Here is a fascinating email from a King World News reader, plus another sign economic danger is ahead.
Email From A Retired Pensioner
October 24 (King World News) – Email from a King World News reader Jonathan Lewis:
Dear Eric King,
Greetings from Portishead, near Bristol, England. I particularly enjoy your regular interviews with Alasdair Macleod, who has a lovely “received pronunciation” English accent, but, because of his name, I suspect that he (like myself) is at least part Highland Scots.
I have a little anecdote which may be of interest to Alasdair Macleod, and I wondered if you might put it to him for comment in a forthcoming interview?
I’m a retired pensioner and both my grandfathers were born around 1890. When they were both young men before WW1, a pound note bore the legend “I promise to pay the bearer on demand the sum of one pound”. This meant that a one pound note could be presented at a bank and exchanged for a one sovereign coin containing 0.238 troy ounces of gold. This in turn, meant that in 1914, before the outbreak of WW1. that one pound sterling had a value of £4.20, or in those days, four pounds and four shillings.
This week, the spot price of gold breached £2100 per troy ounce. The current GB pound is worth one-five-hundredth, in terms of gold, of what it was 110 years ago. To confirm my arithmetic, a gold sovereign coin, still containing 0.238 troy ounces of gold, will now cost just over 500 GB pounds.
To my mind, it’s a reflection of the horrific waste, both of blood and treasure, represented by not just wars, but most Government interventions.
Keep up the good work!
Jonathan Lewis
Luxury Spending Weakens As Wealthy Tighten Spending
Gerald Celente: On 16 October, LVMH, the world’s largest luxury conglomerate, reported third-quarter sales fell 3 percent below last year’s during the same period, landing at €19.08 billion. The news sucked 4 percent out of its share price.
The figure was a wide miss from analysts’ average expectation of 0.9-percent growth.
Revenue was down 5 percent in the company’s fashion and leather division, which includes Louis Vuitton and Christian Dior. Dior faced a recent investigation into its Italian supply line. The division, widely seen as the industry’s bellwether, has not posted a contraction since 2020.
Among LVMH’s nearly 100 brands across industries from hotels to perfumes, Vuitton and Dior are the biggest contributors to profits, the Financial Times reported, and account for 65 percent of the conglomerate’s pre-tax earnings, according to HSBC.
Japan’s stronger yen also cut into the company’s revenues when currencies were converted.
However, the story of the luxury industry’s lean times remains in China. It had grown from 1 percent of the world’s luxury shoppers in 2000 to a third in recent times.
Now China’s indulgent shoppers have put away their American Express cards.
The reason: China’s economy has failed to recover from its anti-COVID lockdowns.
On top of that, developers overbuilt the country’s supply of houses, pushing home values down.
That has drained an average of $60,000 from the equity in the typical Chinese family’s home, analysts estimate. Because a home is the overwhelming source of a family’s wealth, China’s consumers are now saving to replace their lost equity instead of spending.
Making matters worse, Beijing has just imposed a tariff on European brandies and cognacs. LVMH’s Hennessy cognacs have been accounting for 20 percent of its sales in China.
Affluent Chinese are not the only ones tightening their Gucci belts.
Luxury spending in the U.S. was off 6 percent in August, year on year. European luxury spending has been steadily declining from its early 2023 peak.
Together, China, Europe, and the U.S. make up about 70 percent of the luxury industry’s market.
The industry has contributed to its current weakness by jacking up retail prices an average of 50 percent since 2019, according to an estimate by British bank HSBC, with Dior’s tag price rocketing up 60 percent.
LVMH’s diversity of brands has made it one of the most stable companies in its industry. Its weakness presages a similar result when Burberry and Kering report their results, The Wall Street Journal noted. Both are in the midst of makeovers to revive falling sales.
Kering, owner of Balenciaga and Gucci and a dozen other upmarket brands, has seen its share price plunge 40 percent this year. Third-quarter sales of Gucci, its financial anchor, are projected to be down 23 percent, year on year, in the last quarter.
TREND FORECAST:
As we have said, the fish rots from the head down. Thus, the luxury market is signaling the economic danger ahead.
The fact that luxury sales are continuing to fall indicates that the economy in China is months from turning around, at least. The U.S. is recovering reasonably well but Europe and the U.K. are still perilously close to recession.
Therefore, the luxury market will remain hobbled at least through the first half of 2025 and probably longer.
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First Time Monthly MACD Buy Signal In Almost 6 Years!
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Take Action Immediately!
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