Old Themes and Retail Schadenfreude

Wednesday, March 30, 2011

The past two days have seen a return to good old fashioned data and CB watching with the market entranced with the tussle between the ECB and FED over who, what, how much and when rates will start to move. Shock headlines of global strife are just "So passé, darling". Just look at today, "*PORTUGUESE 5-YR NOTE YIELD ABOVE 9% FIRST TIME IN EURO ERA", but it's looking as though Portugal could fall off Spain and vanish, Atlantis style, into the ocean and the markets wouldn't care. IRISH LIFE CLOSES SOMETHING? Bothered?

As far as Fed watching goes, the market appears to have its opera-glasses focused on the peanut throwing galleries occupied by the "ers" of Plosser, Fisher, Lacker etc and their buddy Bullard, rather than on the stage and the main players of Bernanke, Dudley and Yellen. The heckling, for us, does not yet drown out the chorus from the stage which points to 2012 being the earliest likelihood for hikes.

As for data, we wondered last week if this is all the more important, post Japan and Libya, as we need to see how sentiment has been touched. We also surmised that we don’t think it has. Obviously the spinning brass balls on the governor of sentiment and growth is Oil. TMM note that while interest in energy equities remains strong, open interest at NYMEX has dropped for crude. Perhaps the recognition that in Bahrain and Saudi, as one political scientist noted, "suppression works" and in Libya the major oil producing areas are conclusively in the hands of the rebels lowering the risk of a super spike. The recent price rises have seen little change to demand but have poured and extra (guesstimate) $300 bio to OPEC producers coffers but the latest BBCBlx figs have it at 1 trillion (BBCBlx - similarly reliable source of data to the ONS).

And talking of the ONS, as this post lunges between topics, they have just announced that "ONS ESTIMATES UK BUDGET MEASURES WILL ADD 0.29 PERCENTAGE POINTS TO CPI, BIGGEST IMPACT FROM TOBACCO DUTY". Unsurprisingly, Short Sterling Interest Rate Futures got smoked. TMM think this could be a new twist of government policy. If you want lower inflation and the BoE not to raise rates, then stop smoking.

But one headline that TMM were particularly interested in today was Dixons' profit warning and resulting price fall of 20%. We are sad that the UK retail sector is still showing signs of stress, HOWEVER, we are mightily pleased to see an organisation that has for years been responsible for so much of TMM's shopping ire, finally take a kick from the markets in exactly the same spot TMM have many times considered hoofing their sales staff. Dixon Group's "PC World", is, in TMM's eyes, the spawn of the devil. Its continued existence selling overpriced electronic basics in cavernous retail warehouses populated with staff less knowledgeable than nearly all of its customers, had TMM thinking that the whole set up must either have been a Triad money laundering operation or the retail equivalent of a CDO squared - i.e. had lost track of the underlying asset (the customer) and was running on fresh air and accountancy. Dixons is very HMVesque. Both have been competing with online stores for years and instead of adapting to become fonts of "go to" knowledge and expertise have instead just alienated their client base with a "we know best" arrogance. Management genius can only take you so far before the inevitable kicks in.

So perhaps we should see any demise in the old fashioned retailer, not as a sign of worry, but as a sign of a turn for the better. A cleaning out, a part of the process that is already being discussed with respect to the USA where, after 2 1/2 years of life support, some difficult decisions need to be taken and final farewells said to old loved ones.

Or in the case of PC World, Not. TMM are fighting each other to get to the plug.

Posted by Polemic at 12:04 PM  

7 comments:

Old themes indeed,TMM,as for fonts,I think they come in a variety of flavors nowadays.

Wannabe Font = the Googler

Apprentice Font = the Wiki

Master Go To Font = Well, if you find him,lets us know, I'd even consider moving to the states:-)

ps. I'm not feeling very creative today.

FX said...
1:34 PM  

On the subject of oil, I'm wondering if the price rise this year isn't more due to demand than to nervousness about conflict in the Middle East.

Oil had been in contango until just a few months ago and a there were plenty of stories about oil going into storage as traders bought spot and sold futures.

With oil futures now almost flat two years out, that trade is clearly dead.

But each month shouldn't there be some oil coming out of storage as those previous trades wind down? So the spot price by demand sufficient enough to absorb both current production and the maturing supply from storage.

In other words, this future trading has gone from supporting the spot price to suppressing it.

If the recent rise was due to nervousness about future supplies, wouldn't you expect the futures 6-12 months out to be selling at a big premium?

Bob_in_MA said...
2:15 PM  

"it's looking as though Portugal could fall off Spain and vanish, Atlantis style, into the ocean"

Given that the ancient name of Portugal was Lusitania, it is grotesquely amusing to see it sinking in its ocean of debt.

Anonymous said...
3:57 PM  

Euro on a rampage, with ECB officials popping out at opportune times to punish short sellers. Peripheral nations slaughtered on the altar of "price stability."

Anonymous said...
5:46 PM  

"n Libya the major oil producing areas are conclusively in the hands of the rebels"

Correct me if I'm wrong, but weren't they driven away from the main oilfields and export hubs in the last couple of days?

Sid said...
10:12 AM  

here here... the market goes nutty when lacker and plosser say hawkish comments (duh) but the uber -doves say nothing...

lets here it once from bernanke...

and an ever better comment from bullard " the fed will get it (the timing of rate rises )right this time, not too abruptly like in '94 or too predictable in 2004"

can we bet?

Anonymous said...
1:22 PM  

Love all computer retailers where some spotty kid offers to tutor you in turning on your I-Mac.

"The power switch is here, sir, and the um.. stick goes in at the back.."
"the flash drive fits in the USB port?"
"yes, sir, the long flat hole. For $100 a year, a expert can tutor you when you run into problems".
"are you the expert?"
"yes"
"you do know I had one of these in 1986 and I used to write machine language...?"
"these machines can translate into other languages...I can show you, look - goggle translate"
"That's google, sunshine.."
"no need to be a smart-arse..."
"yes, I can see there aren't any around here..."
"do you want Mobile Me, then?"
"sunshine, nobody in their right mind would want you, mobile or static"
"sod off"
"enjoy your retail career, young man..."

Leftback said...
4:51 PM  

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