THE WALL STREET JOURNAL. **** Saturday/Sunday, August 17 - 18, 2019 |B
The 2019 bond rally has reached
epic proportions this summer. A
hearty pack of skeptical investors is
betting it is way overdone.
Sentiment in debt markets has
rarely been more euphoric. Yields on
German government bonds have
slumped to record lows, pushing
prices higher and driving the stock
of global negative-yielding debt to
$15 trillion. Yields on 10-year U.S.
Treasurys this week fell below two-
year yields for the first time since
2007, a pattern known as inversion
that many investors view as a har-
binger of economic recession.
The most acute stage of the rally
has come since the Federal Reserve
cut interest rates in July for the first
time in more than a decade. Inves-
tors often interpret a Fed rate cut
and fears of economic slowdown as
signals to buy bonds because they
often presage a multiyear cycle in
which interest rates decline, boost-
ing the prices of existing debt secu-
rities.
But these traders and fund man-
agers don’t think it will play out that
way. Instead, they insist the global
economy remains essentially healthy.
They see bond markets as overly
pessimistic and are making bets
against debt securities that are over-
bought—just in case yields rise in
the months ahead as the market re-
assesses the global growth story.
One obvious target for these con-
trarians is debt issued by eurozone
sovereigns, much of which now of-
fers a negative return, meaning in-
vestors are paying governments to
take their money.
“You’re either going to make very
Please turn to page BBYAVANTIKACHILKOTI ANDANNAISAACInvestors
Bet Flight to
Bonds Is
Overdone
Deere & Co. provided fresh evi-
dence of weakening conditions in the
U.S. manufacturing sector, saying
Friday that lower demand for U.S.
farm commodities is discouraging
farmers from buying its machinery.
The Moline, Ill.-based maker of
tractors and construction equipment
reported lower sales for its fiscal
third quarter and trimmed its fore-
cast for the year.
It has struggled to increase sales
amid lower commodity prices in re-
cent years that have pulled down
farmers’ incomes. Now, U.S. farmers
are scaling back their purchases as a
result of a yearlong trade dispute
with China.
“Concerns about export-market
access, near-term demand for com-
modities and overall crop conditions
have caused many farmers to post-
pone major equipment purchases,”
said Samuel Allen, Deere’s chief ex-
ecutive and chairman.
The manufacturing sector is show-
ing signs of weakness overall. Output
has fallen more than 1.5% since De-
cember, according to the Federal Re-
serve.
China, one of the largest import-
ers of U.S. soybeans and pork over
the past decade, said earlier this
month it would suspend all imports
of U.S. agricultural products in retal-
iation for the Trump administra-
tion’s plan to expand U.S. tariffs on
goods made in China starting last
year.
The move canceled the purchase
of nearly 500,000 metric tons of
U.S.-grown soybeans, the U.S. De-
partment of Agriculture said.
Over the first six months of this
year, China’s agricultural imports
from the U.S. were down 20% from
Please turn to page BGARAGE SALE INC.
The hunt for bargains is moving out of your neighbor’s driveway to a new constellation of apps
that are capitalizing on the increasing appeal of secondhand clothes, shoes and accessoriesBYSUZANNEKAPNER
My Circular Closet
How our reporter cycles through
$1,000 of clothing each month
BOn Second Thought
Levi’s and J.C. Penney embrace
the thrifting phenomenon
BVintage Generation
Young entrepreneurs hunt for
clothes to sell at a profit
BBuyer (and Seller) Beware
One in three Americans shops in
the Wild West of e-commerce
BINSIDE
PHOTO ILLUSTRATION BY JOHN KUCZALA; PHOTOS: ISTOCK; CIRCULAR: MICHAEL BUCHER/THE WALL STREET JOURNAL; LEVI’S: JOSE ALVARADO JR. FOR THE WALL STREET
JOURNAL; VINTAGE: ANNIE FLANAGAN FOR THE WALL STREET JOURNAL
BYROBERTTITAEXCHANGE
Taxing Bitcoin
Whattodowhenthe
IRScomesforyour
cryptocurrency BHeartbroken
Thebusinessof
collecting‘likes’is
underthreat BBUSINESS|FINANCE|TECHNOLOGY|MANAGEMENTDJIA 25886.01À306.62 1.2% NASDAQ 7895.99À1.7% STOXX 600 369.63À1.2% 10-YR. TREAS. g 2/32, yield 1.540% OIL $54.87À$0.40 GOLD $1,512.50g$7.10 EURO $1.1091 YEN 106.Deere
Says
Farmers
Scaling
Back
Maker of farm tractors
and construction
machinery trims itsforecast for the year
33%
of Generation Z will
make secondhand
purchases this year
in the U.S.56 million
U.S. women
bought secondhand
products in 2018$51 billion
of secondhand goods
will be so
in the U.S. by 2023ld annually9%
of the global luxury
market will be
secondhand goods
by 2021SOURCES: GLOBALDATA PLC, BOSTON CONSULTING GROUPthat are making it easier than ever for people to buy
and sell used merchandise such as The RealReal Inc.,
Poshmark Inc. and thredUP Inc. as well as thrift
stores such as Crossroads Trading Co., with about 37
locations, for bargains.
She recently bought a Prada Cahier belt bag for
$945 on The RealReal. A similar version of the bag is
currently selling at Neiman Marcus for $1,790. Nei-
man Marcus Group Ltd. made its own foray into the
market for what it calls “preloved” handbags and ac-
cessories this year when it took a minority stake in
Fashionphile LLC.
The RealReal, which resells luxury apparel, shoes,
handbags and jewelry, went public in June and now
commands a market value of nearly $1.3 billion, larger
than that of Abercrombie & Fitch Co. It expects to sell
nearly $1 billion of goods this year, though its net loss
widened in the most recent quarter.
ThredUP and Poshmark offer used goods from a
wider array of brands, including J.Crew and Gucci.
Poshmark is planning an initial public offering as
soon as this fall, people familiar with the situation
said. StockX is the place where sneakerheads go for
their latest fix of vintage athletic shoes and
streetwear.
These companies are borrowing a page from the
car industry, which turned the process of buying
secondhand automobiles from agonizing to rela-
Please turn to page BIt used to be that shopping
for secondhand goods meant
sifting through piles of clothes
and “Everything $1” bins at
the local Goodwill or a neigh-
bor’s garage sale. For many, it
meant scrolling through post-
ings on one of the first online
marketplaces, eBay Inc.
Today, it’s as easy as hailing an Uber or renting a
room through Airbnb Inc. Bargain hunting, environ-
mental concerns and the sharing economy have
erased the stigma of used goods at the same time
technology has made thrift shopping more accessi-
ble, reliable and cool. Even Kim Kardashian West
wears vintage designer duds.
“Following the recession, there was a mind-set
shift when it came to acquiring used goods,” said Oli-
ver Chen, an analyst tracking retail trends at Cowen &
Co. “Now, it’s considered a smart bargain. Being fash-
ionable is about getting value for your dollar.”
For many consumers, the opposite was true just over
a decade ago. Jessie Char, 32 years old, said shopping
at thrift stores wasn’t cool when she was growing up.
“It was the Abercrombie & Fitch era,” said Ms. Char, an
event planner in San Francisco. “Vintage clothes were
frowned upon by the popular kids.”
Today, about half of Ms. Char’s wardrobe is sec-
ondhand. She said she scours a new crop of websitesThrift
shopping
is going
mainstream.