Post 245

A snapshot of what’s going on in the world’s economy.  Financial Ructions and book reviews can be a bit more technical so feel free to skip them.  See disclaimer at the end of this note.


  • The size of new homes in the US is shrinking.
  • Luxury furniture sales are still falling.
    • But not as much as they were.
  • More evidence that the sales of consumer products companies are slowing.
    • Still going up in price but falling in terms of volume.
  • Tesla car deliveries are falling.
    • Despite, or perhaps explaining, last year’s dramatic price cuts.
  • Meanwhile, Ford’s electric vehicle sales are soaring.
    • But close to 90% of their cars sold are gas.
    • F-150 sales were down.
  • New car inventories in the US look to be back to normal.
    • But Japanese carmakers still have very low inventory levels:
      • Toyota
      • Honda
  • More evidence that consumers are cutting back on discretionary and big-ticket items so that they can still afford to buy essentials.
  • Tommy Hilfiger and Calvin Klein: A bit of history.
    • They’re both owned by the same company.
  • Small businesses in the US employ almost half of the total workers.
    • Business is not great.
  • Inflation in Europe is ticking down.
    • And so are house prices.
  • In Financial Ructions:
    • More evidence of trouble in China’s property market.



According to the National Association of Home Builders (here)

  • The median square footage of a new home is now: 2,191 square feet.
    • Lowest since 2010.
    • 1981: 1,550 square feet

Resuscitation Restoration Hardware

4Q/ 2023 Results

  • Sales: -4.4%
    • PM: They were down over 15% for the whole year so it seems the declines are falling.
      • It could be that as stock markets soar, the wealthy start buying luxury furniture again.
  •  “…we faced the most challenging housing market in three decades…”
    • PM: Worse than the Great Financial Crisis?
  • They had a great quote in their results:


  • PM: As central banks have thwarted the creative destruction process it’s no surprise productivity growth is grinding lower.

From my post of December 2023:

RH, formerly known as Restoration Hardware, is a luxury furniture retailer.

  • Sofas can cost well over $10,000.
  • The retail stores are called “Design Galleries.”
    • They are meant to be “architecturally impressive” and be a “multi-level expression of the RH brand.”
    • One of their most recent Design Galleries is in the UK and it’s a 17th-century 73-acre estate.
    • They’re opening one in the luxury area of Paris.
      • It “will be a six-floor jewel-box connected by a dramatic, ornate scissor stair and a central glass elevator that will whisk you up to the fifth floor and rooftop Champagne & Caviar Bar, where you can take in views of the Eiffel Tower while enjoying our innovative menu featuring the finest Petrossian Caviars.”
      • Or you can slum-it on their second-floor dining room with an “onyx-carved bar, floors, walls and tables.”
    • They also opened a Gallery in Indianapolis which is on a 151-acre estate.
    • They have a “hospitality experience” in 14 of them which includes restaurants and wine bars.
    • We’ve been in the one in West Palm Beach and the food was really good.
      • We didn’t buy anything.
    • Their goal is to move beyond just selling high-end furniture to build an “ecosystem of Products, Places, Services and Spaces that establishes the RH brand as a global thought leader, taste and place maker.”
    • They are opening RH Guest Houses offering “privacy and luxury in the $200 billion North American hotel industry.”
    • In addition, they are launching RH Residences: “fully furnished luxury homes, condominiums and apartments.”
    • They have two luxury private jets: RH1 and RH2
    • And one luxury yacht, RH3, that can be chartered.

They say that “For the past 23 years we’ve heard others tell us what can’t be done, and for the past 23 years we’ve failed…to listen.”

  • I like it.  And while there’s a risk they may be biting off more than they can chew they certainly know what they stand for in terms of luxury.

Latest 3-month results:

  • Adjusted sales down 13.6%.
  • Adjusted operating margin (operating profit as a percentage of sales);
    • 3Q/2022: 20.8%
    • 3Q/2023: 7.3%
  • Slow home sales have impacted sales of new furniture.
    • They expect this situation to continue until “interest rates and/or home prices fall meaningfully.”
    • They also said that the home furnishings market is increasingly promotional i.e. bigger discounts (I hope my wife Cynne doesn’t read this post).

My post from September 2022

  • Restoration Hardware CEO said that “People keep saying, are we going to be in a recession?  We’re in a recession.  Anybody who thinks we’re not in a recession is crazy.”

My post from July 2022

  • Restoration Hardware expects sales to fall 2-5% due to a fall in luxury home sales caused by rising mortgage rates.

It’s A Ball

Ball Corporation is based in Colorado and is the largest beverage can producer in the world.

  • Really cool video ‘here’ of how aluminum cans are produced.
    • An incredible number of steps to produce one can.
      • But worth it once you get the beer in there.

4Q/2023 Results

Total sales: -4.1%

  • North and Central America: -8.7%
    • Impacted by the Bud Light boycott.
    • Or as they call it “a major brand disruption.”
  • Europe, Middle East, Africa: -1.2%
  • South America: 0%

Shipments of cans for the full year were down 3.3%.

  • But flat excluding Russia and the Bud Light boycott.         


Car deliveries by quarter:

  • 1Q/2023: 422,875
  • 2Q/2023: 466,140
  • 3Q/2023: 435,059
  • 4Q/2023: 484,507
  • 1Q/2024: 389,810
    • Down 7.8% from last year.

PM: As a reminder, here is how the prices of Tesla’s were trending last year (from my post in January):

Prices of Tesla Model S and X Prices

DateModel SModel X
Start of the year$104,990$120,990
January 12$94,990$109,990
March 5$89,990$99,990
April 6$84,990$94,990
April 20$87,490$97,490
May 11$88,490$98,490
August 14$78,490$88,490
Sep 1$74,990$79,990
Percent change from start of yearDown 29%Down 34%


4Q/2023 Sales

The Ford Maverick is the best-selling hybrid truck in the US:

  • 19,660 trucks over the last three months.
    • Up 77% vs. last year.

The F150 is the country’s best-selling truck and had sales of 152,943.

  • PM: They didn’t mention the percentage change and you should always be wary when they’re telling you all of the “large” percentage gains for their other vehicles, but all of a sudden leave one out.
    • Last year at this time they sold 170,377
    • So, F150 sales were down 10.2%.

Total vehicles sold: 508,083

  • Up 6.8%
  • Sales of electric (+86%) and hybrid (42%) vehicles are growing much faster than gas (2.6%).
  • But the vast majority of sales are still gas.
    • Breakdown of vehicles sold by propulsion:
      • Electric: 4.0%
      • Hybrid: 7.6%
      • Internal Combustion (gas): 88.5%
  • And the only category that grew for Ford was SUVs:
    • SUV’s: +16.8%
      • Lincoln SUVs: +31.5%
      • PM: What’s going on here?
    • Trucks: -0.6%
    • Cars: -7.0%

PM: Maybe with gas prices rising again that will change.

New Car Inventory

According to Cox Automotive

Total inventory of new cars:

  • 2022: 1.80 million.
  • 2023: 2.74 million.
    • Up 52%

The average number of days of inventory (how long it takes for a dealer to sell the cars on the lot or on order): 76.

  • According to Kelly Blue Book, the industry guideline for the number of days of industry is:
    • On the lot: 60
    • On order/in transit: 15
    • Total: 75

So, from an inventory perspective it looks like things are back to normal.

  • Shortest:
    • Toyota: 36
    • Honda: 48
  • Longest:
    • Lincoln: 133
    • Genesis: 132

Car Sales in the US (FRED)

Annual number of new cars sold:

  • Feb 2020: 17.0 million
  • Sep 2021: 12.7 million
  • Feb 2024: 16.3 million

PM: Things almost back to normal.

  • Except for the prices of course.
  • According to FRED, new car prices are up 21% since pre-COVID.

Tractor Supply

Tractor Supply is a US retailer that started in 1938 and caters to the rural lifestyle:

  • Recreation farmers
  • Ranchers.
  • Gardeners
  • Pet owners
  • Etc.

They have over 2,200 stores across the US.

4Q/2023 Results:

  • Comparable store sales: -4.2%
    • Number of transactions: -2.7%
    • Average ticket (amount spent): -1.5%
      • $60.48
  • Sales were strong in consumables.
  • But were weak in discretionary and big-ticket items.

Comparable sales for the full year:

  • 2022: +6.3%
  • 2023: 0%

Fashion Retail

PVH Corp. used to be known as Phillips-Van Heusen

  • They own the brands:
    • Tommy Hilfiger
      • 1971: Thomas Hilfiger started a jeans store called People’s Place in Elmira in upstate New York.
        • Elmira had a Civil War prisoner of war camp.
          • Known by its inmates as Hellmira.
            • A quarter of the prisoners died.
              • The site is now a Chuck E Cheese (kidding).
      • 1977: People’s Place went bankrupt.
      • 1979: Set up a company called Tommy Hill:
        • Jordache Jeans was a client.
        • PM: So many, or perhaps most successful entrepreneurs first fail before they succeed.
        • But key is that they didn’t give up.
          • And they have a passion for what it is they’re doing.
          • When someone finally makes it and “bursts” onto the scene, people don’t see the years of investment of time, effort, capital and failure along the way.
            • And then picking themselves up and trying again.
          • I like that old saying that so and so was a 20-year overnight success.
          • I guess when Thomas Hilfiger first failed people were still confident that Hilfiger it out.
      • 1985: Founded Tommy Hilfiger.
      • 2005: Thomas Hilfiger sold the company for $1.6 billion.
      • 2010: Bought by Phillips-Van Heusen
    • Calvin Klein
      • 1968: Founded in New York City by Calvin Klein and Barry Schwartz.
        • First made coats and dresses.
      • 1977: Calvin Klein’s daughter was kidnapped.
        • He paid a $100,000 ransom for her return.
        • The daughter’s babysitter and friends were later arrested.
        • Talk about Adventures in Babysitting (great movie btw).
      • 1980: 15-year old Brooke Shields features in ads for Calvin Klein jeans.
      • 1983: Calvin Klein had to come out and deny rumours that he had AIDS.
        • He said that “I understand why I may be a target.  I’m young, I’m successful, I’m not so bad looking and I enjoy living life in the fast lane.”
        • They ran an ad in 1992 with the slogan “The best protection against AIDS is to keep your Calvins on.”
          • PM: It was a different world back then.
        • 2003: Sold the business to Phillips-Van Heusen (men’s shirts) for an estimated $700 million.

PVH Corp 4Q/2023 Results:

  • Adjusted sales: -1%.
    • Selling Direct To Consumers: +9%
    • Wholesale (selling to other retailers): -9%
  • Tommy Hilfiger: -1%
    • North America: +4%
  • Calvin Klein: +3%
    • North America: -8%
      • PM: Sales in deKlein.
  • Adjusted sales for the coming year are expected to fall 3-4%.

Independent Businesses

National Federation of Independent Businesses Index report.

  • It has been below average for over two years.
  • The average interest rate on small business loans:
    • Was 4%
    • Now 8.7%
  • And their index for small business optimism is the lowest in 50 years.
  • From their commentary:
    • “Although the economy has not tanked, the edges are starting to fray.”
  • Note that small businesses employ 46% of US workers (Forbes)

Eurozone Inflation ‘here

  • Feb: 2.6%
  • Mar: 2.4%
    • Services: +4.0%
      • It has been exactly 4.0% for 5 months in a row??

Eurozone House Prices

Euro Area (20 countries using the Euro) House Prices

  • 3Q/2023: -2.2%
  • 4Q/2023: -1.1%
    • Germany: -7.7%
    • Finland: -4.4%

Germany Inflation

From the Federal Statistic Office

  • Feb: 2.7%
  • Mar: 2.2%
    • Services: +3.7%
    • Goods: +1.0%
      • Energy: -2.7%
      • Food prices: -0.7%

Core inflation excluding food and energy:

  • Feb: 3.4%
  • Mar: 3.3%

Financial Ructions

Note: ‘Financial Ructions’ is optional-to-read for those who are interested in taking a bit of a deeper dive…

According to ET

A number of Chinese property firms had their shares suspended in Hong Kong:

  • Country Garden
    • They have delayed filing their 2023 results.
    • The real estate market volatility is making it difficult to “make appropriate accounting estimates and judgements.”
  • Modern Land
  • Central China Management
  • Ronshine China

Disclaimer: Note that Paulitical Economy™ should not be considered as investment advice, and I have not verified all of the sources of information.  It is meant for general interest purposes only.  Please consult an advisor if you plan on putting any of your hard-earned capital to work during these turbulent times.

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