Pre-Election Special SALE: 60% Off VIP Membership
BREAKING: Supreme Court Rules on Whether Virginia Can Remove Non-Citizens From Voter Rolls
Tim Walz's Gaming Session With Ocasio-Cortez Was a Trainwreck
Oregon Predicates Request to Judge on Self-Delusion
GDP Report Shows Economy 'Weaker Than Expected'
How Trump Plans to Help Compensate Victims of 'Migrant Crime'
NRCC Blasts the Left's Voter Suppression Efforts in Battleground Districts
Watch Trump's Reaction to Finding Out Biden Called His Supporters 'Garbage'
26 Republican AGs Join Virginia in Petitioning SCOTUS to Intervene in Voter Registration...
There Was a Vile, Violent Attack in Chicago, and the Media's Been Silent....
One Red State Just Acquired a Massive Amount of Land to Secure Its...
Poll Out of Texas Shows That Harris Rally Sure Didn't Work for Colin...
This Hollywood Actor Is Persuading Christian Men to Vote for Kamala Harris
Is the Trump Campaign Over-Confident?
Is This Really How the Kamala HQ Is Going to Respond to Biden’s...
OPINION

Consumers Hide-Obama Fights-Markets Dive

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
Advertisement
Advertisement
Advertisement

If you’re a business owner and you are anything like me, you love an Office Depot or Staples store with all those supplies; arming yourself to go it alone and conquering the world of business is exciting. Well, we can thank a few people for making it happen, and one person for helping it to disappear.

Advertisement

In 1986, three guys had the same idea about a retail store dedicated to helping small business owners with everything from supplies to desks and computers.

Leo Khan and Thomas Stemberg launched Staples in Brighton, Massachusetts, with the help of a financier named Mitt Romney.

Down in Lauderdale Lakes, Florida, F. Patrick Sher was opening his first Office Depot in Lauderdale Lakes Mall.

The next twenty years were golden with start-ups peaking at an all-time high in 2006, and then the tide began to turn as the Great Recession was bubbling up beneath the surface.

Perhaps not-so-coincidentally, 2006 saw shares of Staples (SPLS) and Office Depot (ODP) reaching their apex. Afterwards, things began to change. Since then, both stocks collapsed and saw a merger as a way to buy time and stay alive.

Office Supply Stores

Oct 2006

May 2016

Change

Staples

$26

$8.46

-67%

Office Depot

$42

$3.66

-91%

President Obama didn’t agree and blocked the merger, a decision inexplicably upheld in federal court Wednesday.

This administration’s anti-success, anti-profit agenda has laid waste to entire industries and companies; and now, we can add Office Depot and Staples to that list.

Not only was there an economic buzz-saw facing the industry, but the hype of the Internet also started to become real. Business was bad and it was not going to get any better. It was the dynamics of doing business. The ways of ordering paper changed, and there weren’t enough dudes like me that liked walking down the Sharpie aisle romanticizing about the rigors and excitement of owning your own business.

Advertisement

Fast forward to late 2015 when these two rivals understood it would be better to merge in order to survive.

However, considering the hammering endured by both companies, the last thing anyone would have expected was governmental interference, but this administration is like a shark when it comes to anything that might make businesses more competitive.

Wednesday, the deal was challenged and that challenge was inexplicably upheld in federal court.

The stocks were hammered and another notch was carved out by the administration, which also just scuttled the proposed merger of Haliburton (HAL) and Baker Hughes (BHI). And to top off an ugly session, reports about the FTC looking into Google search for being too big were the final blow to the session late into the day. However, one has to wonder if the carnage from industries like coal to individual companies will be a final blow of sorts as well.

I have spoken to some of the biggest names in the coal industry, and they think they can bring it back as long as they’re allowed to compete. I am just not sure ‘past glory’ can be reversed. Sadly, even if the next president has the best of intentions, the mountain of rules and regulations and agencies larded up with eager bureaucrats, are ready to dismantle those big mean businesses- large and small.

Advertisement

The Consumer: Dead or Dormant

Household Incomes Tumbles in Majority of US Cities this Century

FT May 12, 2016

On Thursday’s cover of the Financial Times, there’s a story how 80% of households have suffered a loss in income over the past century with industrial areas hit the hardest. There is no doubt that wage stagnation has ripped the heart out of the economy and consumer confidence. Something akin to a post Great Depression syndrome has kicked in; even though wages are beginning to improve, people are saving instead of spending.

Yes, we saw a spike in consumer credit for March, but it remains to be seen if that was a blip or something more sinister that people needed credit cards to get by… I am just not sure.

Moreover, the surging share price of Amazon (AMZN) and Facebook (FB) point to a robust consumer just spending their time and money on a different platform than brick-and-mortar stores. It’s more of a burnt and spiritually broken consumer than the Internet, but it all plays a part.

The Market

The market gives, and then the market takes; in the last two sessions, a wild ride has been filled with sound and fury. When it’s all said and done, we've gone nowhere. Wednesday, it was consumer stocks led lower by Macy's (M),which missed for the fifth consecutive quarter and lowered its guidance.

Advertisement

Disney (DIS) was also hit by consumer worries, and that one-two punch sent stocks lower. Efforts late in the session at a rebound were smashed when news broke that the FTC was looking at Google perhaps being too big and too dominant. So, consumer discretionary stocks were the hardest hit; before we say the consumer is completely dead, Amazon and Facebook at all-time highs point to a different narrative.

Market Parameters – Key Support Points

  • Dow 17,500
  • NASDAQ 4,717
  • S&P 500 2047 then 2012

Join the conversation as a VIP Member

Recommended

Trending on Townhall Videos