Many guys dress down because they can’t find clothes that fit them.
Petunia,
My advice to the young pro hockey players new to the MN Wild, which I have dispensed on a few occasions as they pass by me before games, “Go to a tailor, and get a few pairs of slacks.”
The blazers and sport coats fit these guys fairly well, but hockey players (and velodrome sprinters) don’t fit into off the rack dress pants too well.
Over the years, I’ve gotten a couple of thank you’s from players who’ve taken my advice. A few extra bucks to look good and be comfortable, is money well spent.
Two of my sons travel to Singapore regularly (or, say, used to) and both have accounts with custom tailors there. They get very nice clothes for a very nice price, and since their dimensions are on file, the tailors can whip out and ship shirts, etc., as needed.
The men in my family were all sailors and had their suits made in Hong Kong. The suits all came with two pairs of pants and lasted forever.
Petunia, I have an Hong Kong made suit in my closet, circa 70s, they last as long as you can button the coat.
Good one Dan.
Hockey players are usually pretty well dressed. In Canada, (anyway), it starts very young with game day meaning a bit of a suit and definitely a tie is worn all day at school. No tie, no play today.
Anyway, it’s always cool watching the well dressed team enter the arena with the pride of just being there, and dressed to match. Professionals making big bucks and displaying respect for the fans and institution is quite welcome.
I laughed when I read the comments today. I’ve got a few decent suits left hanging in the closet that I just haven’t got rid of. The last time I wore one was to a funeral and I think I was the only one sporting a tie. I’m pretty sure I bought that suit for a job interview about twenty years ago. I think it was the only job I have ever applied for and didn’t get…so the suit was benched. (Must’ve been the bloody suit). When I was a union rep and the opposing side came in for a contentious meeting I used to always tease them about their clothes. “I see you’re wearing your power suit today__________. Do you think it will help”. (Then a wink to take the sting away). In jeans and shirt we instantly removed away the posturing and authority of their position.
Hopefully, the Canucks take care of Minny in 4 this year. They are playing each other if the season continues.
When I was in college the hockey players wore a suit to get from the dorm to the hockey game, but no other time. At that time we had so many Canadians on the team the band would play “Oh Canada” before each game and the entire crowd knew the words. You could always tell the hockey players around campus because they wore work boots with no shoe laces. I still can’t figure out what that was about.
Hockey players get jacked up legs, even at the lower levels from years of skating. Both my boys played in high school, and one in college. Their legs are very powerful.
I’ve got a number of friends who were good enough to play pro in the minor leagues/Europe…. two of them retired not too many years ago and both have had hip replacements before 50.
All that skating seems to take a toll on the joints.
Petunia, Walmart and Kmart have always addressed the plus-size woman and “Big and Tall” man. On the other end those people probably wear bespoke clothing.
If only Walmart would hire a few fashion oriented people. They bought ModCloth, Bonobo, Moosejaw, and Hayneedle but I think they have already gotten rid of them.
The problem with the larger sizes is that they’re all too short for tall people. I should wear a L / XL t-shirt due to my chest size but I need an XXL so my navel doesn’t show.
I have some 17 year old t-shirts that are L and XL that fit just fine…. and the XL’s of that vintage are almost too big.
The proportioning of today’s clothing is jacked.
Poor people are obese, rich people eat well and work out. Ergo…they also can afford properly fitted clothes.
Of course, the chain store long ago tried to fool people they were thinner by reclassifying sizes. Ie. American small is like european medium.
When I lived in Palm Beach County most of the well off women were thin because of prescription medication. Most were very thin but not in shape at all. At restaurants they drink and push the food around the plate. Their husbands, on the other hand, need the bespoke suits.
Maybe they do a lot of blow… it is a well known ‘diet drug’
Did they talk incessantly and excitedly?
In the 50s and 60s it was hush-hush “vitamin B shots”
Looks like 24 Hour Fitness may be the latest victim of PE/LBO greed:
Don’t worry guys, Larry Kudlow has predicted a V shaped recovery.
Some choice quotes:
“New business applications are roaring”
“I think we’re off to the races in what will be a very strong V-shaped recovery.”
I mean, he can’t be wrong right??
he may be genetically incapable of being right, given his track record.
Can you be genetically incapable of speaking the Truth? I’ve known some people I wondered about, and he sounds like a candidate.
Oh come on guys. I am sure he wouldn’t lie about his favorite pizza or burger :)
You have to apply to open a business?
Being as the stocks, Wall Street, and the rich have had their V shaped recovery in hand, it’s it about time the ruling elites call it day and wrap things up? All that remains is to make sure Da Fed understands existing “emergency” measures are to be mostly normalized and we’re about done, don’t you think? The dude in the WH will want something to help with reelection but since either choice = The Same Thing it’s pretty close to Mission Accomplished.
All these V-recoveries and tax breaks are just temporary band-aids on the jugular wound that is the Quadrillion dollar Derivative drain-out. Just gets you through to the end of the month, when the next wave of settlements comes do.
These debt-junkies, all loaded up on CLO’s and the like, are just Masters of Debt(s), Tax-breaks and self-dealing. Everyone of them is as economically entitled as their Master of Ceremonies, DJT.
He is overseeing the final days of the Empire of Rehypothecation.
The amount of money that is going to be lost over the next year will be staggering. Paying mortgages and property taxes on commercial real estate that is sitting empty is a slow way to bankruptcy.
Yep, only to find out that a huge portion of your employees want to keep working remote…
The Fed’s now announcing they are buying corporate bonds something or other. We’ll see if they are following through or simply doing their old trick of jawboning the market.
Is that legal? For the Fed to buy corporate bonds?
I know it’s illegal for Fed to buy stocks, not sure about bonds.
If so, I hope they buy my Premium Not Junk Timbers Bimbers Bonds. I have a whole of them to sell to the Fed and trust me they will be put to good use.
I’m starting an SPV to buy overpriced tacos…no one will ever accuse me of faulting junk food bonding.
It could very well be illegal for bond purchase and later if they dare to either jawbone about buying stock or some rich guys’ broken bicycle (which would clearly be illegal then). Who’s gonna take action and prosecute Papa Jerome? This administration or the “resistant” party? Afraid not when majority them personally benefit from the market going higher and higher up. There will be no outrage from the general public to force them to go after any illegal moves if the FED choose to do so since most people don’t understand or care what the FED is doing. Lack of public pressure combine with complicit of the government, it’s a perfect scenario for them to get away with anything in the name of restoring “healthy” economy.
So, just read that the Fed is acting as the “agent” of the Treasury to buy these bonds, with our tax dollars.
The Fed hired Blackrock or stone or whatever…lets just call them Blackmassofshit.
That’s how they got around it apparently.
And….the market makes a comeback right before closing. You have to admire the beauty of the game Powell’s playing to prevent an outright crash:
1. Announce (i.e. merely announce) they will do X to support the markets
2. Do only 0.1X to start with
3. Market recovers
4. If market starts crashing again:
a) Either do more of what was announced in (1) OR
b) “Announce” you’ll do more …
5. Watch the markets and repeat from (2)
The show goes on…
Yah, it’s quite a racket Split-Personality Jeronamo has going.
Last Week: Stocks are risky, not looking at all the risky risk!
Today: I’m gonna boy junk bonds so the stocks can go higher!
The Fed didn’t say any such thing today. It only said that it would finally get its long-announced Secondary Market Corporate Credit Facility (SMCCF) operating by June 16 and buy a broad range of bonds. This hoopla around this today has been astounding.
This is what the Fed actually said:
“SMCCF will begin purchases of corporate bonds to create a portfolio that tracks a broad, diversified market index of U.S. corporate bonds. This index is made up of bonds trading in the secondary markets that have been issued by companies created or organized in the United States or under the laws of the United States that satisfy the criteria detailed in the revised term sheet. Issuers must have been rated investment grade as of March 22, 2020, and still be rated at least BB-/Ba3 on the date of purchase by the SMCCF.”
True. But wisdom is in part from adding context and interpretation, to events. So that makes me either wise…or full of sh*t, I guess.
HAHAHA……..the fed to purchase individual bonds……… a ticket to run a charity called a business and let the feds pick up the pieces.
Henry Ford would be puking at these clowns. The US stands on its military power alone…..until the dollar no longer supports military purchases.
The FED is so uninventive they can’t even come up with an original radical playbook but rather just copy what Japan did instead…..the laziness and the incompetence with these people and they have the world’s reserve currency at their disposal too.
I wonder if George Zimmer is now glad that he got pushed out while Men’s warehouse was still riding high back then. Maybe he can change his tagline to “You’ll love the way I look now and I guaranteed it!”
Not retail but just got an email from 24 hour Fitness stating they filed for Chapter 11 today. It’s going to be a ride, the wave of these bankruptcy will come swift for sure. Waiting for your next move FED, perhaps directly buying up bankrupted business is the next unconventional move.
Where are the #VanLife’ers going to show now?
If it is the River, sure. But if it is the bullseye, not so much.
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Because reading Wolf is making me depressed I will jump with my comment a little bit out of context, to the bigger picture.
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After 1945 you start with 50% of the world GDP, but are facing a formidable adversary during the Cold war. The brightest and the smartest worked and invested their lives into what they perceived to be the right choice, capitalism. When the Berlin wall fell, the game went from “Ultra Hard” mode, to “Easy” mode with cheat codes. The fall of the wall was perceived as a victory, whereas the player just gave up and was looking for new ways to play the game. The professionals of the olden days were dismissed as too conservative and were purged from the system. New “fancy” players joined the game, making careers on what was once considered a trivial task (overthrowing and manipulating governments, creating one mess after another). Then, not long after that three major players started coming back RIC, and they were playing on the “Ultra Hard” mode for 70 years. Serious players with a strong will and determination to succeed.
But now you had a system of game players taught to over glorify their achievements, addicted to cheat codes (money printing) and incapable of nuanced or complex thought (difference between enemy and adversary). The system was cannibalized for the benefit of the few, but still has significant potential for development in all areas.
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My question is: With such players, can the US as a system of “Easy” mode trained individuals reform the fiscal policy and tax code, and address the Herculean tasks in front of them?
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LouisDeLaSmart,
“Because reading Wolf is making me depressed…”
WOLF STREET is a violence-free zone. There are no articles here about suicides, murders, bloody accidents, civil wars, wars, world wars past and future, etc. Is this lack of violence here so depressing? Is this what TV has done to us – that we’re depressed when there is no violence in front of us?
I’m asking because someone else told me the same thing a while back, and when I looked on the front page of what he said was his favorite paper, half was violence and/or death in some manner. He liked reading that, and it didn’t depress him.
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Let me rephrase my statement:”Reading Wolfs’ articles about the current economic affairs and future prospects makes me feel anxious about the same.” No harm intended, I hope you accept the appology.
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Nope, no violence, no blood, no problems, it’s not you or your style or anything for that matter. It’s just how I feel about the current situation, and the gut feeling that this is just the beginning of a long a painful journey.
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1 Trillion infrastructure package. Fed buying corporate bonds. We are WINNING so much it’s starting to hurt.
Dow 500K.
I am still not convinced that the outdoor outlet mall sector is done. The one I follow said foot traffic is back to just under 90% at its malls that have been reopened 30 days. That’s a pretty fast snap back.