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Investment Research Since 1978

Will J.C. Penney Follow Sears into Bankruptcy?

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After a brutal 2018, the carnage in the retail industry continues into 2019. Today The Wall Street Journal reports that J.C. Penney could follow its long-time rival Sears into bankruptcy. Missteps by management and failed rejuvenation attempts have led J.C. Penney to the brink. Suzanne Kapner reports: J.C. Penney Co.’s JCP +0.00% sales are falling, its stores are stuck in malls and the turnaround strategy keeps changing. Now, three months after the embattled retailer hired a new chief executive, a handful of senior positions remain vacant. The series of events is prompting analysts and … [Read more...]

U.S. Pipeline Shortage Bottlenecks Global Oil

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Shortages of pipeline capacity in the U.S. oil patch could put upward pressure on global oil prices as the main source of growth in world oil supply is curtailed. John Kemp reports for Reuters: U.S. oil production is running into capacity constraints, which are starting to have a material impact on the global availability of crude, causing the market to tighten and putting upward pressure on prices. The biggest problem is the lack of sufficient pipeline capacity to move oil from shale wells in western Texas and eastern New Mexico to refineries in the Midwest and export terminals on the … [Read more...]

Sears Saved by Lampert Once Again

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Eddie Lampert, Sears' largest creditor and shareholder, won a last minute bid to buy the company out of bankruptcy for $5.3 billion. This prevented the complete liquidation of the stores, and will keep about 400 Sears open. The Wall Street Journal reports: With more than $7 billion in assets when it filed for chapter 11, Sears is one of the biggest in a string of recent U.S. retail bankruptcies. The company, which also runs the Kmart chain, has already closed about 200 of the roughly 700 stores it had when it filed for protection. The agreement, reached in early-morning hours Wednesday, … [Read more...]

Can Copper Recover without China?

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Copper prices have been sliding as the Chinese economy has weakened. The question is, can copper recover even if the Chinese economy has not? Christopher Alessi and Amrith Ramkumar examine at the copper industry for The Wall Street Journal: Growth worries have recently focused on China, which is the world’s largest consumer of copper, accounting for about half of global demand, and is in engulfed in a tariff fight with the U.S. Apple cited weak Chinese demand in cutting its revenue target, a move that came following tepid Chinese manufacturing figures that showed a commonly-referenced … [Read more...]

The Other Oil Price Crash

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In 2018 crude oil prices fell 44.1% from peak to trough, a roller coaster ride for producers and investors for sure. But another oil price has also been plummeting. Coconut oil prices fell 58.2% from a recent peak in January of 2017 to $759.66/metric ton (Philippines Bulk, CIF Rotterdam, Average of Period) in November of 2018. Lucy Cramer, writing in The Wall Street Journal explains how some negative attention from doctors put downward pressure on coconut oil, which had been rapidly gaining popularity. She writes: Consumption of virgin coconut oil—a pure form of the commodity that is … [Read more...]

Tesla Slashes Prices after Missing on Deliveries

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Tesla has been forced to cut prices on its Model 3 sedans after missing missing expected deliveries on the vehicles. The price cuts also target an expected loss of demand from the end of federal tax credits for Tesla in 2019. The Wall Street Journal's Tim Higgins reports: Chief Executive Elon Musk had promised to increase sales and production of the Model 3 in the fourth quarter from the third quarter. He spent the final weeks of the quarter urging buyers to take advantage of the $7,500 federal tax credit that phases out for the company this year. Deliveries of the Model 3 in the fourth … [Read more...]

Happy New Year!

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Start 2019 by reviewing some of our most popular posts of the last year: Crisis at Vanguard: Part II Your Retirement Life: How Do You Know Where to Live in Retirement? Will You be Ready When the Stock Market Crashes? "E.J., What’s Going on with Vanguard GNMA?" Vanguard GNMA and Your Retirement Years Vanguard Founder Jack Bogle Sounds the Alarm on Index Funds The 6 Basic Investing Principles That Will Make You a Winner Dynamic Maximizers®: an Update   … [Read more...]

Equities Still Expensive by Historical Standards

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Aaron Brown sends investors a note of caution from the opinion page of Bloomberg, writing: The S&P 500 Index reached a record high in September, extending the longest bull market in history and generating an inflation-adjusted return of 300 percent since March 2009. The rally drove price-to-earnings ratios above 33, to levels only matched at the height of the dot-com bubble. The S&P 500 is now down 15 percent from its September high, reducing the P/E ratio to 28. So what does history suggest might happen in 2019? On average, the outlook is not good when stocks are falling, but … [Read more...]

Can New and Old Tobacco Succeed Together?

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With a 35% holding in e-cigarette maker Juul, Altria is betting it can turn its older consumers into fans of vaping. Altria's expertise in dealing with the FDA is a major asset that Juul lacks, and its access to a cohort of longtime tobacco using customers is exactly what the start-up needs to avoid more scrutiny from regulators worried about kids vaping. Jennifer Maloney reports on the business tie-up in The Wall Street Journal: The tobacco giant has agreed to provide Juul with a range of services expected to include help to smooth over the e-cigarette maker’s rocky relationship with the … [Read more...]