DAILY UPDATE: The “Lipstick Index” and Stock Market Crash

Posted on April 5, 2024 by Dr. David Edward Marcinko MBA

By Staff Reporters

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Ulta and other major beauty companies that thrived during the past few years of economic instability provided good fodder for the “lipstick index”—a duct-tape economic measure that assumes people still buy small indulgences (like lipstick) during tough times, keeping the beauty industry recession-proof.

However…it’s not. Ulta’s full-year sales growth target is just 4% to 5%, which falls below Wall Street’s estimates, and Estée Lauder announced in February it was laying off 3% to 5% of its workforce after some difficult months.

And, other consumer goods powerhouses are bracing for a slowdown, too. The parent company of Calvin Klein and Tommy Hilfiger said this week that it’s preparing for a 6% to 7% revenue drop this year.

ECONOMIC INDICATORS: “Lipstick Index” and “Cosmetic” Others?

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MORE: https://medicalexecutivepost.com/2023/09/23/economic-indicators-lipstick-index-and-cosmetic-others/

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Here’s where the major benchmarks ended:

  • The S&P 500 index dropped 64.28 points (1.2%) to 5,147.21; the Dow Jones Industrial Average® ($DJI) tumbled 530.16 points (1.4%) to 38,596.98; the NASDAQ Composite® ($COMP) sank 228.38 points (1.4%) to 16,049.08.
  • The 10-year Treasury note yield (TNX) fell more than 5 basis points to 4.303.%.
  • The CBOE Volatility Index® (VIX) surged 2.07 to 16.39.

Semiconductors were among Thursday’s weakest performers as a drop of more than 8% in Advanced Micro Devices (AMD) helped send the Philadelphia Semiconductor Index (SOX) down 3% to a two-week low. Retail shares were also soft. WTI Crude Oil futures rose for the sixth consecutive day and topped $87 per barrel, marking a gain of 4.3% so far this week. Volatility based on the VIX ended at its highest level since early November. Brent Crude Oil (/BZ) futures, the global benchmark, topped $90 for the first time since October.

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DAILY UPDATE: Powell Speaks and the Stock Markets Tumble

Posted on February 6, 2024 by Dr. David Edward Marcinko MBA

By Staff Reporters

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As Jerome Powell goes, so goes the market. Stocks tumbled yesterday after Federal Reserve Chairman Jerome Powell went on 60 Minutes over the weekend and said he’s in no rush to cut interest rates. Meanwhile, shares of Estée Lauder jumped ~12% after the cosmetics company announced it was laying off 5% of its employees amid weak demand in Asia.

Here’s where the major benchmarks ended:

  • The S&P 500 index fell 15.80 points (0.3%) to 4,942.81; the Dow Jones Industrial Average dropped 274.30 points (0.7%) to 38,380.12; the NASDAQ Composite® (COMP) declined 31.28 points (0.2%) to 15,597.68.
  • The 10-year Treasury note yield surged nearly 14 basis points to 4.166%.
  • The CBOE Volatility Index® (VIX) fell 0.18 to 13.67.

Materials and real estate sector shares were among the market’s weakest performers Monday, and banks and utilities were also under pressure. Semiconductors were one of the few sectors to post gains. In other markets, the U.S. Dollar Index (DXY) strengthened to its highest level since mid-November amid expectations interest rates will remain elevated. 

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ECONOMIC INDICATORS: “Lipstick Index” and “Cosmetic” Others?

Posted on September 23, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

SPONSOR: http://www.CertifiedMedicalPlanner.org

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DEFINITION: According to Wikipedia, the lipstick index is a term coined by Leonard Lauder, chairman of the board of Estee Lauder, used to describe increased sales of cosmetics during the early 2000s recession. Lauder made the claim that lipstick sales could be an economic indicator, in that purchases of cosmetics – lipstick in particular – tend to be inversely correlated to economic health. The speculation was that women substitute lipstick for more expensive purchases like dresses and shoes in times of economic distress.

Lauder identified the Lipstick index as sales across the Estee Lauder family of brands. Subsequent recessions, including the late-2000s recession, provided controverting evidence to Lauder’s claims, as sales have actually fallen with reduced economic activity. Conversely, lipstick sales have experienced growth during periods of increased economic activity. As a result, the lipstick index has been discredited as an economic indicator. The increased sales of cosmetics in 2001 has since been attributed to increased interest in celebrity-designed cosmetics brands.

In the 2010s, many media outlets reported that with the rise of nail art as fad in the English-speaking countries and as far afield as Japan and the Philippines, nail-polish had replaced lipstick as the main affordable indulgence for women in place of bags and shoes during recession, leading to talk of a Nail Polish index. Similar sentiment was noted during the coronavirus pandemic, when the mandated use of face masks to prevent the spread of the disease resulted in an increase of eye makeup purchases, suggesting a Mascara index.

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Now, decades after former Estée Lauder chairman Leonard Lauder first recognized the infamous “lipstick index”—the idea that cosmetics sales hold steady and sometimes spike during economic downturns—the same company posted a relatively downbeat earnings report.

Currently, the economy’s not great, but not abysmal, which makes for two possible interpretations of Estée Lauder’s latest report: Either the economy’s better than it seems, or the lipstick index was always a bit off.

The cosmetics giant reported declining sales figures, while weakening its full-year forecast. “For full-year fiscal 2023, we delivered organic sales growth and prestige beauty share gains in many developed and emerging markets, but Asia travel retail pressured results, particularly in skin care, and we continued to experience softness in North America,” the report said.

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Waffle House Index: https://medicalexecutivepost.com/2022/10/08/what-is-the-waffle-house-index/

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