Brad Kreidle's Personal Website

This is Brad Kreidle's personal website

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Prada Needs More New Designs, Not New Stores

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When one thinks of the world of high fashion, a few well-known and highly recognizable names always come to mind: Gucci, Armani, Dolce & Gabbana, Prada. When most store-based companies, fashion houses included, start running into financial troubles they can go one of two ways. The first is to open new stores in new locations to attract new customers and spread your brand. While this is somewhat effective, it can be ruined if the products you’re offering are the same as they’ve always been. That brings us to the second option, coming up with new products and designs to bring in new customers while keeping your old ones happy.Fashion-Shopping-Girls-Illustration

Prada, one of the world’s most well-renowned fashion houses, have been facing tough economic times due to declining sales in existing stores all around the world. Faced with said declining sales, Prada has decided that the course of action they should follow is to open new high-end luxury stores in new cities that are full of the same bags and designs as all of their other ones. While it’s possible to follow the train of thought that Prada is following, it seems pretty clear to financial and business analysts around the country that they’re chasing the wrong strategy. Most people agree that the main reason Prada is losing sales isn’t because of a lack of exposure, it’s because they haven’t continued releasing new products or designs and people are getting bored and not purchasing anything new.

If people get bored of your products they will stop buying them. That’s one of the first lessons in business and it seems to be one that prada has forgotten. Even the designs that have been recently released seem to be very similar to previous designs that were huge hits for the brand. While it’s understandable that Prada is fearful of moving beyond the designs that once brought it so much fame and fortune, this sort of trepidation will kill the company if they don’t change. Opening new stores isn’t going to help bring in more revenue. Companies need to adapt and be constantly evolving so that they can stay in front of trends and constantly reaffirm to their customers why they should be as loved as they are. Prada has been resting on it’s laurels and it’s catching up to them. If they don’t change soon, they might be buried with their laurels too.

If you’d like to read more, the link is here.

The Fall of Detroit

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Detroit’s Bankruptcy is nearing finalization. The City has finally reached a settlement with its last creditor FGIC (the monoline insurer who has insured $1.1 billion of the COP’s issued to fund the pension plan). The settlement includes a $150 million in cash, some tax credits, and real estate in downtown Detroit. FGIC will need to recoup its losses by becoming a real estate developer.

Effects on the Municipal Market – Many “talking heads” on television have already begun to predict what city(s) will be the next Detroit. They claim cities like Los Angeles and Chicago are next in line. We disagree, as although both cities do have pension obligations that are large and not fully funded, neither city has had the demographic decay of Detroit. Remember, it took Detroit over 50 years to get to where it is today, as 60% of its population left town during that time period. Los Angeles & Chicago have not even begun this demographic downward spiral. 

Reality Check for Other Cities — MainLine feels the Chapter 9 path taken by Detroit will help pave the way for other cities to begin to deal with their pension and aging demographic outlooks. The task will be difficult and we may not be able to measure its success in our lifetime. Detroit will never be the economic and social power it once was, but it could make for a nice large mid-size city along the Detroit River on the Canadian border.

If you’d like to read more, the link is here.

Puerto Rico Electric Utility’s Late Accounts Surge 219%

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There continues to be a lot of behind the scenes activity going on in Puerto Rico.  Banks, hedge funds and the posse of Puerto Rico issuers appear to be finding ways to make things work out, but prices are all over the place, depending on the PR issuer. Uninsured general obligation bonds are trading at roughly 75 to 80 cents on the dollar, sales tax bonds are trading from 80 to 85 cents, while the electric utility’s bonds (PREPA) are trading at 50 to 55 cents on the dollar. What has been impressive is the lack of carry through to the rest of the muni market.  I guess you can say Puerto Rico is now its own “municipal market island”. Prepa, the biggest U.S. public power agency by customers and revenue, is set to release a plan in March to restructure its $8.6 billion of debt.  Read more.

Bank of Japan Stimulus Bumps Up Wall Street

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Wall Street stocks broke another record high as banks reacted favorably to the news the the Bank of Japan will drastically increase its stimulus package so that the country’s economy can get back on track after years of economic struggles and stagnation. This good news and the jump in stocks come days after the United States Federal Reserve started to wind down the package of incentives they had offered in the years after the financial crisis of 2008. Known as a sort of “Old Man of Asia” (just like the Ottoman Empire was known as the “Old Man of Europe” before it finally collapsed), the once strong Japanese economy has been stuck in a boom and bust cycle since the Fat Man and the Little Boy fell on Hiroshima and Nagasaki and dramatically ended the Second World War and Japan’s dreams of conquering Asia and carving out an empire for itself. Shifting from struggling to booming (often supported by the technology and automobile sectors), Japan has frequently made investors nervous and so they tended to stay away.

Now, however, banks and businesses around the country are reacting in a strong positive manner to the news the the Bank of Japan (BoJ) is extending and strengthening its stimulus package and the results can be seen. The S&P 500 came within 0.1 percent of its record high after the news and other markets were similarly affected. In total, the S&P 500 recorded a total of 123 new 52-week highs and only 2 new lows. The  Nasdaq Composite had a similar record with 209 recorded new 52-week highs and only 27 new lows. These records point to a strengthening of both markets in the United States as well as around the world and in Asia. People believe that the markets are going to continue to rise and that records are going to continue to be broken, especially when combined with the fact that the dollar is also rising in strength.

If you’d like to read more, the link is here.