The First 100 days

Lamb and Saccone are going down to the wire.

 

600 vote differential. Each precinct is about 300-350 voters on average. About 15 precincts left. If these are rural areas, scaccone can win

 

So which is it? Tillerson was in over his head or Tillerson was too good at his job for Trump's taste?

Trump has been talking about firing Tillerson for months. We've been hearing about how Tillerson and Trump aren't getting along for months. It wouldn't completely surprise me if this was the thing that made Trump decide to pull the trigger RIGHT NOW... but the idea that this is about Putin is ridiculous, because we all know everything Trump does is about Trump.

Here's a pattern I'm starting to see, and maybe this is overgeneralizing. Trump bends over backward to say nice things and ingratiate himself to world leaders - people on his level. He dumps all over people that are under him. He wants respect as the president and he treats that position as somehow exalted, just as he does other leaders. So any time he meets a foreign leader or representative of one, he says "we had a great talk. So and so is a good guy and I know we're going to get a lot done. So I'm excited about that..." It doesn't matter who they are or whether he likes them or not.

if the two events are linked, it's because Tillerson put out a message wasn't aligned with what Trump wanted to say.

 

Tillerson was apparently undermining Trump with the Europeans regarding the Iran agreement

 

The unemployment situation in Nigeria is so bad

How bad is it?

It's so bad that that SoS Rex Tillerson visited Nigeria, and lost his job

 

Like other retailers, I think this is a structural economic problem more than anything. As the father of a 4-year-old (and therefore a frequent purchaser of toys - mostly Thomas the Tank Engine wooden railway stuff if it has any bearing), I can honestly say that of the countless toys I've bought in the last 4 years, perhaps one or two was bought at Toys 'R Us. Virtually everything I've bought was on amazon (the US and the German sites). I could easily shop at Toys 'R Us. They have a location right across the street from the grocery store that I visit almost every week. I just don't do it, because it's easier to buy on Amazon, and I know Amazon will have what I'm looking for and almost always for less money. It's just a dying retail model.

 

Hey Okie,

Trump admin applied sanctions today against the actors involved in the Russian troll farm. Going to take back your knee jerk responses?

 

March prelim U Mich consumer sentiment 102.0 vs 99.3 expected
Best U Mich reading since 2004

"All of the gain in the Sentiment Index was among households with incomes in the bottom third"

"While income gains are still anticipated, the March survey found that the size of the expected income increase returned to the lows recorded in the past year"​

http://www.forexlive.com/news/!/march-prelim-u-mich-consumer-sentiment-vs-993-expected-20180316

 

heh - wonder why?

 

Toys 'R' Us primary problem wasn't Amazon, although they were a factor. They were purchased for $6.6B and $5.3B was immediately added to their debt. This left incapable of using any debt to refashion their stores. Some retailers are surviving. Those that are refashioning their customer experience and melding the online experience with their brick and mortar stores.

IHeartRadio just filed for bankruptcy too. The common element? Yes, a bad business model helped accelerate it but the $14B in debt they incurred as part of their $21B buyout left them void of any options in rebuilding their business.

 

What did they do with all that extra debt? Why did anyone extend them that much credit? I assume that people thought that they could sell enough toys to pay off the debts, but obviously that didn't happen.

I'm no marketing or economics expert. I'm just a guy who quit doing "God's Work" in Austin to become a kept man in Europe. However, I have a theory on what kinds of brick and mortar retailers can survive in the modern era, and I think it has merit. If you sell items that people need to handle or see before buying, then you can still thrive in the online world.

Toys aren't one of those items. The Tidmouth Sheds toy I can buy in Toys R Us for $110 is no different from the Tidmouth Sheds toy I can buy online for $89, so why would I go to the hassle of going into the store to buy it?

Groceries are another matter, and that's why these online grocery services aren't going to seriously threaten traditional grocery stores. When I buy apples, limes, avocadoes, artichokes, or tomatoes, I look at and feel every single piece of fruit or vegetable that I buy. When I buy chicken, pork, or steak, I look at each piece of meat. I look at its dimensions, fat content and marbling, etc. Accordingly, I will never buy that stuff online, because I can't get that kind of information from a website. I think most people who buy groceries think the same way.

But there's another angle. If I'm already in the grocery store to buy fresh meats and produce, I'll also buy other items there. I'll buy dry food items, cold food items, and even stuff that has nothing to do with food - cleaning supplies, toilet paper, and perhaps other things. That's where Toys R Us comes back into play.

Suppose a I'm at Globus (comparable to Super Walmart but German) to buy food and beer, but I'm also interested in buying a toy for Deez, Jr. Will I go to the hassle of making a separate trip to Toys R Us? No. I'm going to walk over to the toy section at Globus and look for something, even though Toys R Us is literally right across the street. The point is that it's more than just Amazon that hurts Toys R Us. It's also the so-called "super retailers" (Walmart, Target, etc.) that sell food (which most people will always buy in person) but also use the advantage they have from that to sell other items like toys. There's just a lot less reason to go to an actual toy retailer.

 

That’s why I don’t buy at Toys r us, went to get some puzzles for grandkids and couldn’t believe how much they cost at WalMart so went by Toys r us. When I saw the same puzzle costing more there I went back and purchased at Walmart.

 

And you actually gave Toys R Us a chance. Most customers would have just assumed that Walmart was cheaper and bought the puzzle there along with everything else they were planning to buy.

 

If you're business model is purely to be the low cost retailer as a brick and mortar operation, you are already in a losing position compared to internet retailers. Look no further than Walmart's struggles. That's why the debt was critical. It left Toys 'R' Us inflexible to evolving to the changing market conditions. They lacked the ability to reimagine the customer experience in the store, no capital to meld that in store and online experience. Essentailly, the debt that was put on the company was an anchor that assured its demise.

Retailers that are experiencing success (Costco, Nordstrom, etc.) in this tough retail environment are focused on the customer experience. Heck, as Amazon is moving into brick and mortar they are reinventing the customer experience.

 

I wonder what they did with the money they borrowed. Did they advertise with it? Double down on what they were already doing?

I totally see your point about the customer experience. If they had focused on that, they probably could have come up with ways to get the customer into the store. After all, we're talking about a toy store. Let the kids play with some of the stuff, pass out free candy, and kids will relentlessly nag their parents to take them.

 

From my understanding, the debt was what the PE firm borrowed to pay off existing shareholders when they took it private. So, rather than putting that capital into the company, they burdened the company with debt simply so they had full control.

One might wonder about the banks that lent the PE firms the money. Consider that T R Us has paid interest (@ high rates) on that debt for 11 years.

As far as the experience, did any parent or kid see Toys R Us as "fun"? As a parent it was miserable to go there when my sons were young. They couldn't actually PLAY with anything aside from trying to grab a ball from the ball bin and cause havoc bouncing it then cried when we didn't buy their desired toy. Seriously, have a play area where kids could play with toys. How 'bout an espresso cafe for parents? Buy online return in store? Try in store before you buy? Exclusive toys? There are any number of ideas that all take capital to implement.

 

I’m not sure what my kids were doing when we went there. I was too busy plowing through toys I never got when I was a kid. So yes, I had a fun time.

 

It has been a dizzying couple of weeks
Tough to keep track of what the latest groupthink position is

Who is currently to blame for Hillary losing the election?
-- The Russians?
-- Comey?
-- Cambridge Analytica?
-- White women?
-- The husbands, brothers, sons and bosses of white women?

Sheez -- how do lefties keep track of who they are supposed to be blaming on any given day?

 

Oh it's easy - they just blame everyone except themselves.

 

sorry haters

 

As an investor in real estate who's been enjoying free money, I'm not crazy about interest rate hikes. But with good economic growth, I should be able to jack up my rents to make up for the higher cost of funds. So, I guess it should be a wash.

 

I get it.
But middle America has been suffering from zero wage growth for over a decade. They deserve a break.

 

It has to happen, increasing rates. However, it is likely to kill any economic growth. The effect on the economy will say a lot about the true state of it during the extremely low rate and QE situation we have been in for 9 years.

 

The Admin earlier proposed a 60% reduction in refugee admissions from the Obama-era high of 110,000 (77k avg). But now it looks like these cuts will be deeper -- now looking like a 77% cut (to ~25,000 per year)

One of the more troubling aspects of what Obama did is that the US itself does not get to choose which of these people gets in, rather the UN chooses for us. How crazy is that?

Further, as refugees have poured in, they become a financial burden on local communities with immediate access to welfare and medical help.



See https://www.washingtonexaminer.com/washington-secrets/trump-cutting-obama-era-refugee-admissions-77

 

From my perspective, the effect of the rises on the fin mkts will be more interesting than the effect on the US econ generally.
I dont think even multiple marginal raises will be able to slow this econ.
But we will see.

 

Durable Goods blowout

 

Looks like Trump realizes his base is against this sad budget bill
I hope it's a sign he gets the big picture of what it really is -- an attempt by the DC Swamp to finally create a wedge between he and his core supporters

 

Cruz states his position on the Budget Bill in a tweet storm