It’s the first day of June and there is (probably) a lot of important market stuff to talk about, and we’ll get to some that. So get off our back, OK?
You see, it’s hard to focus too much on the topics du jour, such as Greece, the complete lack of growth in consumer spending and what the whiz kids like Peter Lynch or Charles Dow would think of today’s market, when THERE’S A WAR GOING ON!
The war involves prices for some of the timeless staples of both developed and emerging economies: golf clubs. And as such, maybe it really does serve as a case study to explore the state of the consumer economy. Or maybe it’s just a cheap excuse to write about golf instead of markets on a Monday morning. Hard to say at this point.
The golf season started off with an air of peace and prosperity across the land. The greens and fairways of America survived the nasty winter that helped to (maybe) shrink the economy in the first quarter. Even Tiger Woods made a fleeting appearance on the leaderboard at the Masters.
Then came the ambush. Let’s turn now to Rommel Dionisio, analyst at Wunderlich Securities and a correspondent reporting from the front lines of the Great Golf Club Price Wars. Club maker TaylorMade, owned by Adidas AG, has launched what Dionisio calls a “developing and aggressive campaign of price promotions, still fairly early in the golf season.”
TaylorMade’s “history of heavy, and sometimes even irrational” discounts often force competitors to make their own price cuts, dragging down profits for the whole industry, according to Dionisio, who adds: “We are concerned 2015 may develop to become another one of those years.”
The analyst sized up the discounts, which include $100 gift cards with the purchase of a set of TaylorMade’s new AeroBurner irons, $50 for drivers, $30 for fairway woods and $20 for hybrids, not to mention already large discounts on last year’s models. (While not mentioned in the Wunderlich report, it’s worth noting that TaylorMade even plans to give drivers away for free if Dustin Johnson wins the U.S. Open. That may not be too irrational, however, given how he played in the Players Championship.)
Any student of deflation can tell you why this is potentially a bad sign, but let’s go over it in case you were playing golf that day.