What we’re reading (3/2)
“Fed Official Says Hotter Data Will Warrant Higher Rates” (Wall Street Journal). “The Federal Reserve will need to raise rates to higher levels than previously anticipated to prevent inflation from picking up if the recent strength in hiring and consumer spending continues, a central bank official said Thursday.”
“Costco Q2 Earnings: Stock Slips After Mixed Results” (Yahoo! Finance). “Costco (COST) posted fiscal second-quarter earnings results Thursday, March 2, after market close that mostly beat expectations. Shares were down more than 2% after the release.”
“Active Funds Continue To Fall Short Of Their Passive Peers” (Morningstar). “Brutal market performance in 2022 reignited the narrative that active funds can better navigate market turmoil than passive peers. Despite an uptick in success rates by U.S. stock-pickers, the latest evidence debunks these claims yet again. As Warren Buffett once said, ‘only when the tide goes out do you discover who’s been swimming naked.’ In 2022, it turned out that active bond and real estate funds were caught skinny-dipping.”
“Drilling For Oil On The NYSE” (Smead Capital Management). “As a young stockbroker in the 1980s, I was very enamored with T. Boone Pickens. Pickens recognized the huge value that built up in common stocks in the inflationary 1970s and began to use the financial backing of the Junk Bond King, Michael Milken, to become an activist on Wall Street. His little company, Mesa Petroleum, started investing in undervalued large cap oil stocks and threatened to do large leveraged buyouts (LBOs) with the assistance of Milken’s firm, Drexel Burnham Lambert (my employer). Pickens said, ‘It is cheaper to drill for oil on the New York Stock Exchange than it is to drill directly.’ After reading Pioneer Natural Resources CEO Scott Sheffield’s comments recently, we at Smead Capital Management believe we’ve reached that point again[.]”
“Once The World’s Largest, A Hotel Goes ‘Poof!’ Before Our Eyes” (New York Times). “This isn’t — or wasn’t — just any building. This was once the largest hotel on earth, with 2,200 rooms, shops, restaurants, its own newspaper, and a telephone number immortalized by the bandleader Glenn Miller with a 1940 song ‘Pennsylvania 6-5000[.]’”
