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.

Bear Case Scenario Interest Rates $BOND, $XLF, $BND, $AGG, $BSV, $VXX, $SPX, $SPY

Russia will now sell nat gas to China. China should pay with hard foreign currency. USD, Euros and even maybe Gold.

China has long been satisfied with huge reserves of foreign currency yielding microscopic yields. Some of this hard currency will now flow to Russia which basically must import goods and services and spend money they cannot otherwise generate.

So China reduces foreign exchange reserves or at least reduces their rate of growth. Russia the bad boy du jour spends money and recycles into western economies for consumption purposes which will help boast demand. Money circulation increases, factories and other forms of production increase activity.

The pressure for rates going up decreases.

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario for Oil and Gas $OIL, $GAZ, $XOM, $VIX, $RSX, $COP, $CEO, $FXI, $PEK, $ERUS

Russia signs a deal to sell its Gas to China. Surprise. The Chinese were ready to sign before the first commando pushed off for the Crimea.  So here are a few strategic considerations.

Europe’s best bet is to wean itself off of Russian Oil and Gas otherwise it will always be negotiating with a financial bully with the morals of a depraved drug dealer.

Depending on the volume of this pipeline Putin and Moscow will not care what Europe does. China will most likely pay in hard western currency.

Moscow will no longer be interested in supplying the international market and will be increasingly viewed as an unreliable supplier with the morals of a street-walker.

But what will happen is that enormous demand will be spoken for. China’s appetite will be partially satiated and the international market does not have the opportunity to bid the price up to meet China’s addictions.

So by removing a piece of insanity do we stabilize in part energy pricing on a global basis.

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario Swiss Banks $XLF, $CS, $BCS, $UBS, $C, $JPM, $BAC, $WFC, $TD, $RY

Swiss Banks seem to be guilty of what the world knew they have done for generations. Secrecy, tax evasion, money laundering are the big three. Go figure. The Obama administration which is not a friend of Wall Street or the Banking System has been on a mission. The scalps seem to be piling up. Fines in the Billions which may help to balance the Federal budget for a day or two.

It took a long time but the message to tax evaders is we will get you. The most important part of the settlements is not the headline grabbing fines or the guilty plea. It’s the turn. Banks are turning on their clients and giving up names by the thousands. customers are freaked that the data has been breached and now Uncle Sam has proof beyond a shadow of a doubt.

The US of A is probably the only major power that has gone after the Swiss. Other countries will follow suit. Maybe they will also hire lots of American regulators to show them how. In the meantime American’s who play close to the line or maybe do not know where the line is will stay away from Switzerland and probably go to other less stable or well established jurisdictions.

Quite frankly this means a drop in revenues and profits and everything else that goes along with private Swiss Banking. hence the Bear Case Scenario for the Swiss.

George Gutowski writes from a caveat emptor perspective.

Home Depot Bear Case Scenario $HD, $LOW, $FMCC, $FNMA, $XLF

Home Depot is about to release earnings. Ponder the Bear Case Scenario and come to a conclusion:

Home Depot is perched precariously atop the residential real estate market in the US. Particularly the single family home owner. Not a very good strategic position.

Totally vulnerable to interest rates swings. Next major swing is up. Drop in incomes because of unemployment and the vagaries of mortgage lending.

Slower store growth will retard long-term growth. So maybe they have hit some upper limits.

Supply chain, IT and logistics changes are high risk. Problems in these areas spread like a cancer and infect everything else. no one has ever implemented flawlessly.

George Gutowski writes from a caveat emptor perspective.