Albert Edwards, Societe Generale's now predicts a global recession with equity valuations dropping to their lowest levels in a generation..
Albert Edwards, Societe Generale's uber-bearish strategist, who now predicts a global recession with equity valuations dropping to their lowest levels in a generation. Edwards believes this is just the "pungent smell of coffee" that has now overwhelmed the "hallucinatory vapors" contained in the Fed's quantitative easing (QE) bond-buying program that it started shortly after the financial crash of 2008.
"Commodities snapped out of their trance some two years ago and could not find their way back into that same dream-like state. Now it is equities turn," he said.
"And even if the Fed resumes massive QE at some point as the world melts down, and markets desperately attempt their return to the dream trance, they will instead find themselves locked into a Freddie Kruger-like nightmare." Less
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Hey tony that is a threat because you implicated danger for expressing his pont of view and that is what the usa is all about. your post has been referred to the us attorney general's office for review. No longer does the likes of schultz be allowed to amass a fortune based on crime okay???
"I think it would certainly challenge Starbucks," says Sanchez. "If you look at what it would take in terms of what it would take out of their profits, it's anywhere from $300 million to half a billion [dollars]."
Over the last four quarters, Starbucks earned roughly $1.8 billion (excluding the effects of a $2.2 billion payout to Kraft foods over a dispute.
"Starbucks have been benefiting from continued low costs and rising margins," says Sanchez. "So, I do think that a raise to a $10 minimum wage would certainly take a bite out of Starbucks."
Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, disagrees that Starbucks would suffer with a higher minimum wage.
"Let's remember Starbucks [is] historically a very employee-friendly firm," says Ross. "That pro-employee stance is really the cornerstone of their success. So, I don't really think those higher wages will impact the stock."
Indeed, in the last five years, Starbucks stock is up 683%. However, since its all-time high in November 2013, the stock is down nearly 10%. According to Ross, the stock is hitting both a support level and its 200-day moving average, making it a buying opportunity.
"That potentially could be a springboard to higher prices," says Ross. "I like the stock here. I would be a buyer on the double-digit pullback to key support."
To see the rest of the discussion on what minimum wage means for Starbucks, watch the video above.
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