Published by clickbroker.blogspot.com.
I watch with fascination as TLC’s Extreme Couponers (DISCA) stock up hundred of bottles of soda, frozen sweet treats, energy drinks, protein bars, can goods and other nonperishables that can’t possibly cleanse or provide any real nutrition to the body. As a person who completely divorced myself from processed foods, I wonder what I could eat if they invited me to dinner.
The show starts out each episode with a walkthrough of the participant’s stock pile; their neatly organized warehouse either contained in their basement or garage. Interestingly, in the most recent episode I saw the warehouse had spread to industrial style shelving in the master bedroom. How romantic is that?
These reality stars and their families are either obese or on their way to obesity. They talk about saving so much money that they can eat for free and use the money to go on vacation. While I find the show’s premise and characters entertaining, there is always a degree of sadness watching their health deteriorating. This is especially true seeing parents giving “free” cookies to their obese children and bragging that they will be eating “free” canned spaghetti with “free” tater tots for dinner.
The show is a celebration of processed food and supersizing. But the show could also be thought of as an extension of the lifestyle originated by Costco (COST) and now promoted by Groupon. These companies charge their members for the privilege of buying far more than they need. Savings? At least they are not encouraging customers to dive into the recycle bins for 50 copies of the Sunday coupon inserts.
Admittedly, the game is as important to the couponers as the savings. Some even give a large portion of their stockpiles to charity. But the real lesson of the show is awakening to how out of balance the American food supply is. We have a government subsidizing packaged food to the detriment of fresh food through industrial corn policies. Corn is the foundation of most processed foods.
Regardless of your political beliefs, America cannot solve its healthcare crisis until it solves its food crisis. We need to rebalance our subsidies from frozen to fresh, from industrial corn to table green vegetables and from sugar to fruit. This is not the nanny state, it is the reality.
No disclosures. .
[JavaScript Games by Michael Steinberg: Color Splat Game, Magic Word Game and Scramble Word Game.]
Extreme Couponing leads to Bad Health
Economic Shorts: Volkswagen and a Billionaire’s Chinese Misadventure
Published by clickbroker.blogspot.com.
While the Treasury and Federal Reserve’s “strong dollar policy” is killing our currency, some empirical evidence might be showing its benefit. Volkswagen will soon be rolling out its new Americanized “supersized” Passat from Chattanooga. The car is to be built for America in America. Previously VW could not compete in the American mass market with German built cars.
CEO Martin Winterkorn spoke of benefits beyond anticompetitive exchange rates: “Trends are set in America … A U.S. factory can capitalize on those trends faster.” Speed to market and agility will drive America’s new manufacturing renaissance.
If housing bust billionaire John Paulson got fooled in the Chinese stock market, amateurs don’t stand a chance. Paulson & Co has lost more than $500m after selling its entire holding in Sino Forest, the Chinese forestry company fighting allegations of fraud. I have read many recent stories of Chinese companies reporting different results to American investors than Chinese regulators.
No disclosures.
[JavaScript Games by Michael Steinberg: Color Splat Game, Magic Word Game and Scramble Word Game.]
Is Bloomingdale’s Macy’s Ugly Duckling?
Published by clickbroker.blogspot.com.
Strange question in the title readers might think. After all Bloomingdale’s is Macy’s (M) upscale branded department stores. But anecdotally it appears that Macy’s is following Target’s (TGT) restructuring to concentrate on its core brand. Dayton Hudson shed its moderate and upscale department stores and renamed itself Target. Now all the resources are dedicated to one core brand.
Macy’s became national through a series of acquisitions, bankruptcies and other reorganizations. Then they went through the process of rebranding most of their stores into Macy’s. Finally, the company was renamed from Federated to Macy’s. Only two brands remain – Macy’s and Bloomingdale’s.
Recently I visited Bloomingdale’s for the first time in a few years in a very upscale mall. Tacky is a kind description. The Macy’s store in the same mall was immaculate; Macy’s higher end merchandise overlapped Bloomingdale’s. Macy’s was crowded and Bloomingdale’s was empty.
Bloomingdale’s had not been updated for many years. The “classically modern” signature black and white tile was clearly dated. The carpets were stained and worn; the mauve-colored Formica in vogue about two decades ago on the checkout counters was faded and peeling.
Macy’s was loaded with merchandize while Bloomingdale’s was thinly stocked. Some parallels existed. Salespeople at both stores wore solid black business casual and both stores contained sale racks. Why the disparity in investment?
This same mall also contains pristine Nordstrom (JWN) and Saks (SKS) stores. Why would the upscale shopper not shop at Bloomingdale’s competitors?
No disclosures.
[JavaScript Games by Michael Steinberg: Color Splat Game, Magic Word Game and Scramble Word Game.]
Where does Kohl’s fit in?
Published by clickbroker.blogspot.com.
The aspirational hierarchy used to be Saks (SKS), Bloomingdales (M) and friends, then Macy’s (M), followed by JC Penney (JCP) and Kohl’s (KSS), and then Target (TGT), Wal-Mart (WMT) and Kmart (SHLD). I can’t even place the aspirational desire for Sears (SHLD). During good economic times the hierarchy was easy to maintain, with cheap material and labor costs and free spending consumers.
The story of this past year has been higher material costs and disappearing cheap labor from so-called developing nations. The profits of higher priced retailers are supported by the brand value of the merchandise they sell. No surprise in Wall Street’s enthusiasm. The trouble comes in the middle and lower tiers.
Given that a $60 shirt does not cost double that of a $15 shirt to manufacture, brand equity plays a big role in profits. This gives a midline retailer a great deal of flexibility to challenge both the higher and lower ends. To a certain degree Macy’s is making it more difficult for Target, Wal-Mart and Kmart to present quality bargains. Target’s high end in clothing overlaps Macy’s low end.
For sure there are cultural differences in the customers that Macy’s and Wal-Mart attract. But there is probably a lot of overlap in Macy’s and Target’s customers.
So where does this leave Kohl’s? They have much nicer stores than JP Penney and the big box discounters. But if Macy’s is stretching down to Target, the middle ground that Kohl’s is fighting for is no longer needed. Many of the brands Kohl’s carries can be found at Macy’s for the same or lower price.
Frankly, Macy’s survival instinct in the highly competitive space has surprised me. They have proven far more flexible than I had imagined. Shopping Macy’s discounts and coupons gives more value than Kohl’s.
I believe that Kohl’s survival is based on coddling its middle age customers who are intimidated by Macy’s.
[JavaScript Games by Michael Steinberg: Color Splat Game, Magic Word Game and Scramble Word Game.]
Gentlemen Serving Gentlemen
Published by clickbroker.blogspot.com.
I remember reading some time ago an article about the demand for schools training professional household help such as butlers and residential managers. One leading school emphasized they train gentlemen and gentle ladies to serve gentle men and gentle ladies. The theme being the servant’s respect for his or herself and their contribution is as important as their contribution itself. Only with the recognition of mutual respect can excellence be achieved.
The underlying theme is civility. Neither respect nor civility can be achieved without sincerity. This caused me to take a deeper look into the political climate that evolved over the last few years. Many now seem to feel that the Tea Party movement has given them the freedom to act disrespectful and surface innuendoes that might have been taboo only two or three years ago.
As the Tea Party (in all its forms) is losing momentum, right-sided politicians and the corporate elite are becoming more disingenuous and less civil than at the height of the movement. I am particularly disturbed by JP Morgan’s (JPM) CEO Jamie Dimon. While JPM entered the financial crisis stronger than most financial institutions, it still benefited from the government in its opportunist acquisitions of Bear Stearns and Washington Mutual. The contagion following Lehman and AIG would not have left JPM unscathed without government intervention.
Whether he acknowledged the good of government or not, Jamie Dimon accumulated immense good will and political capital during and after the crisis. He often talked about JPM making sacrifices for the good of the country, such as accepting TARP. Then suddenly he changed.
Jamie Dimon’s unprecedented lobbying effort to shape or derail Dodd-Frank (FINREG) failed to be as effective as he desired. So now he’s blown the covers off his offensive. Like the politicians, Jamie Dimon has been emboldened by the Tea Party to be belligerent to his regulator and savior Fed Chairman Ben Bernanke.
Jamie Dimon is unhappy FINREG regulations are being developed for trading derivatives on exchanges, debit card swipe fee caps, and additional capital requirements for large systemically risky banks. But instead of working civilly with the Fed, he thinks the people are with him to fight the process. Unfortunately, this time Jamie Dimon is wrong.
Jamie Dimon is not being a gentleman serving the gentlemen of the Fed.
[JavaScript Games by Michael Steinberg: Color Splat Game, Magic Word Game and Scramble Word Game.]
The Greek Crisis is Different from the Latin American Crisis
Published by clickbroker.blogspot.com.
The top US money center banks have been through many renditions of the Latin American debt crisis over the last 40 years. Fortunately, Latin America appears fairly stable now and there is renewed enthusiasm for developing nations.
The seeds of the crisis started in the 1970’s when Citigroup (C) and other large banks recycled Middle East oil wealth into sovereign Latin American debt. When debt could not be repaid, it was restructured multiple times with the banks incurring losses. The Fed and Treasury eased the banks in their troubles.
Some professionals focus on the Euro currency as the reason a Greek restructuring would be so catastrophic. Others cite the losses incurred by the large European banks would leave them undercapitalized. The explanation that makes the most sense to me is that banks are far more interconnected now than in the past.
The clearest experts focus on the liquidity crisis that emanated from the lack of counterparty confidence occurring after the Lehman collapse. While primary exposure to Geek debt can be generally estimated, the related derivative exposure is near impossible to estimate. The difference this time around is no bank knows their counterparty’s indirect exposure to Geek debt.
Without exchange traded derivatives, no public record of exposure exists. Just like the housing crisis, the Greek crisis is really riding on the back of CDS (credit default swaps).
[JavaScript Games by Michael Steinberg: Color Splat Game, Magic Word Game and Scramble Word Game.]
Two Profound Enlightenments from Two Profound Fed Chairmen
Published by clickbroker.blogspot.com.
The best understanding of the nuances of the Fed’s inner workings come from the casual comments during Q&A with former Fed Chairmen. Of all the comments from Volcker and Greenspan over the last few years, two were the most profound.
Volcker told us that the Fed adjusts its regulatory vigilance as a tool for enacting monetary policy. This explains why the Fed so adamantly fought to maintain its regulatory role during the negotiations leading to the Dodd-Frank (FINREG) bill. When former Treasury Secretary Hank Paulson proposed separating regulation from the Fed, I believe he understood this.
Greenspan told us banks cannot free excess reserves (at the Fed) to issue more loans because they do not have enough capital. Greenspan’s statement might not be immediately obvious. Excess reserves at the Fed carry a zero risk weighting, therefore they require no capital to maintain. Different types of loans have varying risk weights, but all would be above zero. Greenspan’s remarks are far different than the cry that there is no loan demand.
Controlling bank capital requirements and the enforcement of lending standards are powerful tools in Bernanke’s arsenal. The current balance is allowing the Fed to boost asset prices, while at the same time “controlling inflation.” The high capital requirements prevent the excess bank reserves from flooding inflation into the general economy.
Bernanke has in essence sterilized QE 1 and 2, while bidding down interest rates. With most assets prices tied to risk free Treasuries (bills, notes and bonds), as rates go down all other asset prices go up. Is Bernanke the real maestro?
[JavaScript Games by Michael Steinberg: Color Splat Game, Magic Word Game and Scramble Word Game.]
Hanging out at the Apple Store
Published by clickbroker.blogspot.com.
I went to the Apple Store to test some JavaScript games I developed on the iPhone, iPad, MacBook Air and MacBook Pro. I always viewed the Apple Store like Barnes & Noble (BKS); come browse and play without being harrassed. Previously, Apple always had more customers than salespeople. Now, at least in my local mall, Apple has almost as many salespeople as customers. And they’re all trying to convince you to drink the Kool-Aid. Dedication is one thing, but a cult is something else.
No one can deny the dedication of Apple fans and the unique design prowess and genius of Steve Jobs. The products are undeniably gorgeous. But this Apple lurker has found them to be ergonomically challenged. The touchpads on the Macs require a hard press to simulate a mouse down or click, making a drag operation difficult. The virtual keyboards on the iPad are less than practical for serious users and impossible for people with normal fingers on the iPhone.
Jewelry is one thing and practicality is another. The Apple devices are excellent for content distribution, but for me anyway, are not as good as the Wintels for content development. I expect that many of you reading this will disagree with me.
Are these two anecdotal observations an indication that Apple is peaking? No one has ever made any money betting against Steve Jobs. But I get concerned when design overwhelms usability and when salespeople become too aggressive. Have the products stopped selling themselves?
I’m also wondering if Apple is overselling its coolness. How cool is it to see senior citizen salespeople wearing blue jeans and Apple T-shirts? Cool is only cool when it’s real, not fake.
The current wisdom is that Apple in the persona of Steve Jobs will never run out of innovations. The risk is that applying great design to standardized products has its limits. And believe it or not, Microsoft (MSFT) appears to reincarnating itself.
To invest in Apple now, you have to believe that Apple will continue to create completely new categories like the iPhone and iPad. Nobody ever thought Research in Motion (RIMM) would face creative destruction.
[JavaScript Games by Michael Steinberg: Color Splat Game, Magic Word Game and Scramble Word Game.]
Dividends Now vs. Dividends Later
Published by clickbroker.blogspot.com.
A tale of two stocks, Cisco (CSCO) vs. Verizon (VZ): One has dropped in price significantly, while the other has risen significantly. One has a lot of cash, while the other has a lot of debt. One has a starter dividend, while the other has a mature dividend. One yields a little, while the other yields a lot. Both are mature companies with limited growth potential. Both are also in highly competitive oligarchies.
The question is whether to start buying Cisco below $15 in the hope that it follows its mature cash rich technology brethren Intel (INTC) and Microsoft (MSFT) in growing their baby dividends into active teenagers. At the same time, should we buy Verizon and potentially be disappointed if debt curtails their ability to continue the dividend at the current rate?
If you believe that Cisco will be paying at least $1 dividend in 5 years the choice is obvious to me. I would also start buying Intel below $17.50 and Microsoft below $20.
[JavaScript Games by Michael Steinberg: Color Splat Game, Magic Word Game and Scramble Word Game.]
Sphere: Related Content
Posts
