Morning Report Thursday 22 May 2014
Tiffany’s show us the difference between getting it right and wrong!
Last night, Tiffany & Co. rallied over 9% to all-time highs on excellent quarterly profits. This supports the Feds view that the US economy is gradually improving yet US interest rates are still trending lower / flat implying a weakening economy as a divergence of opinions continue.
Firstly, after a strong move up in US equities last night I am leaning towards slight new highs (+4%) in the NASDAQ prior to a +10% correction, but overall this is not yet changing my strategy for coming weeks / months – see chart 1.
As mentioned above, Tiffany is currently “nailing” the Chinese increase in discretionary spend as shoppers love following Western trends e.g. cars, fashion and specifically jewellery. This was incredibly clear when I visited China last November where I witnessed people happy to pay a massive premium for European cars as a status symbol. This trend is following onto diamond engagement rings, a new trend for the shopaholic Chinese. A few opportunities may arise domestically for smart companies as China westernisation continues.
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