THE MORNING RANT: Buck Shots - Business & Economy Edition (03/11/2024)

The stock of mega-woke corporation Target is rising, and it is a Wall Street darling right now for pulling off the seemingly impossible - its same store sales are plummeting, yet it is posting spectacular profits with strong gross margins.

“Target shares pop more than 12% as retailer boosts profits, despite lackluster sales forecast” [CNBC – 3/05/2024]

Target’s net income for the three-month period rose by nearly 58% to $1.38 billion, or $2.98 per share, from $876 million, or $1.89 per share in the year-ago quarter. That was significantly higher than Target’s forecast range of between $1.90 and $2.60 per share.

Its margins also were healthier compared with a year ago. Its fourth-quarter operating income margin rate was 5.8% compared with 3.7% in the year-ago quarter…

Without going all green-eye-shade, there are a few simple truths that are in play:

1) If revenue is declining but the gross margin (profit per unit sold) is increasing, there are many fewer units of merchandise being sold than there used to be.

2) Accounting wizardry, timing of expense recognition, and cost-cutting gimmicks might show a short-term growth in profit, but that is not sustainable in the face of declining revenue.

Even so, Target’s comparable sales declined for the third quarter in a row. The key metric, which includes digital sales and takes out the impact of store openings, closures and renovations, fell 4.4% in the fiscal fourth quarter…

A 4.4% revenue decline is even worse when you factor in the impact of inflation, since all things being equal, the same basket of goods would result in increased spending year over year. Those consumers repulsed by Target’s vulgar products for children are clearly still refusing to spend their money at Target. By contrast, Wal-Mart’s same store sales are up 4%.

My wish for Target is that it maintains its ongoing journey of declining revenue, and that its MBAs and accountants stay busy conjuring up clever new ways to show book profit growth.

Comical Revisions to Government Jobs Reports

I don’t know if there is anything that is so openly fraudulent – yet somehow taken seriously – than the Department of Labor’s monthly jobs report. Pro wrestling is more honest than the phony numbers published by our government. But media and Wall Street still continue to believe that the latest jobs report will be honest despite prior months’ reports constantly being revised for their initial overstatement of jobs created.

In the most recent jobs report for February 2024, there was triumphant news of blowout job creation! 275,000 jobs were created which “smashed consensus forecasts” of just 200,000 new jobs, showing just how strong the labor market and economy is. This number is going to be revised downward in a month or two. Those 75,000 extra jobs will retroactively evaporate.

In this same jobs report, the December and January job creations numbers were retroactively revised downward by a combined 167,000 jobs.

“Takeaways from the February jobs report” [The Hill – 3/08/2024]

Nonfarm payrolls for December were revised down to 290,000 from 333,000, and January payrolls were revised down to 229,000 from a surprising 353,000, the Labor Department reported Friday. The total revisions for those months resulted in 167,000 fewer jobs than previously reported.

Our government’s fabrications are not a problem, they’re policy. Yet their next economic lie will be treated as factual by our elites, because the Labor Department’s fabrications serve the elites’ financial and political interests.

”Free Enterprise”: Using Government to Cripple Your Competition

You’ve probably heard by now how California Gov. Gavin Newsom exempted Panera Bread from California’s new fast food minimum wage law – and what a coincidence – the Panera franchise owner in California (Greg Flynn) is a friend and supporter of Gov. Newsom’s political campaigns. Our own co-blogger K.T. has been all over the story, since she is on the ground in California reporting on life under Newsom’s arrogant rule, but I’d like to chime in too.

Here is a quick overview of the story:

“Panera Bread exempt from California’s $20 minimum wage law after owner donated to Gov. Newsom” [NY Post – 02/28/2024]

California Gov. Gavin Newsom signed a law that exempts Panera Bread from a new $20-an-hour minimum wage hike for fast food chains after the billionaire owner of several of the chain’s locations donated to his campaign, according to a report.

Panera wasn’t exempted by name, rather the legislation created a strange carve-out that exempted “chains that bake bread and sell it as a standalone item.”

Newsom reportedly sought the exemption, which benefits among others Greg Flynn, the billionaire CEO of Flynn Restaurant Group, the company that owns some two dozen Panera Bread locations in the state.

California Gov. Gavin Newsom pushed for a “bread exemption” to his new law raising the minimum wage for fast food workers to $20 an hour.

Flynn, who attended the same high school as Newsom, has been involved in business dealings with the California governor, according to Bloomberg News.

Greg Flynn has denied having a specific role in crafting the bread exception. Of course he denies it, because he didn’t have to specifically ask for it. That’s not how the corrupt business-political nexus works. Flynn knows he can count on Newsom to carry water for him, just like Newsom knows he can count on Flynn to continue his various forms of campaign support. But Flynn’s people might have reached out to remind Newsom’s people of their special relationship…

Flynn quietly lobbied Newsom’s aides to reconsider whether Panera Bread can be considered fast food, according to Bloomberg News.

“Capitalists” like Greg Flynn who use the power of government to cripple their competition make me ill. I’ve read that he is now promising not to take advantage of this special “Panera law” because of the intense criticism it has generated. Sorry, but I still give him no credit. The time to do the right thing isn’t when your scheme gets exposed. The time to do the right thing was when your powerful political friend was creating beneficial loopholes that hurt the competition.

McDonalds should add the “McBreadLoaf” to its value menu to get itself the same exemption that Newsom carved out for Greg Flynn and Panera.

A Fast Food Education

Speaking of fast food employment. This tweet below was flying all over the internet a few weeks ago, with the left outraged at seeing a young teenage boy celebrating his part-time gig at Burger King.

Rob Province had the best response: ”You’re gonna work for that kid.”

If I were given the choice of hiring either this young man who worked part-time at Burger King while going to school, or hiring an Ivy Leaguer with a resume loaded with faux-community service and prestigious internships - but no real-world job experience - I would hire the Burger King kid in a heartbeat.

Home Renovations Are Banned in Beverly Hills

“Judge halts home upgrades in Beverly Hills over city's lack of affordable housing” [KABC – 01/18/2024]

A Los Angeles County Superior Court ruling has found that the city of Beverly Hills cannot issue new construction permits because it is not following state laws requiring it to plan for affordable housing.

Judge Curtis Kin's ruling still allows Beverly Hills to move forward with any new residential developments, but prohibits the city from issuing permits for residential renovations, commercial developments or any other construction projects.

Rich California leftists provide the funding for the communists who are now targeting rich California leftists.

That’s a shame. Anyway…

Soaring Insurance Premiums

I mentioned earlier the phony jobs reports that our government issues. I wonder if the government’s phony inflation reports include the cost of auto and home insurance. Unless you don’t own a car or a house, you’ve probably experienced sticker shock over the past year or two whenever you receive notification of your insurance premium renewal. Premiums have been rising about 20% per year, with no slowdown in sight.

“How High Could Home Insurance Rates Jump This Year?” [Money - 03/01/2024]

While the rate of inflation in home insurance prices is expected to slow down this year, Stuart Winchester, founder and CEO of Marble, says he’s counseling customers to still expect 10% to 15% hikes.

Because journalism is so awful now, it’s hard to find actual reporting about the increase in insurance premiums that doesn’t reflexively blame “climate” disasters. The problem is actually related more to surging replacement and repair costs rather than due to natural disasters. Cars have become much more expensive, with minor fender benders now involving complex electronics and sensors rather than being about pounding out a dent. Everything involved in housing construction costs has gone up dramatically too in the post-Covid era of inflation and shortages.

Beyond disaster risk, Loretta Worters, spokesperson at the Insurance Information Institute, says, "Much of the increase can be attributed to supply-chain issues and labor shortages driving up the cost of home repairs and replacement." She also points to several other issues that insurers are facing, including fraud, excessive claims and legal system abuse.

Iowahawk Weighs in on the Sussexes Attending SXSW

My old hometown of Austin is infested right now with media, entertainment, and tech moguls thanks to the SXSW confab.

Back when it was just a music festival, it was a fun time. Although I attended some “official” events in the late ‘80s and early ‘90s, my favorite part of SXSW by the early 21st century wasn’t the official music showcases, rather it was the spillover and unofficial events that popped up all over the place. By my office near downtown Austin there were several restaurants and saloons, and during the festival they’d set up outdoor stages in parking lots featuring musicians who weren’t invited to perform at the actual event. These unofficial venues were also delightfully devoid of VIPs.

I’ve been gone a few years, and I hope the unofficial SXSW scene is still going strong. As for the official celebrity-studded SXSW scene, good ol’ Iowahawk, who is now an Austin resident, offers up his eloquent summation of what SXSW has become.

[buck.throckmorton at protonmail dot com]

posted by Buck Throckmorton at 11:00 AM

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