Some Common Cents for May 12th, 2017

To read the headlines, you would assume the French Presidential election and the Administration’s sacking of Jim Comey as the Director of the FBI were the big stories for the week. However, both were sort of non-events for investors, or should be. First, the French election was basically a foregone conclusion. The issue wasn’t whether Macron would win, as everyone expected he would. The bigger issue was by how much he would win. It was an appropriate amount to suggest the status quo would remain the status quo, if you catch my drift.

As for Comey, I have been doing this a pretty long time, and I can’t remember an instance when the Director of the FBI was a topic of serious consideration or debate for investors. They are generally not in a position to directly impact corporate profitability, let alone monetary or even fiscal policy. Certainly, you can make some ‘slippery slope’ arguments, and take the ramifications of Comey’s firing to an illogical conclusion. However, where the rubber meets the road, this was/is more of a political story, as opposed to either economic or financial.

So, what was the big news?

Lost in shuffle were the earnings reports of some old-school, retail heavyweights. J.C. Penney (JCP), Macy’s, Dillard’s, and Kohl’s, basically the last of the publicly traded, significant, anchor department stores, with the exception of Sears, all announced their 1Q earnings. I will cut to the quick: the numbers weren’t great, particularly for JCP and Macy’s. Kohl’s and Dillard’s were arguably better than you might have expected, even if only in private. Even so, the markets have taken the sector out back this week, quite possibly more than the results would warrant. Actually, you can strike the phrase “quite possibly.” …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.