A consistent picture is emerging from the American retail sector; there is not enough growth to benefit all players. One wins while another loses. This confirms our assessment from years ago that the U.S. is over-stored with far more retail space than most comparable countries. The result is that even the best retailers go through periods of difficulty and over-all the sector is shrinking and needs to contract further. The winners survive; the losers go away.

Some stock market analysts extrapolate the difficulties in retail to observations about the broader economy. They have simply missed the fact that this industry is going through necessary change and contraction; the rest of the economy is doing fine.

Our capitalist based economy is always changing. New ideas disrupt old ones. When the horse and buggy died out, the economy did not require a funeral. Today we have the Internet and Amazon.

Change, if anything is speeding up. We savor the opportunities that this provides.

Stay steady, my friends.

El Toro Solo