I Guess It isn't that Bad, is it?

I Guess It isn’t that Bad, is it?

By TheWild1 at 29 May, 2008, 12:01 am, Categories : Financial Markets

Ralph Lauren

It is somewhat of an interesting conundrum. At last check we were suppose to be in some sort of a recession, right? Yet in a time when houses everywhere are in foreclosure, people are tangled in something called subprime, and old folks everywhere are having difficult times landing a job.

It seems like people just can’t or don’t have to give up their high end apparel.

If you don’t already know what I am talking about, today clothing brands like American Eagle (AEO) and Ralph Lauren (RL) surpassed the “high” expectations of the crack Wall Street analysts to spark a rally in the apparel family; however, is there really anything that we can conclude from this?

Yes, about 60 MILLION different things:

The upper middle class is perhaps the one sector not hit the hardest.

It might sound funny, but could there be some factual evidence for this? On the same day when many upper end retail stores beat expectations, companies that target the even higher classes seemed to shatter to a new 52 week low, such as Brunswick Corp (BC). What does this all mean?

I am sure you have heard the term that the gap between the middle class and lower class are drastically diverging, but what about these upper class civilians who are now falling into the middle class because of their failed investments?

Now lets be honest here. People will always buy clothes and that can’t be said for boats or pool tables; however, people can choose the price level of clothes they want to buy. According to the earnings, consumers are not worried about cutting back on nice clothes.

If finances are supposed to be so bad, then why are we not seeing companies like JCPenny’s (JCP) surpassing estimates or at least matching them?

The analyst pulled some number out of their backsides and prepared for the worst.

Common sense would say when consumers are low on cash, they will try to save and cutback on the more luxury items. That if so many people are in true financial blunder, then that should mean an increase of sales for stores like JCPenny’s or (Sears??? - SHLD). Thus, higher sales should mean high expectations, and when that doesn’t happen then you know the rest.

It doesn’t mean anything. The apparal gods felt like having a good day and tomorrow we will see a massive sell off in the sector.

Whatever that real story is. There are just too many different contributing factors that yellsfor me to stay away and you should too, unless you feel lucky. Well, do ya?

What interesting theory would you conclude for this “phenomenon?”

That is whats so great about the stock market. There are bountiful amount of ideas, theories, or factors that keep buyers and sellers alive in any market. Its just a matter of choosing the right side at the right time…

image source - iofferphoto.com

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