And I thought that $5 for a cup of coffee was over the top.
--Hedley Goldsworthy, Victoria B.C., Canada
We think you’re right this time. In addition to the $15 dollar cup of coffee, The Elliott Wave Financial Forecast identified further evidence of a peak in Starbuck's stock chart. We thought its long rise was over back in July 2006 when we ran this stock chart.
But Starbucks managed to rally to one more slight new all-time high.
This second chart shows that since then, however, Starbucks has fallen below last July’s low in a manner that subscribers will recognize as a very significant five-wave decline. It should be followed by further declines for Starbucks and the overall market, possibly quite soon.
Paying $15 for a cup of coffee is a double signal as it strongly suggests that the demand for luxuries is “over the top,” too. As we’ve noted in several recent issues of EWFF and the June 10 Socio Times entry (click here to view), the luxury boom appears to be reversing. One key confirmation comes from Coach Inc., the maker of Soho and Ergo purses. Suddenly demand for what was until very recently a must-have accessory, is slowing down. Coach’s chief executive officer says growth in the $7 billion industry may fall by as much as half. We say his estimate is way too high. As the cash thirst discussed here on Friday intensifies, the demand for pocket books to stash spare cash in will recede at a fast rate. As EWFF noted in May, “hedge funds are at the epicenter” of the binge, and the experience of one London fund manager is probably indicative of what will happen to the preoccupation with extravagance as the markets head down. For several weeks, the founder of SPQR Capital didn’t even notice that his $160,000 Maserati Cambiocorsa had been impounded for unpaid tickets and taxes. “I was distracted by the market turmoil,” said the fund manager. The expanding scope of the distractions confirms the last line from May’s Special Report, “At the Pinnacle of the Great Pyramid”: “This may be the end of the line for luxury.” |
