Bear Case Scenario Auto Insurers $GOOG, $ALL, $AIG, $IAK, $AXAHY, $AZSEY, $AZSEV

Google has just unveiled a driverless car. Computer chips and sensors but no steering wheel. Sounds great. Good for environment. Bad for insurance companies. Insurance is a function of individual behaviour. Your driving record establishes your risk premium. Drivers must have insurance. Lawyers love insurance and the litigation industry it feeds.

Driverless cars sidestep the liability issue. Controlled in such a way to avoid accidents the good record vs bad record becomes irrelevant. Insurance becomes unnecessary. Insurance companies become unnecessary.

The American consumer is the big winner. Imagine household budgets without the burden of car insurance premiums. Better than a tax cut. this will be a long term stimulus which should lift most consumer boats in the US economy. Big savings for many businesses large and small.

How can I make your life better. eliminate my car insurance premiums and now I can spend more money on other goods and services or carry a larger mortgage on a better home.

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario for toll Brothers $TOLL, $PHM, $DHI, $LEN, $SKHSY

Toll Brothers is about to release earnings. Ponder this Bear Case Scenario:

Real Estate development is interest rate sensitive and subject to mortgage availability. These two factors are not aces up your sleeve.

Housing sales are still a struggle. Consumers prefer to rent. Nothing is stimulating demand. Drops in unemployment are not translating into housing sales.

The best locations have already been bought and they are not making anymore. Suburban tract development may not be the way of the future.

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario for Bank of Nova Scotia $BNS, $BMO, $TD, $RY, $CM, $XLF, $C, $JPM, $BAC, $WFC

Bank of Nova Scotia is about to release earnings. Many American Investor believe Canadian Banks are set up for large real estate and mortgage defaults. Ponder this Bear Case Scenario

Net Interest rate position continues to be under pressure in a low interest rate environment.

High growth international activities earn smaller margins than less risky domestic operations. Incremental growth will be financially disappointing.

The past ten years have been very good to Canadian banks. The next ten years will most likely not be the same.

While there is a significant exposure to mortgages the Canadian government has underwritten much of the credit risk. Canada is “AAA”

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario Bank of Montreal $BMO, $RY, $CM, $BNS, $TD, $XLF, $C, $BAC, $JPM, $WFC

Bank of Montreal is about to release earnings. Some American investors are convinced Canadian banks are over exposed to real estate and mortgages. Ponder this Bear Case Scenario.

Much of BMO growth comes from outside the highly regulated highly protected Canadian banking scene. BMO executives are not used to the bare knuckle capitalist approach followed in the US.

US acquisitions will distract management as they grapple with new issues. Will they pay enough attention to domestic issues.

All Canadian banks have large mortgage exposures. The sub prime phenomenon experienced in the US is not a factor. Much of the mortgage product is underwritten by the Canadian Government which is “AAA”

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario Michael Kors $KORS, $COH, $LVMUY, $CHRUY

Michael Kors is about to release earnings. Ponder the Bear Case Scenario

Fashion is a cut throat blood sport. Things can change on a dime. Things do change on a dime. In short the business beta is stratospheric.

A nascent bio tech or high-tech for the same risk can create millionaires over night. Michael Kors is involved in daily do or die struggles. For now it is winning but where are the returns. You are better off ignoring the stock and just buying their branded product.

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario for AutoZone $AZN, $AMZN, $EBAY, $GPC, $ORLY

AutoZone is about to release earnings. Ponder the Bear Case Scenario

Competing specialty retailers have dramatically increased stores and square footage and have eroded AutoZone’s competitive advantage.

AutoZone and competitors are in a storefront expansion mode. This will probably create an over supply and force later contractions and rationalizations.

AutoZone is being paid the ultimate compliment they are being copy catted big time. Customer does not care he will go where the best deal is.

AutoZone needs to come up with something new and different. Their advantages are eroding.

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario for National Bank of Canada $NA, $C, $XLF, $TD, $RY

National Bank of Canada is about to release earnings. Some American investors are concerned about real estate and mortgage exposure by Canadian Banks. Ponder this Bear Case Scenario.

National Bank Capital is the smallest of the big six in Canada. they have the smallest cushion to deal with problems.

Canadian consumers are fairly maxed out with consumer debt, car loans, plastic, lines of credit and other tools of enslavement. There are serious limitations to growth in the consumer portfolio which National Bank has relied on.

Low interest rate environment keeps margins down. as long as interest rates stay low National Bank will not be hitting home runs.

While National Bank has a real estate and mortgage exposure; most mortgages are underwritten by the Canadian Government which has a “AAA” rating. This is not where the problem will be.

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario Gap $GPS, $XRT, $TJX, $LUX, $IDEXY, $FRCOF

Gap Stores is about to release earnings. Ponder the Bear Case Scenario:

Retailing is a difficult blood sport which often has the characteristics of a street brawl with knife fighting. Gap is in the middle of all this.

Gap had a huge advantage in style but its niche has been picked away at. Gap has not picked away at someone else’s niche. So no counter-attack or blocking move.

Commodity prices and inflation are subject to inflation. Retail pricing is increase resistant. Train wreck waiting to happen.

Gap products are too easily copied in all their attributes.

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario Sears $SHLD, $M, $XRT, $COST, $DLTR, $RTH, $WMT, $TGT

Sears is about to release earnings. Ponder this Bear Case Scenario:

Retail at best is a blood sport. Maybe knife fight is a better descriptor. Margins are competitive. you have to buy right and then sell like crazy to get rid of the wrong stock.

Sears used to be Middle America. The middle class is disappearing. Wal-Mart has the lower regions fairly well covered.

Sears quality is not the solid middle ground. They have gone down. Once you get used to quality you find it hard to give up. Quality gets great margins. Sear does not get great margins. Hence the perpetual death spiral.

Sears is retreating from Canada which has money for decent retail.

Sears major problem is the hedge fund guy who bought them because it was going to be an easy fix. This fellow who probably wears bespoke suits and has tailors report to his office for fittings in between board meetings does not understand retail or restructuring.

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario Best Buy $BBY, $SHLD, $M, $COST, $JCP, $XRT, $RTH, $PMR, $RETV

Best Buy is about to release earnings results. Ponder the Bear Case Scenario:

Entertainment software such as games and movies is rapidly declining. Best Buy has way too much floor space selling you DVD’s at full price which Netflix will have for you soon.

The product mix remains bizarre. I can get an espresso maker, a smart phone, a big ass TV, a bag of chips and a soda all in the same place. I just don’t think so.

Other retailers are picking off Best Buy sweet spots. Best Buy is not picking off someone else’s or coming up with something new.

Consumer electronics is a blood sport with rapidly declining margins. It’s always about what’s new what’s next.

Best Buy so far is not what’s next.

George Gutowski writes from a caveat emptor perspective.