Wednesday, December 17, 2014

For Whom the Oil Tolls


We haven’t been shy about pounding the drum on oil prices.  We thought last summer that the slump at the pump would supercharge the holiday shopping season with a huge “tax cut” for consumers long-suffering from stagnant paychecks.  We still think it will do that, enabling retailers to meet their sales and earnings targets.

However, the slide has turned into a crash, with sweet crude well below $60 on the near-month futures contract.  What’s more, the 10-year Treasury yield is flirting with 2%, currently at its lowest level of the year. But employment gains continue apace, and last month wages finally showed some life.  Oh, and the inflation landlord?  We can look that guy right in the eye.

At the risk of getting all Panglossian, it’s a return to the “goldilocks” economy of the Clinton years isn’t it?  Our old friend ROW (rest of the world) has another view.  The oil price has been widely seen in the U.S. as a supply phenomenon.  Shale technology and all that frack.  But elsewhere it’s a demand thingamajig. Europe remains sclerotic, China is slowing and Japan has slipped into recession.  The United States has become the little engine that could – so far.

This state of affairs is obviously salubrious for you and us and all the John Qs with tanks to fill or airplanes to fly.  Even the local motorcycle gang might be able to afford another meth lab.  But is it predictive of bad times to come or contemporaneous with them? 

Surely it’s the latter.  What seller in any market – be it oil or life-saving miracle drugs – wouldn’t gouge the heck out of us if we (or insurance companies) had the coin to cough up.   There’s a limit of course.  Folks would cut back if energy became too dear.  But the oil market is no stranger to pushing the envelope just short of demand destruction.  Apparently, demand can destroy itself just fine, thank you.

WTI Crude Futures Contract
 



The upshot?  The Federal Reserve Open Market Committee will be reluctant to commit to raising the Federal Funds rate target as early as most expect.  We’ll hear from policy makers today.

Tuesday, October 21, 2014

Mattel: Summer Disappointment and Winter Dreams

You can almost hear the management of Mattel (NASDAQ:MAT) singing, "Christmas is a comin' and the geese are gettin' fat, will you please to put a penny in the old girl's hat." The old girl being Barbie, who'll celebrate her 55th anniversary under the tree this year. (Click here to read more).

It Ain't Love But It Ain't Bad

They - you know who you are - say that if we liked J.C. Penney (NYSE:JCP) at $11.06, we should love it at $7.09. Well, it ain't love but it ain't bad, as the old 1970s country and western song goes.
When we visited Penney a month ago and deemed it worthy of speculation, the stock was trading at the aforementioned entry point. Since then, after a ballyhooed analyst meeting backfired and expectations were lowered, the stock was taken out and summarily shot (Click here to read more).

Saturday, September 13, 2014

Deserving of Credit, J.C. Penney Gets It

J.C. Penney (NYSE:JCP) deserves more credit, so that's what it got - from the credit markets, that is. Now the question is: Will equity investors follow suit? We believe they will, rewarding the company with a higher share price once the success of the company's turnaround is more clearly visible.  (Dear reader, click here to read more).

Monday, September 8, 2014

Reading and Believing in Barnes & Noble

We visit Barnes & Noble (NYSE:BKS) at least once a month. It's the only place we can pick up the latest issue of Ellery Queen's Mystery Magazine and the encyclopedic Phil Steele's College Football Preview. For those with wider interests, though, the company is counting on its new tablet courtesy of Samsung (OTC:SSNLF) to increase traffic and revitalize the digital space ahead of Christmas and the planned spin-off of NOOK Media LLC early next year. (Dear reader, click here for more).

Tuesday, September 2, 2014

Macy's Makes Us Feel So Young

As a member of the most resented generation (i.e., boomers), it's hard enough for us to entertain the thought that citizens born in the '90s (i.e., millennials) have the right to vote, much less the ability to dress themselves. "Get over it," we hear you say. "Woodstock was 45 years ago." O tempus fugit, indeed.

Macy's (NYSE: M), however, is pinning much of its hope for the rest of 2014 on helping millennials do that - dress, not vote, we presume. (Dear reader, click here for more).

Tuesday, August 26, 2014

Summer Reading: The Pity and the Glory

 Our golfer’s tan, if not our swing, is almost perfect, college football is just weeks away and the young scholars we fled in May are winding up summer frolics in gleeful anticipation of mending dangling participles and solving quadratic equations.
 
For our part, haunted as we are by the past, we spent many of these lazy, hazy, crazy days consuming the pastry of the 19th century.  But first we must eat the spinach of 2014: Thomas Picketty’s Capital in the Twenty-First Century.

Let’s go to the videotape, as Warner Wolf of WCBS used to advise us: “The rich get richer and the poor get poorer. In the meantime, in between time, ain’t we got fun.”  Put-upon right-wing apologists whined that the surprise best-seller (a weighty, academic tome with graphs galore) was a crypto-Marxist tract.  And, of course, they’re right, because much of Marx’s criticism of capitalism remains valid.  The welfare state was created by governments and factory owners to keep their heads off pikes.  Monsieur Picketty suggests the owners of capital consider anew their heads.

In the 19th century, capital was essentially land and the rents it provided – a constant concern of Anthony Trollope’s Englishmen and women.  We devoured the six Palliser novels like a bag of chips.  Our favorites: The Eustace Diamonds and Can You Forgive Her? (Can you beat that title?).  Something nagged at us in reading the former; we had encountered these characters before.  Of course, it was Gone with the Wind.  We felt like an idiot to learn that Trollope’s work was Margaret Mitchell’s inspiration.  Seems everyone knew but me.  Trollope proved addictive, and we had to wrench ourselves away.  His work is delicious soap opera served up with a gimlet eye.  We are tiptoeing back to our Victorian siren with The Way We Live Today (another great title) with every intention of savoring.

Still in thrall to our anglophilia, we took up Pride and Prejudice.  We confess having never read Jane Austen’s standard high-school curriculum romance, but, secure in our manhood, we jumped in, and were cured.  We did note this lovely line delivered by Lizzy Bennett to the insufferable Mr. Darcy: “You must learn some of my philosophy. Think only of the past as its remembrance gives you pleasure."

Nonetheless, we were driven back to our republican shores, and then cast off again with a re-reading of Moby Dick, last encountered in our college days at old OU.  ‘Tis not for everyone, but those of us with a biblical bent and a whale or two to kill in our own life’s voyage may find it oddly comforting.

But back to England we were drawn, this time to Dickens’ first novel, The Pickwick Papers.  Would that Pickwickian naiveté and unshakeable good nature ruled more hearts.
Still in England, we started Ford Maddox For’s The Fifth Queen trilogy.  It can only end badly for this wife of Henry VIII, we fear. 

On this 100th anniversary of the beginning of World War I, the legacy of which can be seen playing out even today in the sands of Araby, we recommend Ford’s Parade’s End trilogy.

For the sporting gentleman, Run to Daylight by Vince Lombardi and the great sportswriter W.C. Heinz is a 1960s classic not to be missed.  Surprising is Lombardi’s tolerance for most every kind of man.  We are all odd fish, he acknowledges, to be taken as we are.

In the meantime, we are halfway through Joyce’s Ulysses, which we gave up on in our callow youth.  The trick is not to try and make sense of it; just get lost in the language.

And our annual re-reading of Hamlet reminded us of what it means to be a modern man, much to be pitied and gloried.

We know there was more, but we are tired of writing about reading and want to get back to our book and the fading pleasure of summer at twilight, dear reader. We hope you are enjoying your own leafy glade somewhere with someone in the summer of ’14.