I don’t compliment the government often, but when I do, I like to shout about it. On October 27th of this year I posted a stern objection on this blog to the proposed merger between Kroger and Albertsons. That post can be viewed here. Based on my 40+ years in the food industry marketing to the national chains, I felt strongly that this action would stifle competition, lead to store closures, and would most definitely result in higher prices for consumers. It seems that the FTC agreed with me. Listed below is an excerpt from the Wall Street Journal that the FTC is suing to block this $25 Billion merger.
In a lawsuit filed in federal court in Oregon, the FTC said the deal would lead to higher food prices and harm union workers’ bargaining power, and asked a court to block the companies from closing their deal on antitrust grounds.
“Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” said Henry Liu, director of the FTC’s bureau of competition.
Meanwhile the management of Kroger and Albertsons, who most likely would receive big bonuses in a successful merger, continue to propagate the same old BS about lowering food prices and securing jobs in a combined entity. They say that the merger would allow them to better compete with Walmart and Amazon. Amazon? Really? The last time I checked, Amazon’s presence in the retail food industry was Whole Foods, otherwise known as Whole Paycheck by some. /wj
The political bias slant of the three major cable news networks is beyond blatant. There! Now for full disclosure, this writer is conservative in nature, so I tend to default to Fox News only because the other two, with their ridiculous over the top, woke agendas, make me nauseous. The only exception is that CNN does seem to do a better job reporting on world-wide crisis events. But this post isn’t about politics. It’s about the commercials that run on these networks.
It pains me to say this, but Fox News ranks first in disingenuous commercials. Among the many that I find distasteful are William Devane pitching gold from Rosland Capital while standing on a battleship deck wearing a flight jacket and aviator sunglasses, Mike Lindell and his annoying My Pillow ads, and Tom Sellick using his folksy persona to convince seniors that they need a reverse mortgage. Let’s not forget the incessant Back to Nature supplement ads that have no scientific health basis. But the worst of all are the ads from this guy named Jonathan Lawson hawking life insurance from Colonial Penn. https://www.youtube.com/watch?v=v8ldmLkS1AE
The pitch is that guaranteed coverage for anyone 50 to 85 costs only $9.95 a month. The catch is that $9.95 per month ($120 per year) only buys $760 in coverage for a 68-year-old male. The other catch is that the full death benefit only pays out if death occurs after two years of the policy date. What a deal, huh?
Hats off to to French based supermarket chain, Carrefour after recently discontinuing Pepsi and Lays products from their product lineup in over 4000 stores throughout Europe. Citing Pepsi’s net change in pricing from a year earlier of 18 percentage points as unacceptable, the bold action of Carrefour’s management is a welcomed response to consumers world-wide.
What began during the Covid-19 pandemic fueled by inflation headlines, companies used this excuse to gouge consumers well beyond their cost of inputs. This practice was first highlighted nearly two years ago on this WJ blog. Below is an excerpt from that post…
…What I am going to talk about is something a little more personal. While I pride myself on staying up with the latest in technology, I am clearly old school in a lot of ways. So, what I am going to talk about is Old Spice. For you lesser-informed millennials, Old Spice is not a Captain Morgan spiced rum knock-off, but rather a line of personal care products reserved for and coveted by the baby boomer generation.
The current rate of inflation has not been seen since the 1970’s during the storied presidential career of Jimmy Carter. I will spare the readers a rant and rave critique of the current administration economic policies because I am not sure that they deserve all the blame. Well – maybe most of it, but that is not the point I want to make. The point is that corporate America is using the current inflation headlines as a free pass to raise prices at will. This is worth repeating. Corporate America is raising prices faster than their cost inputs just because they can do so with impunity. Despite all the gloom and doom that they are shoveling upon the American consumer, profit margins are soaring along with their stock prices. Witness, the Dow, S&P 500 all closing 2021 in record territory.
Now with Europe accounting for about 14% of Pepsi’s global revenue, a “come to Jesus” response from them will be inevitable. /wj
Here is one of my old posts from 2008 that still rings true today – well, mostly…
Saturday, November 15, 2008
Gentlemen Prefer Bonds
Stocks and bonds are the instruments of equity and debt, both of which represent claims against a company’s assets. The truth of the matter, however, is that common stocks are at the bottom of the food chain with respect to those claims. Further, it has been said that “the value of a stock is a function of its capacity and propensity to return cash to its owner” – [Josh Peters, The Ultimate Dividend Playbook]. Well guess what… 99% of stocks have done a lousy job of performing that particular function.
Notwithstanding any market rallies that occur subsequent to this post, stocks [as measured by the S&P 500] have been essentially flat for the last 10 years. Their paltry 1% dividends have done little to mitigate that dismal performance. Bonds, on the other hand [by the way, the bond market is nearly 3 times the size of the stock market] continue to deliver consistent predictable returns day in and day out. Another fact propping up the bond vs. stock argument is that bondholders are two steps ahead of common stocks when it comes to distribution of assets in bankruptcy or other liquidation.
Now having made somewhat of a case for the preference of bonds over stocks, there is even a better option in todays markets. That option is Preferred Stocks. I would have titled this post “Gentlemen Prefer Preferreds” but it wouldn’t sound as sexy. Anyway, preferred stocks are essentially a hybrid product of stocks and bonds.
While there are some variations, preferred stocks are usually issued at a par value of $25.00 and typically have a call date of around 5 years. The call date represents the date that the issuing company can exercise its option to call in or buy back the preferred stock at stated par value. When issued, a fixed dividend is declared and will remain in place until the stock is called by the issuing company. For the most part, these dividends qualify for the 15% dividend tax rate compared to interest which is taxed as ordinary income. And the main reason they are called Preferred is that the dividend payments and claims against assets come in front of those given to Common stock.
Now here’s the best part. The recent stock market slide has depressed the market prices of Preferred issues as well. All of those initial coupon rates of 4% – 5% when issued are now yielding 8% – 10% and more for investment grade Preferreds. Besides the handsome dividend payments, there is also the prospect of future capital gains as they begin to ascend back to their par values of $25.00, which would boost total returns well into double digits.
So if you believe that in fact markets will eventually recover during your lifetime, why not get paid an excellent return while you wait? -wj
Today is election day in America. I am not aware of any results, as I am writing this at 6:00AM, the day of. But what I am aware of, is that the election process in our country, which was designed to evaluate and select the best candidate for the job, is no longer the case. Instead, most of us don’t take the time to even consider candidates based on their merits or campaign promises, and just vote along straight party lines.
Why do we do this? We behave in this manner because we are simply following the examples set by our elected officials. Both political parties give lip service to the need for bi-partisan action in congress and reaching across the aisle. But that’s just it – lip service and no action. The leadership in both parties is so powerful that anyone straying from the official narrative runs the risk of being ostracized by that leadership and cast into a virtual Siberia should they commit the sin of independent thought.
So why bother with analyzing candidates and issues and voting based on the person or the issue? Once elected, the candidates will just step in line and vote according to the mandates set down by the party bosses anyway.
The 2022 midterm elections are on a pace to spend in excess of $17 Billion to infiltrate our consciousness with their carefully crafted propaganda and lies. The only thing propagated by the vicious and expensive attacks in campaign ads is to further divide an already divided country. The two party system is supposed to foster healthy debate within a democracy. It’s not working.
“This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food and accelerates our position as a more compelling alternative to larger and non-union competitors. As a combined entity, we will be better positioned to advance Kroger’s successful go-to-market strategy by providing an incredible seamless shopping experience, expanding Our Brands portfolio, and delivering personalized value and savings.”
So says Kroger CEO, Rodney McMullen promoting this mega merger. As a 45+ year food industry veteran marketing to our nation’s retailers, I have witnessed this story play out exactly the opposite too many times. In a carefully worded combined statement by the two chains, they say the “merged companies would pass along as much as $500 Million in savings to their customers.” Does anyone really believe this? The more likely result will be store closures, employee layoffs, and higher prices for consumers.
Big box food retailers have used the Covid-19 pandemic and headline inflation figures as a free pass to raise prices to consumers, well in excess of their cost inputs. Despite the tight labor market, both companies have enjoyed double digit increases in operating profits during the past year. In the quarter ending August 13, Kroger’s operating profit grew by 13.7 percent from a year earlier. Both companies argue that this merger is needed to compete against stores like Aldi, Walmart, Costco and Amazon. Amazon? Really?
When I entered the Southern California food industry in 1973 as a lowly banana salesman, there were six food chains dominating that market – Alpha Beta, Safeway, Lucky, Ralphs, Vons, and little bitty Albertsons, complimented by a handful of small regional chains and independents, none of which had more than a 10 percent market share. Since then, Alpha Beta was acquired by American Stores and eventually dissolved and rebranded to Ralphs and Lucky Stores. Ralphs was acquired by Kroger. Albertsons, through some masterful financial engineering, eventually gobbled up American Stores (Lucky Stores), Safeway, and Vons. And when the dust settled, there were two – Kroger and Albertsons.
According to Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, and advocacy group that challenges concentrated corporate power in the grocery industry, “if this merger is allowed to go through, the combined Albertsons-Kroger and Walmart would control 70 percent or more of the market in 167 cities in the United States.” This is hardly a recipe for increased competition and lower food prices in America.
Well, here it is, January 1, 2022. A brand new year with the same old worries plus a few more that have recently cropped up. Where to start is the big question. First there is the China Syndrome and the Covide-19 pandemic that they launched upon the world. Then there is their test launch of hypersonic missiles that circled the globe as a show of strength that they could easily annihilate any major U.S. city at will. Now they are rattling their sabers about invading Taiwan. But I am not going to talk about that.
The Russia problem never seems to go away. So what is wrong with them massing 100,000 troops along the Ukrainian border as a threat to keep the Ukraine from joining NATO? But I am not going to talk about that.
The current administration single handedly in one short year stripped us of our hard earned energy independence and is now begging OPEC to produce more oil as a solution to mitigate record fuel price increases. The solution offered was to release 55,000 gallons of oil from our strategic reserve – a whopping 3 day supply considering our daily use is around 20,000 barrels a day. But I am not going to talk about that.
Crime is increasing at unprecedented rates in our major cities. The national debt has ballooned to $30 Trillion with the progressive administration trying to pile another $2 trillion on top with their social agenda. It seems that parents have no right to weigh in on what their children learn in school. But I am not going to talk about any of these things.
What I am going to talk about is something a little more personal. While I pride myself on staying up with the latest in technology, I am clearly old school in a lot of ways. So, what I am going to talk about is Old Spice. For you lesser-informed millennials, Old Spice is not a Captain Morgan spiced rum knock-off, but rather a line of personal care products reserved for and coveted by the baby boomer generation.
So, what I am going to talk about is the current rate of inflation not seen since the 1970’s during the storied presidential career of Jimmy Carter. I will spare the readers a rant and rave critique of the current administration economic policies because I am not sure that they deserve all the blame. Well – maybe most of it, but that is not the point I want to make. The point is that corporate America is using the current inflation headlines as a free pass to raise prices at will. This is worth repeating. Corporate America is raising prices faster than their cost inputs just because they can do so without impunity. Despite all the gloom and doom that they are shoveling upon the American consumer, profit margins are soaring along with their stock prices. Witness, the Dow, S&P 500 all closing 2021 in record territory.
Strictly Old School
Now back to the Old Spice story. As recently as one year ago, I paid $3.97 for Old Spice body wash at my local Aldi supermarket. Last week, the same item was priced at $5.97. I find it difficult to believe that a price increase of over 50% is justified based on raw cost inputs. Old Spice is owned by behemoth Procter and Gamble – a company well known for its ability to control prices in any way that they see fit to boost their own bottom line.
Follow up quotes from Proctor and Gamble press release on January 19,2022
“The Cincinnati-based consumer-products company said sales increased 6% in the quarter ended Dec. 31 compared with a year earlier, fueled in part by the company’s largest average price increases since the spring of 2019.
Executives on Wednesday said its price increases will continue throughout 2022, and predicted higher profitability and improved margins in coming quarters even as labor, freight and raw-materials costs continue to balloon due to the global supply-chain turmoil.“
Although much has been written, broadcast, and said about this issue, I simply cannot resist the urge to pile on. Coca Cola, Delta Airlines, and Major League baseball also recently weighed in with protests. What is the issue? The state of Georgia’s recently revised regulations to minimize the potential for voter fraud by requiring all voters to present some sort of valid I.D. when casting their vote. How dare they?
Lets see… We need to present an I.D. when purchasing liquor or cigarettes, open a bank account, rent a car, board an airplane, check in to a hotel, file for unemployment, and buy prescription drugs, just to name a few activities. But that most sacrosanct act of all afforded to our citizens, the right to vote, apparently is not important enough to verify the identity of someone casting a ballot. In fact, Joe Biden himself, called this new rule “sick.”.
What is “sick” is allowing this process to continue without validating one’s true identity. The potential for voter fraud is virtually limitless. Can you imagine the black market that will be created for unmarked ballots for those willing to sell them for a few bucks to unscrupulous ballot harvesters.
Back in early December of 2020, I expressed doubt about local states, counties and cities abilities to effectively manage Covid-19 vaccinations. That post can be viewed here. Below is an excerpt from a recent Wall Street Journal article on this effort:
The result: More than 16 million of the 72.4 million vaccine doses distributed by the U.S. government hadn’t been used as of Wednesday, according to the U.S. Centers for Disease Control and Prevention.
Yet across the country, Americans young and old are constantly refreshing their browsers and calling public-health officials as they try to nab scarce appointments, with many confused about where and when doses will be available. Some sites have had to cancel appointments when promised doses don’t arrive or when weather like recent winter storms shutter vaccination events unexpectedly. Los Angeles temporarily closed Dodger Stadium, one of the largest vaccine sites in the country, and other inoculation events last week when it ran out of supply. Meanwhile, some people find sites have extra doses they are giving away to lucky bystanders—one man was offered a dose from a store’s pharmacy while out grocery shopping.
In 1971, singer/songwriter John Lennon wrote and performed his iconic song called, “Imagine.” While always long on controversy, Lennon’s lyrics in this piece became an anthem of sorts for all the unrest and discourse that still grips the world today. The opening verse goes like this:
“Imagine there’s no heaven It’s easy if you try No hell below us Above us only sky Imagine all the people living for today”
No Political Parties
Imagine for a moment that there were no political parties. No Republicans. No Democrats. There would be no Speaker of the House designated by the party in power. There would be no Senate Majority Leader, only a Senate Leader. Instead, we would have independent Congressmen and Senators serving the citizens that elected them, not beholden to party leadership. Imagine a congress comprised of independent thinkers that introduce and vote on legislation and policy with their conscience and common sense rather than blindly along party lines.
Imagine elections where candidates for public office are nominated and selected by petitions circulated amongst the electorate. Imagine elections with limits on campaign spending where all qualified candidates had equal access to campaign funds. Imagine a system where the top five or six candidates that receive the most signatures participated in a series of televised debates. Imagine election results that required a simple majority of the vote to certify a winner. Failing to achieve a majority would require a runoff between the top two vote getters. Imagine this rule applying to the presidential election as well.
In the presidential election of 1992, Bill Clinton received 48% of the popular vote. George HW Bush received 38%. Ross Perot, running as an Independent, garnered nearly 20%, despite temporarily dropping out of the race in July. Had a runoff been conducted between Clinton and Bush, the presidential election of 1992 may have turned out differently. In the final tally, Bill Clinton received 370 electoral college votes compared to 168 for George HW Bush. Ross Perot received zero. In a runoff between Clinton and Bush, the electoral vote could have also turned out much differently with 20 percent of the Ross Perot swing votes suddenly up for grabs.
In the aftermath of the 2020 election that saw Democrats seize control of the House, Senate, and the Presidency, there has been noise within the Republican party about splintering off to form a new political party. That tactic would be political suicide and only serve to further fracture the conservative movement resulting in cementing the Democratic power grip for the foreseeable future.
If the goal of the conservative Republican party is to water down the far left agenda of the Democrats and bring it more to the center, consider a novel approach. Imagine the effect of all Republicans suddenly declaring themselves Democrats. This act would surely sow seeds of discontent within the Democratic party and intensify debates over policies affecting the American people. Complete the process by allowing open primaries among all voters for all candidates regardless of one’s specified party affiliation. Party affiliation then, would revert to nothing more than a mere footnote on the voter registration rolls.
Steve Almond, a bestselling author which includes his book, “Bad Stories” – a literary investigation of what the hell just happened to our country, quotes in a 2018 essay: “political prejudice has become our most accepted form of bigotry.” He goes on to say, “what today’s voters see is not a candidate, or a set of policy proposals, but a party affiliation.”
If John Lennon were alive today, he might say something like, “Imagine a world and a system more focused on policy than partisan politics.” In the final verse of Lennon’s song, he says:
“You may say I’m a dreamer But I’m not the only one I hope some day you’ll join us And the world will be as one”
Rants, Raves & Reflections 