There were too many shorts banking on some really bad times going forward. Now that it appears that CA doesn't really want to shut them down, the whole landscape has changed, and shorts no longer have any real threat to hold on to.
The best you can hope for is a slight pullback from the $9+ that it will hit on Monday.
California has no interest in running companies our of business; they only want to levy fines. They got some money on a down payment of a larger fine they will try to impose later. Antagonizing businesses is a significant revenue generator for the State of California.
I've never met two people who believe in the same good. Everyone invents their religion to suit their own tastes, taking pieces here and there and calling them truth, and disregarding all the rest. I found it interesting that Pope Francis recently indicated that an insult to one's god justifies force in return. That leaves me with no alternative but to believe he's a terrorist. So much for turning cheeks.
Oil job losses are also a real problem. The currency war is likely to increase imports (due to lower import prices) enough to offset the reduced cost of imported oil, so in the net we will have the oil job losses with no reduction in the current account deficit to offset the losses. On top of that we'll have other job losses as imports displace domestically produced goods.
We're now in the midst of a currency war that the USA is losing. Unemployment claims should start to move up in the next two months, and the unemployment rate will stop falling, and begin to rise by this summer.
Last year, JCP raised prices so fast that recovery of lost sales stalled. As a result, JCP is in a weakened position coming into the next recession.
Markit, a rational argument will have no effect. I would have thought that you would realize that by now.
OCN hasn't been any worse than any other player in the home mortgage industry, they just got caught. Give it a little time and the regulators who are trying to get public attention for their lofty efforts will move on to another target, and leave OCN alone. Let's face it. Everyone in the industry is trying to screw everyone else.
JCP's future will depend on its ability to both recognize the changing circumstances and respond intelligently. Some may have been surprised by the recent moves made by Macy*s, but it is doing exactly what it needs to do to be successful five and ten years from now. JCP needs to react in a similar fashion.
Closing stores will not get JCP to where it needs to go, but baby steps such as that are generally helpful. Store brands are also helpful, but it has to leverage such brands by increasing differentiation with respect to style, materials, colors, and quality. Lululemon is a great example of a retailer that has succeeded by way of brand differentiation.
It's unfortunate that JCP was weakened by RJ, because it puts it under greater financial stress at a time that such stress can be quite harmful. But JCP's future has not yet been decided by the past but is very much a matter of how they play their cards in the future.
I'll be looking for signs that JCP understands its challenges and continues moving in the right direction. Over the past year I have to say that JCP has done exactly what I would have done under the same circumstances. That's all well and good, but a serious misstep at this time could be fatal. I'll be watching carefully.
The JCP stock price will not follow fundamentals very well. The vast majority of investors, both retail and institutional, have no idea what they're investing in. The price of any individual stock appears to have the wisdom and understanding of a six year old child, changing with the wind and in response to conditions that often have no bearing. At this time, one can generally expect that any highs over $9 are almost certainly unsustainable, and a price lower than $5 is unlikely. However, the general economic picture is subject to considerable change, which will tend to shift the trading range either up or down.
JCP's circumstances and future have to be viewed in the context of the overall economy first, and the retail sector second.
The Fed has been pulling out all the stops to pump the economy since 2009, and nothing has been nearly as successful as in the past. Since the 1980's, stimulative measures have had diminishing benefit. Regardless of why, one should not try to deny the obvious fact that a strong recovery is looking less and less likely. Beside the absolute interest rate on the 10YR note, look at the yield curve. A sharply sloping yield curve is stimulative because the net interest margin for banks is great, so banks profit from making loans. Right now the yield curve has a reduced slope, which is a condition that always corresponds to a weakening economy. In conclusion, I expect a weak economy going forward with a growth rate averaging less than 2%. There's a meaningful chance of a brief recession of small magnitude, but such has less than a 50% chance. On the other had, there's virtually no chance of average growth over the next two years of near or above 3%. Neither is there any reasonable chance of short rates being raised by the Fed, so keep your adjustable rate mortgage if you can.
Retailing will increasingly be affected by the options afforded by the Internet. Although brick and mortar stores will continue to be an important part of the retail landscape, their role will change over the next 20 years. The most important change is that information available through the Internet will empower consumers and reduce the power of retailers, with an unavoidable drop in margins. Whereas JCP could count on an average margin of about 37% in the past, it better prepare for a sustainable margin of only about 25%. Differentiation is the driver behind gross margin, and all retailers are losing the ability to differentiate. Store brands will help, and those without brand differentiation will suffer.
Please don't think for a minute that RSH will make it without going through bankruptcy. I could explain in detail, but I don't have the time to post 100 pages of analysis, and Yahoo won't let me.
Obama is moving tax avoidance by wealthy people and large corporations to the front burner. When Yahoo announces its plan, it will draw instant, both favorable and unfavorable, from the opposing sides of the tax issue. Really big fireworks are in our future.
libo, what we're seeing in the 10YR is the continuation of a 30 year trend downward, which is being driven by the current account deficit. This is not a short-term manifestation of a market imbalance.
Our economy is driven by consumption, which is linked to borrowing by consumers. We have reached a point at which retired people, who make up an increasing large percentage of the population, have no desire to borrow, but young people, who want to borrow, have such low incomes that they have no borrowing capacity. The 10YR rate reflects the drop in demand for money.
The same thing is happening in Europe, but modified slightly by the problems of integrating economies of greatly different productivity levels. It is; though, exactly what Japan began to experience in the early 1990's, and will continue for the USA just as it has continued in Japan. Please note that the 10YR rate in Japan is 0.25%.
CA likes to get it way through threats and intimidation. Those people think they're god's chosen people and that their s*** doesn't stink.