Financial and Economic Brief - June 13, 2017by © Liberty Publishing, Inc.
Wholesale Inventories Slip
According to the U.S. Commerce Department, wholesale inventories dropped 0.5% in April. Expectations fell short, as economists were expecting a gain of 0.2%. Sales by merchant wholesalers for April, were $462.3 billion, down 0.4% for the latest period. Total inventories by merchant wholesalers were $591 billion. The April inventories/sales ratio came in at 1.28, compared to 1.35 a year ago. For Q1 overall, inventory investment was on the weaker side, taking away from growth. Wholesale inventories data for May will be released in mid-July.
Gymboree Files for Bankruptcy
Gymboree, a children's clothing retailer, announced it reached an agreement with lenders that will allow it to stay open as it begins a restructuring process. However, the announcement did not include any plans for store closings. The company reported a $324 million net loss for the three-month period that ended in January 2017. Furthermore, credit rating firm Moody’s recently included Gymboree in a list of 19 retailers facing “financial distress”. Daniel Griesemer will be replacing Mark Breitbard as CEO.
Tech Stocks Fall
Technology stocks fell across Europe and Asia, and were set to fall again on Wall Street after the worst day for Apple (AAPL.O) shares in over a year. The Nasdaq was seen opening down 0.8% after an almost 2% drop on Friday, its third biggest one-day loss in 2017. “This is the nature of the tech sector. Valuations do from time to time become stretched and they come back and anyone who has paid a very high valuation might experience some short-term pain,” said Fergus Shaw, fund manager at Cerno Capital. However, economists will be watching to see whether the recent “dip” in economic data and uncertainty surrounding President Donald Trump has affected confidence.