What Has Paris Got to Do with What My Lady Buys at Kohl's or Penny's?

While some of us ask whether the oddly proportioned ladies on the fashion runways were genetically engineered, a reader of the Wall Street Journal asks Teri Agins, the Journal's fashion editor, about "How Fashions Trickle Down From Runways to Stores."

Agins tells us, "Runway creations provide many ideas that trickle down to the masses. Alexander McQueen's low-riding 'bumster' pants [see picture by Rex] seemed downright radical in the mid-1990s. But the revolutionary silhouette inspired many interpretations—and gradually morphed into the low-rise jeans that are so ubiquitous in shops today. Of course, not every design has a runway origin; Capris date back to the 1950s but were revived as recently as a decade ago.


"The mainstream market offers a mix of original designs and runway interpretations."

Penny's, J. Crew, and the rest keenly follow the traveling fashion show as it goes from Milan to Paris to New York. They then design for their own customers. Agins writes that stores "have design teams who possess a keen sense of their consumer fans and give them what they want." Consequently, "what's offered in stores doesn't really change very much. Most customers gravitate to familiar styles that work on many body types, tweaked just enough to look new."

One of the cleverest firms is Zara which has honed the art of imitation and design. Its competitive advantage lies in the speed with which it can put trendy designs on the racks and turn over their fashions. Zara is headquartered in Coruña, Spain. It has ridden its design cycle and supply chain management to spectacular growth and profitability for its parent,Inditex.

Inditex earned €1.3bn on sales of €11.1bn over its fiscal year ending January, 2010, up from the prior year's €1.25bn. Retailers typically have fiscal year ends ending in January. This permits a general inventory after Christmas and January "white sales."  Mark Mulligan explained in the Financial Times that "sales rose 7 per cent," not bad in a global recession which hit particularly hard in Europe. Mulligan attributed it to "expansion in Asia [which] helped offset weakness in the domestic market and other faltering European economies. After stripping out currency factors, global revenues rose 9 per cent, the company said."

Benjamin Graham and Commodity Based Money

Vivian reviews World Commodities and World Currencies, by Benjamin Graham (McGraw-Hill, 1944) on the website bufferstock.org . She writes that Graham "wanted [the IMF] to finance international multi-commodity buffer stocks which would be bought and sold automatically; and to monetize what was in these pools to back paper money as gold did in 1944 with a commodity reserve currency.

"Curiously enough, Graham's views - called "groceries first" - garnered support from economists as divergent as von Hayek and Lord Keynes."

Payrolls Are Up, Employment is Up, and the Labor Force Surges Causing a 9.9% Unemployment Rate

BLS released its April jobs report. Unemployment hit 9.9% because the labor force jumped by 805,000 including almost 200,000 re-entrants. Payroll jobs were up 260,000. Private jobs up 231,000 including 44,000 manufacturing jobs.

Although the unemployment rate rose, the household survey showed employment growing faster than population for the fourth straight month.

As for Wichita's unemployment situation, aviation is the core of its economic base. There was no evidence of a rise in aviation jobs in the report motor vehicle manufacturing jobs rose by 4,100 jobs while other transportation equipment employment fell by 4,000.

Correction:  The last sentence should read: "There was no evidence of a rise in aviation jobs in the report: motor vehicle manufacturing jobs rose by 4,100 jobs while other transportation equipment employment fell by 400."

Zuckerman: Investing in an Age of Bubbles

Zuckerman: Investing in an Age of Bubbles WSJ 4/25/2010

Author of the Greatest Trade Ever, Gregory Zuckerman, explains to Simon Constable why he thinks the world of investing has changed and how small investors should be willing to try new tactics to make money.

What Paulson Taught Zuckerman About Investing

What Paulson Taught Zuckerman About Investing WSJ 4/24/2010

Author of the Greatest Trade Ever, Gregory Zuckerman, explains to Simon Constable how small investors can learn from the quirky outsider tactics of John Paulson, the hedge fund manager at the center of the Goldman Sachs subprime trading scandal.

The Economy Hit Bottom, But It Is Still Not Official

June, 2009?

Here at Mammon Among Friends, you have been reading for some time that the recession of 2007-2009 ended last June (i.e., June, 2009.)  The Business Cycle Dating Committee of the National Bureau of Economic Research (the NBER) ducked the issue, although it looks like a consensus agrees with me.  Their caution flows from a fear that we might have a repeat of 1980 and 1982 when we had either back to back recessions or one double dip recession.   The committee's decision was for the former.


I have no doubt we are well into a recovery and that the trough was June 2009.

Robert Gordon agrees: "It is obvious that the recession is over. Real GDP has recovered strongly from a trough in 2009:Q2 and by 2010:Q2 (the current quarter) will have reached (or be very close to) its value reached in the peak NBER quarter of 2007:Q4...The traditional measure of production used by the committee is the Federal Reserve Board Index of Industrial Production (IIP), which reached a well-defined trough in June 2009. For those who object that the IIP refers only to about 15 percent of the economy, the broader monthly measure real manufacturing and trade sales also reached its trough in June 2009. The private firm Macro Advisers has constructed a measure of monthly GDP that is available back to 1992, and this also indicates a cyclical trough in June 2009. While real GDI is flat across 2009:Q2 and 2009:Q3, quarterly real GDP reaches its trough in 2009:Q2, as does the average of quarterly real GDP and real GDI. Thus we have three monthly measures that reach a trough in June, the average of two measures of aggregate economic activity which reach their trough in 2009:Q2, and no clearly defined troughs occurring later than that in any series other than the traditional lagging data on aggregate hours of work and total employment."


Gordon is the senior guy on the committee now that Victor Zarnowitz is dead.   I'm in good company!

Jeffrey Frankel seems to be in the same camp. On April 5th, he blogged, "The recession is over."

What is a Recession?

A recession is a broad, sustained decline in a wide range of economic indicators. The committee has put increasing stress on GDP over the years , although not as much as they did in 1966. Still the monthly indicators are decisive and most of the coincident indicators are measures of private activity: e.g., real retail sales, industrial production, personal income minus transfer payments.


The committee's actual statement was:

"The Business Cycle Dating Committee of the National Bureau of Economic Research met at the organization’s headquarters in Cambridge, Massachusetts, on April 8, 2010. The committee reviewed the most recent data for all indicators relevant to the determination of a possible date of the trough in economic activity marking the end of the recession that began in December 2007. The trough date would identify the end of contraction and the beginning of expansion. Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature. Many indicators are quite preliminary at this time and will be revised in coming months. The committee acts only on the basis of actual indicators and does not rely on forecasts in making its determination of the dates of peaks and troughs in economic activity. The committee did review data relating to the date of the peak, previously determined to have occurred in December 2007, marking the onset of the recent recession. The committee reaffirmed that peak date."

Where Are We At?  Where Are We Going?

We certainly should have a strong recovery given how far the economy fell. The first part of a recovery is when things are at their worst. Places where the housing bubble was the worst will recover more slowly.

My greater concern is that the administration's health care payment "reform" and taxing will create a second recession much like the very severe Roosevelt recession of 1937-8.  That would not be pretty.

Jamie Dimon, the boy from Queens, Mammon Among Friends' 2009 Banker of the Year, and hero of the financial crisis, has taken on Washington.   "Mr. Dimon Goes to Washington" Robin Sidel and Damian Paletta wrote last Wednesday that far from keeping a low profile in our bankerphobic time, "he's spent the past year launching his own campaign to stave off government proposals that would rein in profits, boost consumer protections and impose new fees."

Here is Robin Sidel discussing what they wrote with Kelly Evans and Evan Newmark.

Junk versus Quality

Is it time to shift from the bottom fishing bargains to the solid investments?

How to Buy a Mutual Fund

A mutual fund is an open ended investment company.  Here Jonathan Burton tells us to look beyond just what the fund has done lately when picking which fund to invest in.



You should also carefully examine your own personal financial objectives in light of your own financial consideration.