Posted in: Market NewsOp-ed
Published:
April 18, 2020 7:00 PM UTC

This Iconic Luxury S&P 500 Stock Is Surging at the Weirdest Possible Time

One of the S&P 500's most iconic jewelry stocks is trading near record highs and Google Trends data show just how weird that is.
  • As retailers have been battered by the coronavirus, one luxury S&P 500 stock has defied the slowdown.
  • Tiffany & Co. still trades within $5 of its all time high.
  • Worryingly for the jewelry manufacturer, Google Trends data show search interest for engagement rings is at a 13-year low.

As the coronavirus ravages consumer spending, one luxury S&P 500 stock is defying gravity.

Tiffany & Co. (NYSE: TIF) continues to trade close to its all-time highs even as Google search interest for engagement rings plunges to its lowest level in 13 years.

Tiffany & Co. Proves Resilient

Due to coronavirus, Tiffany & Co. was among the first wave of U.S. businesses forced to close stores and make some rather dire earnings predictions for the rest of 2020.

Despite the initial selloff in the stock market, equities have rallied throughout April, even as almost 23 million American have found themselves unemployed. TIF was no exception.

Source: Twitter via Jeroen Blokland

It would make sense that the rough outlook for consumer spending might hit an S&P 500 stock like TIF the hardest, but this so far has not been the case.

S&P 500 stock Tiffany & Co. (NYSE: TIF) is within just $5 of its all time highs despite the coronavirus. | Source: Yahoo Finance

Luxury French giant LMVH’s agreement to purchase Tiffany & Co. for around $135 a share is supporting the stock price, but with that deal pushed to October, there’s still a lot of uncertainty in the world of high-end fashion and jewelry.

Google Trends Data Show Alarming Crash In Engagement Ring Searches

What should be most worrying for Tiffany is that its most iconic business–engagement rings–is facing some of the lowest interest in over a decade.

According to Google Trends data, search interest in engagement rings is at its lowest level since 2007.

Google trends data show search interest for “engagement ring” is at a 13-year low. | Source: Google Trends

The reasons for this are likely to be many-fold, but all are centered around the uncertainty caused by coronavirus. Firstly, 23 million Americans have lost their jobs over the last few weeks, and this is not good for household spending.

Given that younger workers have been disproportionately affected by these layoffs, they have less money to spend and won’t feel comfortable doling out cash on a luxury. Plus, planning a wedding is almost impossible in the current environment.

S&P 500 Ignores China’s Retail Sales Collapse

Beyond the United States, Tiffany has embarked on an aggressive strategy in China to woo Millennials.

The world’s second-largest economy released retail sales data recently, and as ING’s Iris Pang reports, it made for rough reading:

Retail sales in March fell 15.8%YoY after falling 19.0%YoY in Jan-Feb. Retail sales show some improvement in terms of the variety of spending… But there was still a deep contraction in many retail sales items, e.g., clothing (-34.8%YoY), furniture (-22.7%YoY), and automobiles (-18.4%YoY). As mentioned earlier, as long as there are strict social distancing measures, the recovery of activity will be very slow, and this will be reflected in consumption.

All these facts make it very strange to see a stock like Tiffany & Co withstanding broader market volatility. Investors still expect the LMVH deal to go through without a hitch, but if no-one’s getting hitched, is that realistic?

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.

This article was edited by Sam Bourgi.

Last modified: April 18, 2020 2:36 PM UTC

Francois Aure @bullishtulips

Financial speculator & author living in the hills in Los Angeles. J.D. but very much not a lawyer. Favorite trading books are anything written by Jack Schwager. Email: bullishtulips@gmail.com,

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