The Daily Dose: We Live in Yellen's World

 | Mar 19, 2014 | 9:30 AM EDT  | Comments
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Happy Janet Yellen Day! To me, this is a national holiday. Unfortunately, many don't feel the same way as they probably have no clue who Janet Yellen is (no worries though, she just controls your life... for real). I am sticking with the view that the ole' gal will stumble a bit and upset markets that are already on edge underneath the surface of sucker's rallies.

One key thing I am paying attention to is the level of transparency from the Yellen-led Fed on what actually guides future interest rate decisions. There will likely be a broadening of the indicators used expressed to the market and reporters, which then sets the stage for even more questions in coming months. For example, which indicator is the most important? What if one indicator shows great improvement but the others don't? Understanding future Fed decisions is poised to get seriously more complex amid more transparency. Weird how that works, huh?

Here is a tidy chart with colorful lines to keep in mind today. No matter the forward guidance powers of the Fed, there will be troubling aspects to this economic cycle that easy money just won't solve. That fact makes me wonder if Walmart needs to be operating as many stores as it does with this permanent underclass being fully apparent...

Source: St. Louis Fed

Source: St. Louis Fed

Stock Spotlight: Ralph Lauren (RL)

At age 74, Ralph Lauren is the chairman, CEO and director of the company he founded in 1967 and took public in 1997. Lauren is actively designing and appearing on runaways. But, there has been no outward guidance to investors on a successor. To get the feel of what loss of Mr. Lauren would mean, look no further than the annual report; the top risk presented to investors is the loss of Mr. Lauren's services.

In fact, here is the section from the annual report of most interest:

"Mr. Ralph Lauren's leadership in the design, marketing, and operational areas of our business has been a critical element of our success since the inception of our Company. Mr. Lauren is instrumental to, and closely identified with, our brand that bears his name. Our ability to maintain our brand image and leverage the goodwill associated with Mr. Lauren's name may be damaged if we were to lose his services.

"We depend on the service and management experience of Mr. Lauren and other key executive officers, who have substantial experience and expertise in our industry and our business. The death or disability of Mr. Lauren or other extended or permanent loss of his services, or any negative market or industry perception with respect to him or arising from his loss, could have a material adverse effect on our business, financial condition, and results of operations. Our other executive officers and other members of senior management have substantial experience and expertise in our business and have made significant contributions to our growth and success."

Pretty disturbing.

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