Macy’s: Still opportunity on the short side?

Stephen Roseman on Seeking Alpha thinks so.  He outlines 5 of the major issues facing this behemoth of a department store.  Here’s one of his most damning points:

The company hoped to use its coming year operating cash to pay down its burgeoning $9.8 billion debt load (see Q3 conference call transcript). $950 million of debt comes due in 2009. It looks like Macy’s will have to dig into its short term credit facility to cover that shortfall. That’s a temporary fix. The company will need to find longer term financing (bonds for Macy’s are trading at 14 to 15%) and Macy’s will need to refinance more debt coming due in 2010 and 2011.

Indeed,  Macy’s outlook is ugly. But a lot of stocks that look ripe for shorting have proved quite resilient, so use caution.

December Consumer Confidence Hits New Low, Stocks Rally

And of course, the market shrugs off and even rallies on this wonderful news. Economists were expecting a reading of 45, but it came in at a much worse level of 38. Last month’s downward-revised reading was 44.7. Why is it that when the numbers get revised, they’re always worse than the original reading? Could it be that there’s a concerted effort to skew numbers to be more positive than they actually are? No, that would be crazy.

Another positive note:

The separate Present Situation index, which measures how respondents feel about business conditions and employment prospects, fell to 29.4 in December from 42.3 in November. It is now close to levels last seen after the 1990-1991 recession.

Bill Fleckenstein still bearish, and planning a mutual fund

Stocks may claw upward for now, but the next quarter could be a different story. And while the threat of financial-stock collapses is fading, this brutal recession has far to go.

That’s the headline of legendary short hedge-fund manager Bill Fleckenstein’s recent column at MSN money. Although he recently closed his short fund and covered most of his shorts, Fleckenstein is still in bear-mode. The current rally can be attributed to what he calls “the market’s misplaced optimism”.

Damn smart guy. Wish I had followed his lead and covered some of my shorts a bit lower. But I still think we’re headed much lower in the long run, so it’s reassuring to see that Mr. Fleckstein thinks the same. His insight demonstrates how important it is to be aware of the impact of government interventions and mutual fund

The most exciting part of his announcement is this:

My efforts in 2009 will be directed toward setting up an investment vehicle to be managed by Fred Hickey and me. It won’t be a hedge fund and will hopefully be available to everyone.

I’ll be first in line if he opens up a fund available to small-timers like myself. Check out his site here (subscription required, but it’s very reasonable at $120/year). His MSN Money articles can be found here.

Roubini Comments on ZIRP

Nouriel Roubini’s comments on zero-interest-rate-policy (ZIRP) this week were interesting. If you haven’t signed up for his site yet, do so now.  I think it’s still free, but don’t expect that to last long. Roubini was one of the earliest to call the credit crisis, and he’s absolutely worth listening to. Everyone may not agree with his suggestions for fixing the mess, but then again, most of us didn’t see this coming like he did.

Roubini on ZIRP

By the way, it’s worth registering just to read the comments on his site. It’s an eclectic mix of goldbugs, bulls, apocalyptic gun & butter hoarders, academics, and other colorful characters. This gem was posted by user Capone:

the more things change the more they stay the same…  maybe Farmer Bob and Farmer Bill should offer shares in the physical corn stored on their farms to local folks for REAL, TRUE, PURE retirement savings and skip the entire scandal the Fed, Wall Street and global banking system have become altogether

i have started my search for a job at a commodity company today whether it be an investment firm or producer. either way, it is the place to be over the next decades… i can’t believe after all of these years. I REALLY truly want to be a “bean counter.” The term has lost its negative bias and gained a bright shiny new spin… ha ha

Love that.

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