WASHINGTON, April 21, 2016 – Very short column today. Trading action in U.S. markets was so strange today that it defied a meaningful description. Volume was anemic, evidence of a decided lack of enthusiasm even by the permabulls. Is this market worried that the Fed may surprise and jack interest rates in June? Too early, perhaps, to say.
Former tech darlings continue to get hit, including Google and Microsoft. Precious metals want to really rally, but except for silver, they always seem to pull back. And spinmeisters continue to use economic numbers to lie.
Today we heard the “good news” that the U.S. just reported the lowest number ever (since records were kept) of unemployment applicants. What they didn’t tell you was that this “low” number is simply due to the fact that most unemployed and underemployed Americans—still roughly 10 percent of the workforce according to the more accurate U-6 unemployment numbers—have long since exhausted their unemployment benefits and can’t apply any more.
So as these long-term unemployed Americans drop off the official unemployment rolls, they are no longer counted as unemployed. Worse, their absence from the government’s official count is now creating the impression of a really robust economy, when, as any worker outside Washington, D.C. will tell you, this economy is anything but.
Further evidence comes from a different place, namely, Sears Holdings (symbol: SHLD), which owns Sears and KMart stores nationwide and announced that a goodly number of them will be shuttered by some time in July.
Once robust Sears stores have been poorly managed for years, but also suffer from a confusing consumer image as well as a baffling, longstanding inability to transist a once robust nationwide catalogue sales operation to the e-commerce model.
The result: declining foot traffic.
That’s not only a problem at Sears. It has long plagued traditionally cut-price chain KMart stores whose generally low-income demographic increasingly prefers nicer Walmart stores and dollar stores where goods are plentiful and where shelves, floors, lighting and personnel don’t look like crap. I still pick up the occasional really good bargain at a local KMart.
But every time I go into that building, I get depressed with the dismal atmosphere and the pervading sense of failure that permeates everything within. In today’s competitive retail environment, that’s not going to cut it. And this particular store is one of the better ones.
At any rate, by mid-summer, 10 Sears stores will be no more, along with a whopping 68 KMarts whose blue-lights, if any are left, will go out for good in locales across the country. You really get the feeling that current owner and hedge fund genius Eddie Lampert is just phoning it in, waiting to close that entire enterprise down to sell off the real estate, which is probably why he bought the two chains anyway. What a cynical waste of two retailers that were once American icons.
Today’s trading tips
After reporting relatively poor earnings numbers (which were largely expected), one of our vulture capitalist pick hits, Blackstone (BX) took a hit. So we sold off the shares for a tiny profit, as opposed to the big one we took only a month ago when we sold off our first position. We’ll get back in once again when the boys stop beating it up.
We figured there’d be at least one more quarterly hit until BX could start cranking its cash stash to bulk up on new acquisitions again. But in this uncertain environment, that’s apparently happening a bit slower than we thought it would.
Aside from that, we’ve been slowly selling minor positions that no longer seem to make sense, which is getting us down to a rather undiversified portfolio of term preferred stocks and good old oil tanker MLP Teekay Tankers (TNK) which keeps trying to break out.
We’re just too nervous to load up right now. This market just doesn’t feel good.