Good morning investors,

I will be at the virtual ICR Retail Conference for the next three days. There are a lot of great companies at this conference along with the regular batch of retailers that I religiously follow. Notes will be posted for all Alpha Letter Pro subscribers as incremental data points are dropped. Stay tuned.

Good luck in the markets the next few days. The waters are choppy as investors are looking to de-risk and limit exposure to their portfolios as interest rates and inflation begin to rage. Stay calm and remember that time in the market is way better than timing the market. Keep buying undervalued companies and know what you own. If nothing has changed fundamentally, a selloff is a value investors best friend.

I continue to buy stocks that I already own that keep getting cheaper. I have never been a tech investor or a cryptocurrency owner, but may look to start nibbling at some tech indexes should valuations continue to crumble. At some point bitcoin may be a buy, which is something I am trying to evaluate. If I was to buy bitcoin it would need to be at a price where most of the market participants are panicking. I don’t think we are there yet, but every time it drops the panic builds.

Sector News Flow

Retail sales wrap up 2021 on a high note following robust holiday season: U.S. retail sales closed out 2021 on a high note following a robust holiday shopping season, according to preliminary data from Mastercard SpendingPulse. Specifically, total retail sales (excluding auto and gas) grew 6.9% on a Y/Y basis and +10.3% if gas were to be included. Luxury (excluding Jewelry) +46.8% and Apparel +46.3% retail sales make the biggest moves. With regards to e-commerce, this year "innovation will be amplified with retailers looking at different platforms and tactics to reach hyper-connected consumers," the report says. Read More.
J.Jill is on watch after issuing strong guidance at ICR Conference: J.Jill (NYSE:JILL) posts a guidance update ahead of the company's appearance at the ICR Conference today. The retailer expects sales to increase 12% to 13% in Q4 compared to a year ago. Adjusted EBITDA is seen landing in a range of $11M to $13M, driven by gross margin expansion and disciplined expense management. Former guidance from J. Jill was just for sales and EBITDA to "grow" during the quarter. Read More.
Torrid Holdings falls after lowering guidance due to omicron impact: Torrid Holdings (NYSE:CURV) updates its Q4 and full-year outlook ahead of an appearance today at the ICR Conference. had a strong start. The retailer says it had a strong start to the quarter before the spread of the omicron variant negatively impacted performance largely due to labor challenges at both distribution center and a portion of our stores. "While we are not a business heavily dependent on holiday sales, our Torrid cash event in January saw a negative impact from these factors. As a result, we are revising our net sales and adjusted EBITDA to below our initial guidance." Read More.
Destination XL Group reports 11.4% comparable sales growth this holiday season: Destination XL Group (NASDAQ:DXLG) comes close to pre-pandemic level sales for the holiday season of 9-week ended Jan. 1, 2022. The retailer's omni-channel comparable sales increased 11.4% with direct business sales up 32% when compared to 2019's holiday season. However, this comparable sales increase was partially offset by closed stores and a decrease in wholesale revenues. Total season sales of $106.6M increased from $78.4M in the same corresponding period of FY20; and up from $103.1M in FY19. Read More.

Macro News

Bitcoin slashes through $40K to lowest since August: Bitcoin (BTC-USD) briefly dips below $40K per token to its lowest level seen since August 2021 as the global crypto market cap continues to plunge. Now changing hands at $40.7K. The global crypto market cap declines nearly 4% to 1.87T, according to data from CoinMarketCap. Recall last week when the market cap fell below $2T amid continued selling pressure. Read More.
Fed needs to boost rates faster than markets currently expect, Dudley says: Former New York Federal Reserve president Bill Dudley expects the U.S. central bank to become increasingly hawkish as its current dovish outlook clashes with the reality of a tight labor market that's likely to keep inflation elevated, he said in a Bloomberg opinion piece. "As the economic recovery pushes unemployment unsustainably low — something that may already have happened — wage growth will spill into consumer price inflation," he writes. "The Fed will have to respond by taking interest rates above neutral well before the end of 2024." Read More.
Bitcoin Loses $40k, Ether Below $3k As Cryptos Suffer Worst Start To Year... Ever: “Cryptocurrencies are likely to remain under pressure as the Fed reduces its liquidity injections,” said Jay Hatfield, chief executive of Infrastructure Capital Advisors. “Bitcoin could end 2022 below $20,000.”
“Tighter Fed policy affects not only interest rates but the equity risk premium as the Fed withdraws funds from the capital markets. Riskier investments such as unprofitable tech, meme stocks and cryptocurrency are disproportionately affected relative to the rest of the market since those investments are approximately twice as volatile as the overall market so have double the risk premium as the average stock,” said Hatfield. Read More.

Tweet Deck

zerohedge @zerohedge

Market is smart: the faster we crash, the faster the Fed's Blackrock subsidiary buys ETFs.

Dr. Parik Patel, BA, CFA, ACCA Esq. 💸 @ParikPatelCFA

@CEOTimBaxter @BrianSozzi @juleshyman @bcheungz Mr. Baxter, I am disappointed that Express will not be at the ICR conference unlike many of your peers. After several months of awful stock price performance it is important you find a CFO and improve relations with Wall Street. I am willing to join the board immediately. Dr. P