Friday, June 30, 2017

"Herb & Dorothy", a film worth watching

This documentary from 2008 was watched last night, and it was charming.  At times it is wondered whether other people with my background, proclivities, and interests have already seen films, read books, heard music, and discovered television programs that are only found here belatedly.  My relative isolation at times is wearing.  Yet, like last night, it is so rewarding to find something completely unexpected.

For those not familiar, or in my shoes until yesterday, Herb and Dorothy Vogel were art collectors who accumulated a collection of modern art of the minimalist and conceptual variety that was astonishing.  That he was a night time post office mail sorter and she was a librarian did not deter them from their life long shared interest in collecting work done by artists that they often found in the early stages of their productivity.  The Vogels lived in a one bedroom upper east side Manhattan rent stabilized apartment that was eventually somehow stuffed with thousands of paintings and other iterations of art.  They were hoarders with a distinct purpose and an interest.  Narrow pathways were the only open space in their living areas.

They eventually donated the majority of their collection to the National Museum in Washington, as well as giving portions to smaller museums in all 50 states.  The film was pleasant to watch.  The interaction between the Vogels and various artists was interesting.  Their relationship with each other was enviable, and even at times reminiscent.  Their dedication to art without any motivation for profit could only be from another era, but it was not.

Thursday, June 29, 2017

Tech vs. Big Banks---market slides as two industries diverge

Technology stocks did not fare well today.  That's fine.  They have been on a tear this year, so seeing Apple, Google, Facebook, Adobe, Paypal, Microsoft, and the QQQ decline between 1.5% to 2.5% today could be easily absorbed by investors, as opposed to traders.  It's probably a healthy sign.  Straight lines up can lead to straight lines down.  It is not anticipated that this is the beginning of a longer term retrenchment but there may well be further more modest declines heading into the weekend that will effectively end on Tuesday July 4th for many folks.

Bank stocks, especially those of the biggest banks, rose materially with, as examples, Citi and Standard Chartered up around 3% and Wells Fargo, Bank of America, and JP Morgan up close to 2%.  This is a one-off jump, as expected positive regulatory stress tests results will free up banks to buy back more stock and/or increase dividends.  Tomorrow in fact may see the excitement about that ebb.

Stocks in general did decline today, with some non-tech, non-bank outliers.  Visa was down around 2% and Kimberly Clark declined almost as much.  They have been good performers but action there needs to be looked at for understanding.

Before a holiday weekend, it is possible that there will be a broad defensive decline. That type of action has happened at times in the past.  That said, no fireworks are expected, at least in the financial markets.

Is all of that wishy-washy enough?

Wednesday, June 28, 2017

An unusual contact after 45 years

Yesterday an e-mail was received notifying me that there was a comment added to a post published here on January 11, 2016.  That post had meandered into a mention of Camp Carolina, where I was a counselor and tennis instructor in summers from 1968 to 1971.

It was an interesting surprise. A camper who is not clearly remembered had found me, and sent a note saying that his sons had been camp counselors from time to time and he used me as an example of the good influence that they could have on their campers.  Through Google it was found that he was now a 58 year old pastor at a Presbyterian church in Oxford, Mississippi.   How nice.

Tuesday, June 27, 2017

Kroger's dilemma

This morning while doing a few exercises, very few, I happened to see an interview with the CEO of Kroger, Rodney McMullen.  New to me, he is a native of small town Kentucky and a U.K. graduate, and has been a lifetime employee of the grocery company headquartered in nearby Cincinnati.  It did not look as if he relished this interview, in the least.

Kroger's stock has dived in the last two weeks from $30 to $23 as a result of a reduction in earnings guidance one day followed by the announcement of the Amazon acquisition of Whole Foods the next day, a double whammy that they could not have expected.

CEO McMullen said that he was focused on the long term and on the customer.  According to his commentary, virtually everything about Kroger was "great", even "incredible" in a few instances, and that the company was "proactive" on all fronts.  He noted that they had been in business for 130 years.  He did not answer any of the questions asked about the issues related to the new shape of the competition.  Clearly he stayed on a weak script and gave no evidence of being a humanoid.  That gave the impression to some that he was the product of a rigid corporate culture.

The company does have a credible following with three of its top shareholders being the respected discretionary investors Capital Research, Fidelity, and Janus.  That's impressive in these days of dominance by huge index funds investing in large companies. There actually must be some good management at work there since my last visit to one of their stores in hometown Virginia years ago. Unfortunately McMullen did not inspire anyone and his view that everything was "great" suggested that nothing could get better to some observers.

Then again and perhaps fortunately, it will give opportunistic investors a chance to evaluate the stock and decide if they can step in a at "great" price.

Saturday, June 24, 2017

A concern that is bigger than Trump

Seeking the attention he desperately needs, Trump went to Iowa on Friday for a rally.  It was no different from his campaign last year.  The audience was his, they were into his rants, they enjoyed his assaults on the media, they reveled in his attacks on the Democrats and anything that popped into Trump's mind.  The fact is that they enjoy the thought free and free theater.

The people that are enthusiastically at these rallies do not represent a majority of Americans, but they may represent a bigger percentage of people obsessed with one intuitive cause, however difficult to articulate, than any other block of citizens.

Are they more important than Trump?  Could this amorphous group  metastasize when Trump inevitably self-destructs?  Those are questions that need attention by smart people not on cable.

Saturday, June 17, 2017

Amazon and Whole Foods

Everything that can be written and said about this acquisition is probably already out there in the media and blogging world.  Two cents here...  it IS a big deal, but it should not substantially affect Walmart and Costco.  Why?

Walmart is by now a global company that is growing.  When a friend is vacationing in Mexico and mentions walking to Walmart to shop that is not trivial.  Walmart's distribution system is more extensive than Amazon and more local.  Costco is a unique experience, a place that is known for unpredictability as well as value.  The stores are destinations, not routine grocery outlets.

Target is more in danger from the combination as their stores have lost their once unique cachet, no matter how hard they have tried to recapture it.  The various "dollar stores" could be at some risk as well.  With all of the talk and reality in the market of retail contraction already,  this transaction was timed to get attention.  It did.

Watching golf

There were times when watching golf on television was somewhat entertaining on a lazy day.  That is seemingly no longer possible.  These anonymous chunky white men in their similar apparel with no apparent emotion are beyond boring.  It may be that trying to watch today before the closing holes on the final round is flagging the enthusiasm here, or it may be that golf is only an entertaining game when actually being on the course playing.  It can be said with certainty here that physically being at a tournament and watching is the ultimate torture, but in the past lying on the sofa and watching was relaxing.  No more.  Now it is just irritating.  It is on in the den now with an aide choosing to watch and care for K.  At least the volume is low.

Wednesday, June 14, 2017

Equity market too stable

It's hard to trust the U.S. equity market now.  That's not because there is any distinct trouble visible. The issue is the ongoing creep up that has no catalyst.  This past Friday, some of the major tech stocks and the Nasdaq broadly took a significant hit.  By Tuesday of this week all was well although less than half of the decline had been clawed back.  The decline had been accepted as normal, and in the context of the last year it could be.

For example, after years of loving Amazon the company but never finding another entry point since a short stint of ownership in the late 1990's, in early September 2016 I jumped in with both feet.  As of Thursday of last week before the next day's slide, the position was up almost 25% in the nine months since purchase.  How could there be any concern about a decline that had no determinable reason other than an institutional thought that these big tech names had gone up too much in an uncontested way.  Everything else in the market was behaving in a relatively normal way.

That all leads to the thought that the next two days could be interesting to watch.  Are we beginning to move back into the strangely stable market behavior that we have had over the last two months, or is there a reassessment underway that will lead to more volatility.  Today's notable events were weakness in small caps and many mid caps with stability in plain vanilla large caps.  Apple retreated somewhat more, while Walmart, Costco, and Target continued to edge up nicely despite huge market concern about overall retail sales.  They are in fact part of the ongoing reason that niche retailers and mall anchors are challenged.

As always, some pundits tried to turn the rate hike today into news and a Vice News reporter tonight surprisingly painted it as a controversial and ill advised move.  It is a necessary move to try to build some management flexibility for the Fed if a day comes when some unexpected dire event requires the Fed to demonstrate its might.  That's all this is.  There is little major impact expected.

Stay tuned, but in Trump time, sort of like dog years, every day can bring unexpected change quickly.  Somehow it is expected that the next two days will not be boring.

Tuesday, June 13, 2017

The departure of Immelt from GE was overdue

The industrial conglomerate GE is a sprawling behemoth of valuable and productive businesses.  The financial asset GE is a stock that has been a laggard for years.  Jeffrey Immelt inherited a tough situation from the highly regarded, hard charging egomaniac Jack Welch.  He became a custodian of the company more than a disruptive or energizing leader.  His major action was to remove GE from the financial services business but he did so in a way that reduced risk substantially while not creating any significant value in the disposition of those businesses.

Immelt clearly enjoyed his 16 years as CEO.  He became a major public figure and a sought after spokesperson for industry.  He devoted considerable time to public service and to charitable organizations.  Now GE is in need of a major overhaul from the perspective of many shareholders who have stayed the course due to GE's strong balance sheet and healthy dividend.

The new CEO will be John Flannery, a 30 year veteran of the company who has wide business line and international experience.  Is it possible that a hopeful comparison can be made to the succession of Satya Nadelli to CEO of Microsoft three years ago after Steve Ballmer's languid tenure.  Microsoft stock is up 60% since Ballmer's overdue departure.  That is the hope of investors who pushed GE's stock up 3.4% yesterday after the announcement, but backed off more than half of that gain today as Flannery's pure GE persona was focused on.  Can he shake up this conglomerate in a way that creates investor enthusiasm and reinvigorates businesses?  Is GE's capital might required for all of its huge businesses, or can some be broken out into still large stand alone companies that are more competitively focused?

That's the question.  A few shares were added here early yesterday to an already full position as a reflection of some optimism.  This change could be extremely positive.  We will see.  

Monday, June 12, 2017

Trump's cabinet meeting --- a bizarre one for the ages

Today, Donald Trump had a televised roundtable of required comments from each of his cabinet members and others attending the meeting.  He began by praising his own leadership and its historic significance, and then "graciously asked" everyone there to comment.  They did, and one at time praised Trump.  Priebus called it "a blessing" to work for him.  Pence, Sessions, Haley, DeVos,  Chao, and Price were each embarrassingly obsequious.  In fact, the unanimity of the group, many of whom were "thrilled", "honored", or "privileged" to have the leadership of Trump, was astounding.  What a surprise!  Only one member of the cabinet, one, maybe McMaster but not sure, said that he was benefiting from the team he inherited.

Maybe Trump is running the country like a business.  In 2001 when the company that I worked for was acquiring another company at a price that made me cringe, the Chairman decided to go around the table of executives and ask everyone attending what they expected the stock price would be after the deal was announced the next morning.  The stock was at $55 that day, and the Vice Chairman to his left who knew better started by drawling that it could go to $100.  Around the table the comments were exceedingly positive with only a few voicing some mild caution as they looked for only a small gain at first.  When my turn arrived, reflecting my less powerful role, I said that "we may not see the benefit immediately" and no more.  My boss the CFO followed and knew my extreme discomfort with the price.  She tried to echo my concerns with low key and politically cautious commentary. When the stock opened the next day it immediately went to $45 and did not reach $55 again for seven years.

That was then and this is now.  The dynamic is familiar.

Sunday, June 11, 2017

Sunday dinner, a melange from the frig

Tonight's meal will be a mixture of good food, some leftover and some purchased on Friday.  There will be a side order of Gino's linguini marinara not touched two nights ago, with three veal and pork meatballs from Cippolini Pronto, all with some Rao's pasta sauce added.  Microwaved on medium heat, longer but better.  In addition there is teriyaki salmon from North Shore Farms that is a staple of our diet weekly.  From last night's Pita Station dinner there is Greek rice and grilled vegetables, as well as a tomato, beet, feta, corn, and walnut salad that is large and never finished in one night.

Kathy will prefer the rice to the linguini, but will certainly try the meatballs as they are made her way. Pasta will be my focus for better or worse, and the meatballs will be my major source of protein as opposed to the more healthy salmon.  There's plenty of that for tomorrow.

That's an update from here that does not mention Trump...   darn, he slips in.

Wednesday, June 07, 2017

Comey's testimony tomorrow --- live television event

Former FBI Director Comey's testimony to the Senate Intelligence Committee will be widely broadcast tomorrow beginning at 10am.  While some of the media and political commentary of late has likened the current investigations into Trump's clumsy attempts at obstruction of justice as similar to Watergate may be exaggerated or at least premature, the attention that this hearing will receive is a reminder of the days in 1973 when a congressional hearing was television that had to be watched by many.  It will be interesting to see the tally of viewers during the panel.

It will be necessary for viewers to choke through the self serving questions posed and commentary made by some of the various Senators on the committee.  This is clearly their chance for national exposure, and rarely has anyone accused members of the Senate of being shy when it comes to publicity.  Still, the approach that they individually take will be interesting to see, especially relative to party line adherence and the states that they represent.

Stay tuned.

Thursday, June 01, 2017

Trump's withdrawal from Paris climate accords is now a fact

Decisions made by Donald Trump fuel his need to build his ego and reflect his power more than any thoughts of substance.  Many people know that.  After the usual appallingly obsequious introduction by Pence, Trump first praised his own management of the economy and stock market, as the lawn full of sycophants applauded politely.  Then Trump moved into his Make America Great Again and America First themed campaign comments.

His speechwriters, primarily Bannon it is presumed, had given him a litany of "facts" about the negative consequences of the Paris accords.  The source of these facts was one "institute" of unknown regard, and from whatever grab bag of sources that had been handed to him.   He repeatedly claimed that the largest polluters were not contributing to the accords while the burden largely fell on America.  Have his advisers shielded him from the fact that the U.S. is the second largest emitter of carbon dioxide emissions, after the much larger country of China, and roughly tied for the third largest emitter were India and Russia, both at around one/third of U.S. emissions.  How could his remarks essentially deny this?

After his comments that were mostly a list of either unsubstantiated or out of context claims about the agreement, Trump introduced the improbable head of the Environmental Protection Agency, Scott Pruitt, an unabashed climate change denier.  Pruitt picked right up from Pence's opening, expressing his gratitude for being able to serve the President and his admiration for him.

This was difficult to watch, but it feels like a necessary chore.  Once again Trump may be surprised at the country's reception to this.  He ignored the entreaties of many influential corporate leaders and their voices will be heard later today and tomorrow.  More activism is coming.  The majority of millennials are serious about this subject.  Many will speak up.

"Lion", a film

This is a well done and touching film that follows the life of a young Indian boy.  He gets lost when he is five years old and ends up in Kolkata alone.  The first half of the film covers the harrowing early part of his life until he is adopted.  The second half finds him as a 25 year old man, successful and educated, who is seeking his past.  While occasionally a bit plodding, the story evolves with the goal of bringing out the tissues of viewers.  It works, and it is based on a true story.

While this is an Australian film, it does follow the Bollywood formula in which both films and actors are based on successful templates.  "Lion" is clearly a derivative of "Slumdog Millionaire" in many ways.  At times that is almost humorously obvious even though the actual stories are very different.

Its recommendation for an academy award was clearly a longshot, but the recognition as a nominee seems to have been deserved.  Multiculturalism encouraged at that show is a good thing.