2023 Week 17

Notes, thoughts and observations - Compiled weekly

A couple of surprises this week. Primarily the better-than-expected corporate earnings reports which seem to point toward a realistic soft landing. What that looks like remains to be seen, but positive news is balanced against an all too expected bankruptcy by Bed Bath & Beyond and overall long-term anemia of the automotive industry.

US Auto industry, really not that healthy

TOPICS

Real Estate

OPINION - Tip of the iceberg for commercial real estate

(Charlotte Ledger)
- Office tower owner relinquishes it to lender: The First Citizens Bank Plaza uptown is being turned over to its lender by owner The Delwig Cos., after WeWork defaulted on its lease. The 23-story tower is 42% full, and Delwig owes $120M on a loan after buying the building for $79M in 2017. (Biz Journal, subscriber-only)

Automotive

OPINION - US Auto industry, really not that healthy

(DiMartinoBooth)
- Very BALANCED & well written. This is not a cheerleader article in favor of any one OEM but rather a rebuke to greed that’s made OEMs enemies of US workers.

Stock Market

OPINION - Investors betting on a soft landing or a short, mild recession

(Over My Shoulder)
- Ed Yardeni: An Upbeat Earnings Indicator
  - Analysts are growing more optimistic about corporate earnings, despite economic fears, bank failures and Federal Reserve tightening.
- Yardeni tracks the percentage of S&P 500 companies with positive three-month change in consensus forward earnings estimates.
- This figure tends to fluctuate around 80% during economic expansions, then drop toward 50% in recessions.
- Bottom Line: This data is a good reminder the economy and markets don’t necessarily rise and fall together.

Corporate Debt

OPINION - Exactly no one surprised by this, signals more trouble for retail

(CNN)
- Bed Bath & Beyond plans to liquidate all inventory and go out of business
- $5.2 billion in debt and assets of just $4.4 billion.
- It secured $240 million in financing Sunday to stay afloat just long enough to close its stores and wind down its operations.
- “We missed the boat on the internet,” Eisenberg said in a recent Wall Street Journal interview. (The co-founders are no longer involved with the company.)
  - Walmart (WMT), Target (TGT) and Costco (COST) have grown over the past decade, and they have been able to draw Bed Bath & Beyond customers with lower prices and a wider array of merchandise.
  - Without the differentiators of the lowest prices or widest selection, Bed Bath & Beyond’s sales stagnated from 2012 to 2019.
  - Then the pandemic hit in 2020. The company temporarily closed all of its stores while rivals deemed “essential retailers” like Walmart remained open. Sales sank 17% in 2020 and 15% in 2021.