Wednesday, 23 May 2012

status update....

I've not pushed anything out there recently, because I don't think there is too much to say. I thought the Greeks would look to repudiate their existing debt when they started running a balanced primary budget, it looks like we are getting closer to that point. I think the pressures in the eurozone system are definitely increasing, and the press trying to whip up panic with stories of deposit flight and bank runs is certainly not going to help.

It is the mechanism that I thought could pull the rug out from the system, but would be hard to predict. I guess the ECB is falling over itself to provide liquidity to those banks who are losing deposits. I am not sure whether it should or not, given the uncertainty of the solvency and the questionable collateral they have accepted. Additionally there is the risk to the system they add as the subordinate other creditors, without the political mandate. But then I am a euroskeptic and I don't feel that the project has any democratic legitimacy.

I'd like to have a quick moan though, I find it increasingly difficult to read newspapers, magazines or watch the news. Maybe it is just my inevitable middle aged crankiness, but the ratio of factual reporting to opinion and "analysis" seems to be at an all time low. I like the next punter enjoy a bit of gossip, and hearing opinions, but surely not every article should soley consist of dumb down clich├ęs, rhetoric and the journos political views. The place for rants and froth is opinion pieces, editorials, letters and blogs, not leading stories and bulletin pieces surely.

The media, economist covers and consensus is definitely focussed on the euro, with a shocked belief that they will muddle through. A lot of the better macro commentary is talking about the slow down in China, which I agree remains the biggest risk, not that I feel I have any edge calling that or finding ways to express it. With complete consensus that the US is recovering better than 'expected'.

I'll resist the urge to slate the bookrunning skills of MS.

JCP

I always get a little bit nervous when a value investor falls in love with a retailer. I don't know much about JCP, I don't even think I have set foot in one. I do however remember Akman's involvement in Target, and the ongoing ulcer that SHLD is for Eddie Lampert. Both smart guys and good investors; both lacerated by concentrated retailer investments.

Perhaps JCP is different. I do worry about the fawning over management. AAPL is a different proposition to JCP. I also don't particularly think much of plans to make efficiency savings with the ad budget, that always seems like a false proposition to me and a short term attempt to increase the spreadsheet value of a business.

My biggest concern is that Akman will get frustrated and sell his shares, also not too sure who the marginal buyer really is, or more precisely when it'll be. Looking at the pricing of the stock, I just don't think there is enough margin of safety in there for me, maybe at $19 if the chart looks a bit better it might be worth a 'placeholder'.