Stock Analyst Sozzi: Sears could disappear by 2017
By Dan Weil From MoneyNews
Sears may go out of business by 2017, Brian Sozzi, CEO and chief equity analyst of stock research firm Belus Capital Advisors, concluded after an extremely negative earnings forecast from the retailer Thursday.
It predicted an adjusted loss of $811 million to $914 million for all of 2013.
“We got a dose of reality check from Sears,” Sozzi told Yahoo, adding that the “company is in absolute crisis.”
“All the years of mass underinvestment. When you cut your capex by 50 to 60 percent in the third quarter year-to-date, you’re going to see the negative sales you saw from Sears and Kmart, and it came home to roost.”
Sears has liquidity issues, Sozzi says. “If they don’t sell assets now, they could run out of money by holiday 2015.”
The retailer isn’t investing in its name brands, which would enable it to entice customers back to its stores, Sozzi says. And there’s nothing it can do to recover now, he says.
“I view Sears in a slow death spiral. I originally viewed by 2020 that this company may not be in business. After that report [Thursday] night, I move that target up to 2017 to 2018.”
Investors clearly didn’t think too highly of Sears’ forecast either, pushing its shares down 14 percent Friday.
“The [earnings] numbers are atrocious,” Mary Ross Gilbert, an analyst at Imperial Capital, told Bloomberg. “A lot of apparel retailers were challenged in the [fourth] quarter. And those that executed well were able to come out ok.”
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Stiglitz: Get ready for a dismal 2014
By Michael Kling From Moneynews
Many economists are upbeat about 2014, saying the recovery will finally accelerate.
Joseph Stiglitz, a Nobel laureate in economics and university professor at Columbia, isn’t one of them.
“Unfortunately, the year ahead will bring little relief,” predicts Stiglitz in an article for Project Syndicate.
“On both sides of the Atlantic, market economies are failing to deliver for most citizens. How long can this continue?”
There are a few relatively bright spots, including Japan and Germany, concedes Stiglitz, chairman of President Clinton’s Council of Economic Advisors and former chief economist of the World Bank.
“Elsewhere, though, things really are dismal: unemployment in the eurozone remains stubbornly high and the long-term unemployment rate in the U.S. still far exceeds its pre-recession levels.”
Inflation-adjusted per capital GDP in the United States and much of Western Europe is lower than before the Great Recession.
The International Monetary Fund (IMF) predicts a “truly anemic” European growth rate of 1 percent for 2014. Even that may be too rosy, he says, noting the IMF’s forecasts have repeatedly been overly optimistic.
Stiglitz has “muted optimism” for the U.S. economy. The unemployment rate is falling, GDP is growing faster and a degree of sanity has returned to Washington politics. Plus, healthcare costs are increasing more slowly.
“But we should curb our euphoria,” he cautions, saying most new jobs are low-paying, median incomes are falling and median income is lower than it was in 1989.
“For most Americans, there is no recovery, with 95 percent of the gains going to the top 1 percent.”
Long-term unemployment is the country’s new problem, Stiglitz argues. The labor participation is rate the lowest it’s been in 30 years. Some argue that’s because of the growing numbers of older Americans.
“But this simply recasts the problem: the U.S. economy has never been good at retraining workers,” he counters. “American workers are treated like disposable commodities, tossed aside if and when they cannot keep up with changes in technology and the marketplace.”
Poor economic and social policies that are wasting human resources have created the dismal outlook for workers, Stiglitz charges.
Justin Wolfers, a senior fellow at the Brookings Institution, agrees that long-term unemployment is major issue.
“I would say it’s the number one social and economic problem confronting the United States today,” he tells WNYC.
Many long-term unemployed are middle-aged or older men who saw jobs in their occupations disappear in the recession, but the group also includes women and younger people, he maintains.
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