Suppose you bought a new set of Callaway Golf Co. irons early this spring, then set out on your merry way to lose balls in ponds and woods and tall grass all over New Jersey (or wherever). Wouldn’t you feel like a knucklehead to find out now that TaylorMade is cutting prices and Callaway might be forced to cut prices to compete? (Disclosure: the author of this piece is one of those knuckleheads, even though a particularly loudmouthed friend warned this exact thing could happen.)
It’s hard to say if these price cuts are indicative of a broader trend in the consumer economy, or just the continuation of a rough cycle for golf since Tiger Woods started making more headlines in places like pancake houses than putting greens.
Consumer Spending
However, there undeniably is something of note going on with consumers who aren’t spending more despite cheaper gasoline, notwithstanding more expensive stocks of retailers. The trend was reinforced today by government figures that showed purchases were unchanged in April, the peak golf-club shopping period for knuckleheads. There are plenty of theories as to why. Maybe people are just saving more and paying down debt. Or, as Scott Wren at Wells Fargo Investment Institute contends, spending by retirees has been crippled as the era of near-zero interest rates provided little income from nest eggs.
As for the other stuff? As promised, here are the highlights.
Greece: The situation here is undeniably dire. In fact, it sounds like you’ll find nicer golf courses near Athens, Georgia, than near Athens, Greece. Oh and there’s still that whole government debt crisis or whatever.
Peter Lynch: one of the valuation metrics favored by this legendary Fidelity Investments fund manager is showing little value left in the U.S. stock market. Read more about that here. Not sure what his handicap was.
Charles Dow: There’s been much discussion about the Wall Street Journal publisher’s ancient “Dow Theory” regarding the relationship between transportation stocks and industrial stocks and what it portends for the market’s prospects, given that the Dow industrials are up about 1 percent in 2015 while the transports are down more than 9 percent.
According to Sam Stovall at Standard & Poor’s, the divergence of performance “may sound alarm bells to some,” but “it represents dissonant noise to others.” Still, the ding was loud enough to play a partial role in helping S&P Capital IQ’s Investment Policy Committee to decide to lower the recommended exposure to U.S. equities and increase the cash allocation. On the other hand, for Ari Wald -- the Oppenheimer strategist and reputed friend of Downtown Josh Brown -- the theory is still flashing a buy signal.
One thing is for sure: Back in Charles Dow’s day in the late 1800s, they’d laugh their knickers off at these fancy sets of graphite-shaft, cavity-backed irons from TaylorMade and Callaway. All they needed back then was a brassie, a mashie or two, a niblick and a cleek. And maybe some termite repellent.