The nine-year bull market for U.S. stocks still has room for growth in 2018, but the outlook isn’t so great for consumer discretionary stocks such as retailers and apparel and beauty brands.According to Savita Subramanian, head of U.S. Equity and Quantitative Strategy at Bank of America Merrill Lynch Global Research, the S&P target of 2,800 by the end of 2018 will be “7 percent higher than today.”She spoke at a presentation Tuesday on the company’s 2018 outlook. “We’re not done with the bull market yet,” she said, noting that earnings expectations for next year look decent, but could be great with tax reform. Her team is projecting 6 percent growth in earnings per share for the S&P 500, outside of corporate tax-related benefits.Subramanian reasoned that investors “haven’t hit euphoria in the U.S. equity market, which is needed at the end of a bull market.” Her recommendations are sticking with equity stocks in 2018, buying growth shares in materials and financials, and technology stocks. That’s bad news for retail and apparel shares, a sector she has underweighted along with utilities and real estate.According to Subramanian, the problem with consumer discretionary stocks in a period of Federal Reserve tightening of liquidity through interest-rate hikes is that it tends to result in the companies feeling pressure from wage increases and margin squeezes.She also noted that if companies repatriate money from overseas, they likely would use just 50 percent of that for stock buybacks, and reserve the balance for other uses such as mergers and acquisitions. Consumer goods firms also could elect to give some of that back to consumers through lower prices and more promotions. Rather than spur consumers to buy more and provide some revenue growth, Subramanian cautioned that the impact could have the effect of pulling from “tomorrow [or future growth] to today.”Michelle Meyer, head of U.S. economics, forecast 2.4 percent gross domestic product growth in 2018, and then slowing to 2 percent in 2019. She is also predicting inflation to rise to 1.8 percent by the end of 2018, and to 2 percent by the end of 2019. Meyer said the labor market would likely tighten next year, which typically leads to wage growth for workers. She is expecting the Federal Reserve to raise rates this month, and raise rates three more times in 2018 and another two rate hikes in 2019.Ethan Harris, head of global economics, said the global “bullishness on growth is warranted.” For 2018, the economist expects 3.8 percent global GDP growth, up from 3.7 percent in 2017. He said the synchronized global recovery is due mostly to accommodative worldwide monetary policy, leveling off of the slowdown in China and the increasing confidence of investors who have learned to ignore political and geopolitical risks.There were some cautionary points raised by Michael Hartnett, chief investment strategist, who said the “financial returns since 2009 have been abnormally strong.” He noted that wage inflation could be a game changer, since when “wages go up, that’s less good for profits.”Hartnett — zeroing in on the not-so-rosy parts of the economic backdrop heading into 2018 — also said that given the expected higher inflation and rising corporate debt levels and bond volatility, an end to easy monetary policy could be most damaging for corporate debt. Along with record-high art prices, soaring rates for crypto-currencies, exponential Nasdaq growth and climbing global debt levels, there are already signs of possible bubble-like behavior. All that means there could be the potential for a slowing down of global growth in the second half of 2018, he cautioned.
Taking the final spot on the mens’ portion of New York Fashion Week calendar next month will be none other than @tomford. Though he’s shown his men’s wear in New York in the past, this will mark the first time the designer has shown his men’s collection alone during New York Fashion Week: Men’s. His runway show will debut on February 6 at the Park Avenue Armory. #wwdfashion
London-based couture house @ralphandrusso has certainly been in the spotlight, having its dresses worn by @beyonce, Angelina Jolie, Meghan Markle in her engagement photos and more. For couture, Tamara Ralph focused on ornamentation — think: feathers with chain mail, jet embroidery and clusters of pearls and crystals. See the rest of the collection on WWD.com #wwdfashion #couture (📷: @giovanni_giannoni_photo)
Minnie Mouse celebrated her 90th birthday by getting her own star on the Hollywood Walk of Fame. For her celebratory luncheon, @coach’s creative director @stuartvevers dressed her in a custom made prairie dress, complete with Vever’s take on the polka dot – black sequined versions – under a cropped motorcycle jacket. The designer also put his own mark on Minnie’s classic red shoes, infusing the color with sparkles and adding some Coach crystals. “We chose colors that were very Minnie and also represented quintessential Coach elements,” said Vevers. #wwdfashion #nationalpolkadotday (📷: George Chinsee)
@nickjonas is unveiling his first-ever apparel collection through a partnership with John Varvatos. The limited-edition capsule, which makes its debut in spring, also marks the first time the designer has collaborated with anyone on a line. “The process in working with Nick is amazing. It’s inspiring to be around someone who is not only connected with the trade that they do, but also with what’s happening in the environment around him, and how that connects to what we do with style,” said Varvatos. (RG: @johnvarvatos) #wwdfashion
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)