Fintrust Investment Commentary

The week before Father’s Day: Sons and daughters will search clothing stores and sports departments for that special gift, perhaps a shirt, or a tie, or a fishing rod for Dad.

They’re thinking about their Fathers.

What they’re thinking is, “how can I buy this using his credit card?”

Apparently they haven’t figured that out yet. Americans spend less on Father’s Day gifts than on gifts associated with any other holiday.

According to the National Retail Federation, Father’s Day spending will be around $12.7 billion this year, far below the $21.2 billion spent this year on Mother’s Day gifts. Why do families spend less on Dads than Moms?

Marketing psychologists say Dads don’t care about their “day” as much as Mothers do, so family members don’t feel as much pressure to go big on Father’s Day.

Experts also say Father’s Day comes in the middle of wedding season and graduation season, and some families are just gifted-out by mid-June.

More analysis, provided last week by the National Retail Federation:

  • 75.4% of Americans will buy a gift or a greeting card on Father’s Day.
  • The average store buyer will spend $115 on Dad.
  • The average online buyer will spend $157.
  • 39.7% of buyers will choose apparel.
  • 43.3% of buyers will choose “experience” gifts, such as tickets to a ballgame, or a special meal. (“Happy Father’s Day, Dad, we’re going to Hardee’s” technically counts as an “experience” gift.)
  • The remaining buyers will choose yard equipment, tools or books.

Comment: Still no statistics showing how many Dads unknowingly pay for their own presents.

Fatherhood and the Adam Smith Necktie

Neckties are the quintessential Father’s Day gift and 2015 may be the best year in a while to give Dad an Adam Smith Necktie.

Adam Smith Necktie – $35 from the Leadership Institute

Scottish economist Adam Smith (1723-1790) is often called The Father of Modern Economics. His classic work An Inquiry into the Nature and Causes of the Wealth of Nations is a foundation of free market economic theory.

2015 may finally be the year – the first year since 2008 – in which the Federal Reserve begins to un-tie quantitative easing and hand interest rates back over to the free market.

Fintrust summer intern and Economics student Kaitlin Matheson says we may know a lot more about the future of interest rates by Wednesday afternoon.

The Week Ahead

Economics – Kaitlin Matheson

The Federal Open Market Committee announcement this Wednesday is an important event for the markets this summer. The FOMC sets the target federal funds rate, the rate at which banks charge overnight loans to each other, and this affects short term interest rates in the economy.
Since the recession, the FOMC also announces their purchases of assets (quantitative easing), which affects long term interest rates.
Investors have been speculating for weeks about the announcement, and according to federal funds futures prices, interest rates could increase in the fall (Source: Bloomberg). However, if their announcement is different, the markets will react because investor’s expectations were wrong.
Lower interest rates are good for borrowers and the market. The funny thing about the announcement is that investors will dissect the Fed president’s diction. The key word used to be “patient”, which had been said in every announcement since the recession. It was removed in March, and investors interpreted this to mean interest rates will rise sometime this year. Fed president Janet Yellen said back in March, “Just because we removed the word patient from the statement doesn’t mean we’re going to be impatient,” which leaves us wondering what she could mean from a statement like that. Investors will be noting every word closely, and trying to read between the lines.
Good luck to all who try.

(Kaitlin is a nationally recognized economics student at Clemson University)

In addition to the Fed announcements Wednesday afternoon, other economic reports next week will include Industrial Production on Monday, Housing Starts on Tuesday, the Consumer Price Index and Jobless Claims on Thursday.

Earnings

Tuesday: Adobe Systems, Jammin Java, La-z-boy

Wednesday: FedEx, Oracle, Pier 1

Thursday: Kroger, Rite Aid, Red Hat, Smith & Wesson

Friday: Darden Restaurants

Stock Splits

Monday: PPG 2 for 1
Tuesday: Swiss Re 4 for 1
Watching the Tape is compilation of news, observations and views written by Bill Kibler, Senior Vice President, FinTrust Investment Advisors. Bkibler@fintrustadvisors.com. Information is provided by sources believed to be reliable, but FinTrust is not responsible for accuracy. The information herein is not a recommendation to buy or sell any security. Past performance does not indicate future results.

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