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The Edmonton Oilers situation with Sheldon Souray continues to be overshadowed by the bright future of the team, and thankfully so. Souray's attitude last year and down-right awful play, especially from a former all-star defencemen, would have booked him a flight to 29 other destinations, but in a salary-cap world, trading Souray has proven extremely difficult.
Two main problems exist in this situation: his tendency for injury, as observed last year, and his $5.4 million cap hit with two years remaining. General Managers should be reluctant on trading for a player whose cap hit is $900,000 above his salary, and is possibly not going to perform up to the standards of a $4.5 million player, not to mention his high-risk style of play.
But the Oilers might have an out and a low-risk one at that. Many had already suggested that Tambellini send Souray down to the Oklahoma City Barons (AHL), allowing the team to free up the $5.4 million cap hit. And earlier today, 11-year veteran Wade Redden (New York Rangers) cleared waivers and was sent down to their AHL affiliate, the Hartford Wolf Pack, suggesting that no NHL team is ready to pick up an overpaid defencemen, even for half the price. Although there are no guarantees, given the lack of responses from the other NHL teams, Souray has a very good chance of clearing waivers too.
If Souray were to clear waivers, the Oilers would be able to free up precious cap-space. I also assume that the Barons would be willing to have Souray in the line-up.
Rumours have also circulated that Redden is speaking to others teams about signing a contract, possibly even smaller than his current salary, which pays him out $23 million over the next four years. If Redden refuses to play in the AHL, the Rangers would be able to release Redden as an unrestricted free agent and would not have to pay the remaining money, and in turn, Redden can sign with his new team, assuming the talks are true.
If Souray balks at playing in the AHL, the Oilers would also have the luxury of releasing Souray to the open market, allowing him to play for another team, or even in the KHL, Swedish Elite League, or elsewhere.
It's pretty clear that the Oilers no longer want a part of Souray, and would be quick to rid jersey 44, which has proven to be a curse over the last five years (Pronger also wore #44). Tambellini has said that no beneficial bid has emerged for the team with Souray, so why not consider sending him to the minors? The team is paying $9 million a year for the next two years regardless of where or if he plays. And if a team does put in a claim from waivers, Tambellini should not be so quick to believe that the team lost him for nothing. Ownership would no longer be responsible for his contract, the management team would be free from distractions, and cap-space would be open to sign or trade for other promising players.
Although it is probably the last resort for Tambellini, it may prove to be the best move. The Oilers want to end the Souray saga immediately, and what other way then to take control by putting the ball in Souray's court? Let him decide if wants to finish his career in the AHL or not. If he really wants out, as he proclaimed last year by requesting a trade, he'll do it when he has no other choice.
Earlier this week, the National Bureau of Economic Research (NBER) released data concluding that the American recession had ended nearly 15 months ago, back in June of 2009. But for those living outside the world of numbers, also known as reality, the recession is still hitting hard.
Recent data suggests that about 1 in 7 Americans are living below the poverty line, which is a direct result of a "jobless recovery." Unemployment in America has steadily held just under ten per cent for a few consecutive months, and underemployment, a better indication of the job market, shows that almost 19 per cent of Americans are not working the amount of hours they want. With so many having trouble making ends meet, many question how the NBER claimed that the recession ended 15 months ago.
The reason is that a recession is defined only as two or more consecutive quarters of negative GDP growth. The image (see below) shows that negative growth ended in June 2009, preceded by four quarters, or one full year, of negative growth. However, those impacted via the job market, falling credit, and increasing debt will argue that the recession is still a reality for too many.
Courtesy of www.tradingeconomics.com
The chart also tells a tale of a potential double-dip recession. The last two quarters have seen GDP growth decelerate and it is not unlikely for the next report, due in October, to show negative growth, the first criterion for a new recession. To be clear, GDP growth is a net figure, which accounts for inflation. For example, if the real economic output increased 5 per cent, but inflation rose 3 per cent, GDP growth would be reported as 2 per cent.
Inflation can mean either the increase of money supply, which we are seeing today, or the increase in overall prices. A lack of inflation in the American economy is the only reason they are not yet back in a recession, but as the US continues to print money, it is only a matter of time before inflation kicks in.
The reason I point this out is because worries about deflation (a prolong drop in the prices of goods) was brought up at the last Fed minutes, released Tuesday September 21. If deflation some how became a reality, GDP figures could show substantial growth, even though economic output may decrease. But, with the US continuing to print money, ever increasing their debt, it is more likely that inflation will take place before deflation.
What is troubling is that the potential for inflation will co-exist with tepid economic growth. It is highly possible for many Americans to earn next to nothing and be forced to battle increasing costs of goods, which could lead to cost-push inflation, a type of inflation caused by increasing costs to producers (such as raising wages demanded by workers to pay for goods) passing the buck on to consumers. It would just be a never ending cycle only to be resolved by real economic growth, if that ever happens.
Time and time again, I've heard adult's say that children's shows today aren't as good as when they were younger. Now, whether this is an accurate representation of the decreasing quality in television programming is debatable. Many argue that it is the maturing of an individual and their evolving taste that results in this belief, all the while, still adoring their own childhood favourites because of the dose of nostalgia that it brings. I once heard an older gentlemen tell me that the programming of my childhood were downright terrible, and could never replace his favourite shows. But growing up as a child of the 1990's, I personally believe that I was treated to a myriad of great cartoons, including my favourites the Ninja Turtles, Aladdin, and TaleSpin.
Many of these shows shaped my life and probably the lives of many other kids too. Why, the reason I love pizza is because of a quartet of mutant turtles who also loved them too.
Disney is, and always will be, an integral part of the lives of youth in North America. It has created dozens of great tv shows and movies that made childhood so fun. When most of us think of Disney, we are immediately reminded of Mickey Mouse, Disneyland, or princesses finding a handsome prince. But, as I have evolved into an adult myself, I have noticed a shift in Disney's programming line-up that may potentially end Disney's roots.
For decades, Disney brought magic to the forefront of their cinemas and captured audiences around the world. These timeless tales will be shared for generations and have been immortalized in the Disney theme parks. But starting around the turn of the century, the same time Robert Iger became president, and later in 2005, CEO, we have seen a large shift in the paradigm of Disney programming. I for one believe that Disney's reputation as a magical company will soon be lost and Iger could be to blame.
The resurgence of Disney occurred during the Eisner era, considered the Disney Renaissance. Michael Eisner moulded Disney into a dominant corporation which reached children and parents through family-oriented movies that revolved around fairy tales and stories of heroism. The movies released during his era include The Little Mermaid, Beauty and the Beast, Aladdin, The Lion King, and Pocahontas, each having won two Oscars. But as his reign ended, and Robert Iger took over, so too did the quality of Disney movies and programming. Tarzan (1999), the last movie of the Eisner era, was the last time any Disney film won an Oscar award, a testament to the success of Eisner or possibly the lack of success of Iger.
Disney's large focus on teen dramas for television programming has created successful shows like Hannah Montana and That's So Raven. But unlike Disney creations of the past, shows today focus on youth problems, such as relationships and family, not heroes battling mobsters, evil wizards, or space aliens.
These major shifts in programming leads me to believe that Disney is attempting to attract a different target audience, mainly pre-teen girls.
Another major alteration to Disney's programming and marketing is the subtle focus from teams or groups to one main character. Even the titles in today's television programming suggests the star of the show is Hannah Montana or Sonny Monroe, not The Rescue Rangers or the Gummi Bears. These changes will ultimately decrease the longevity and long-term popularity and nostalgic commerciability. In fact, some of the most popular cartoon series of the 1990's are team-related shows, including the Ninja Turtles, Care Bears, and Power Rangers. Side note, there is a running joke that the Power Rangers was racist because of their suit colours, but really, it is marketing technique.
The idea behind teams and groups was not only designed to promote team work, equality, and unity, but to market to a wider range of children and their different personalities. So many shows, not just Disney, used colours and varying personalities to attract children. They would include an athletic character, a shy character, a smart character, a clumsy character, and a humourous character, alongside many other possible personalities. This is how children create "favourite characters," something that seems to be lacking in today's shows because of its one-character focus.
Adult hit shows, like Friends, The Big Bang Theory, and How I Met Your Mother have also developed multiple characters with multiple personalities. I'm sure everyone had a favourite Friends character because of how we identified them. Chandler was the witty-remarked one, Monica the clean-freak, Rachel the ditz, and so on. It was a formula that has proven to work in all genres.
Disney's new format of live-action teen dramas has proven to be profitable, but its longevity wears off. Lizzie McGuire and That's So Raven, two shows which ceased productions years ago, were once extremely popular, but do not sell merchandise anymore. Meanwhile, shows like Duck Tales and TaleSpin continue to sell DVDs and memorabilia because of the nostalgia. Even Lilo & Stitch, a show made after the Eisner era, continues to sell merchandise because of Stitch's cuteness. Other brands like Hello Kitty and Ninja Turtles also prove popular in today's market with adults and children. Walk into a Disney Store or outlet and see what plush toys, dolls, or collectibles are up on stock. It's usually Winnie the Pooh, Mickey, and the Chipmunks, characters which never age and carry that longevity that I keep bringing up. Or, consider going to a Disney theme park and notice what characters continue to play a large role in upkeeping the Disney magic. It's Snow White, Sleeping Beauty, and Jasmine, as well Mickey and Minnie.
Even with the purchase of Pixar Studios in 2006, Disney's magic touch is still lost. Films like Finding Nemo and Toy Story are considered the best CGI films ever for its originality, its quality of story-telling, its creativity, and its imagination. Almost five years later, viewers of Disney-Pixar collaborations, like Up! and Toy Story 3, still give credit to Pixar, not Disney, a sign that movie viewers regard Pixar as a separate imaginative entity. This is because people regard Disney as the king of hand-drawn animation, which brought the company to its pinnacle in 1999.
But many do not know that Disney had planned on halting 2-D, hand-drawn animated films. John Lasseter, who once as an employee criticized Disney for being uncreative in the past, helped create The Princess and the Frog in 2009, saving Disney's spirit and roots as a classic movie creator. What would have become of Disney if hand-drawn movies were no longer a staple in Disney's video vault?
The former king of cartoons, Walt Disney, if he were alive today, would have seen his company evolve into something he would have hated. Disney was once a company that told creative stories of fantasy and fairy tales. These stories gave children of all ages and of both genders magic and wonderment, memories and inspiration. But we have seen major changes in programming during the reign of Iger that have resulted in the production of teen drama programming and regurgitated movies during the 2000's, titles that bombed at the box office and have very little chance at future success.
Where did all the creativity go once Iger took over? It would not be fair to blame it all on him for the disappearance of the magic of Disney, but considering the decisions and results that have come out of Disney Imagineering, it could be justified.
Revenue Streams Shifting
Disney's revenue stream from its Studio Entertainment division, once represented half of the company's overall profits, but as the company grew, so did its other divisions. However, growth from Studio Entertainment peaked in 2004 and has since declined
(see Wikipedia link). Revenue from this division now generates less revenue than it did before it merged with Creative Content in 1996. Consumer product sales have also declined sharply at the end of the Eisner era, evidence supporting that the lack of creative and memorable shows have proven to be profitable only in the short-term.
Now, nearly a half of the company's revenue comes from the theme park and its Media Network, which include television stations like ESPN, Disney Channel, and ABC, which make their money from advertising.
So what can Iger do with Disney to revive its name and identity? The first step was making sure Lasseter continues to lead the creative team. Disney's identity was almost lost in the mix of Pixar movies, and Disney must reclaim its reign as cartoon king. Secondly, if Iger insists on creating live-action shows, consider adding villains back into the picture. Classic television needs heroes to guide children because more children look up to heroes, not teenagers. It worked with Power Rangers, it can work again. Lastly, focus on creating shows with longevity and tie it in with Disney Media Networks. Memorable characters allow fans to collect toys, purchase products and merchandise that will add to the top and bottom line. Adults today, who grew up in the 1980's and 1990's are now buying DVD sets, toys, and clothing from their favourite shows, generating huge profits.
Iger took over a company whose brand was highly regarded, but today is being trashed. Major shifts back to an Eisner-like era would be easily accepted in today's market and would be inexpensive to pursue. Iger has to remember that the profitability of Disney, as important as it may be, must be secondary. The magical world of Disney (also a title of their Sunday night movies) must be upheld to the highest standards with integrity. The money will come along once Disney's reputation as a magical company is restored.
The city of Edmonton is ready to witness an exciting Edmonton Oilers team. The Oilers showcased their top prospects in Penticton yesterday at the NHL Rookie Tournament, beating the Vancouver Canucks rookies 4-1, with their 'Big Three' players all hitting the score sheet.
Taylor Hall, along with Jordan Eberle and Magnus Paajarvi, are grabbing the focus of the media and hockey fans at this tournament. Although, only one game has been played, Oiler and general hockey fans were treated to some fancy skating, puck-handling, and passing plays that will ultimately land them a job in the Oilers line-up, come October.
The three players have shown that they are capable of playing well in a competitive environment. Many are not taking too much stock in their one-game performance, but if all three players finish top in scoring, consider those skeptics believers. Considering the Oilers entire rookie team is under the age of 21 and their opposition consist of players 21 to 25, we should remind ourselves that the team, not just the Big Three, outplayed people about 5 years older than them. At that age, 5 years is huge difference in terms of strength and maturity.
Paajarvi, 10th overall in 2009, who is considered the most NHL-ready, scored two goals in the first game of the tournament. Many in Oil Country believe that Paarjavi has the better chance of winning the Calder this year, not Hall, but if all three players compete for that trophy, without hurting the team, Oiler fans will be treated to great hockey. Eberle, 22nd overall in 2008, also scored a goal, receiving a nice pass from Hall, something I'm hoping to hear a lot of when the real season starts.
Comparisons to Gretzky, Messier, and Kurri, the Oilers Big Three of the 1980's, have emerged in the City of Champions, and many are expecting this team to one day hoist the Cup again. It's probably too soon, no, it is too soon, to say this is the next dynasty, but if the players live up to their hype, and can get better productivity from their past "kids" Gagner and Cogliano, we could see this last place team really be a Cup contender in just a few seasons. Oiler fans have seen many promising prospects flop, like Schremp, or play in the KHL, like Mikhnov, so it would be nice to see some prospects want to play here and one day win.
Last year's dismal performance by the team had one silver lining - nabbing Taylor Hall. He has won at multiple levels, including the two Memorial Cups with the Windsor Spitfires and a gold medal at the U18 in 2008 (with Eberle). Hall also won three gold medals in 2008 alone, one at the World U-17 Hockey Challenge, the IIHF World U18 Championsihps, and the Ivan Hlinka Memorial Tournament (also known as the U-18 Junior World Cup).
Eberle has also shown he can show up and win big games. At the end of the NHL regular season last year, Eberle proved he can play with men in the IIHF World Championships in Germany, although Canada finished in a disappointing 7th place. After being called up to the AHL from the WHL late in the season, Eberle tallied 14 points in 11 games with Springfield, and was even rumoured to hit the ice for the Oilers in one regular season game, but of course nothing transpired.
Paajarvi, the biggest Swede to impact the Oilers since Tommy Salo, has a lucrative tradition of winning as well. Although not as successful as Hall and Eberle, Paajarvi has two silver medals and one bronze medal in the annual World Junior Championships Tournament, one bronze medal at the World Championships (2010) and was the youngest Swede to ever play in the under-18's. Paajarvi also won a gold medal in the J20 SuperElit (the highest junior level hockey league in Sweden, comparable with the OHL, WHL, CHL, and ECHL in North America).
With three players who have won so many titles and medals in their days, what's to stop them from winning the Stanley Cup? Just themselves.
On a side note, I really want to see Hall and Eberle play together with Crosby, Nash, or Perry and so many other talented players at the next Olympics in Russia. The 2010 decade for the NHL looks very promising and high-calibre players from all over the world are emerging in this sport including Russia's Malkin (Pittsburgh) and Ovechkin (Washington), Calgary prospect Backlund (Sweden), Los Angeles forward Kopitar (Slovenia), and Washington forward Backstrom (Sweden).
Well, that's my basic run down of the Oilers 'Big Three' prospects. It should make for a heck of a season, even if this team fails to reach the post-season again. Fans will be treated with creativity and imaginative plays beyond Hemsky and that should make it worth it. The development of the players from boys to men should also allow many superstars to realize the Oilers will be a legitimate contender very soon, and could bring greater talent to the city. For now, that's my run-down of this season. I hope to bring more updates of the Oilers in my blog. Good luck to the boys in copper and blue.
You can watch the entire tournament unfold for the Oilers, Flames, Canucks, Ducks, and Sharks at http://youngstars.insinc.com.
Netflix [NFLX:NSD], trading at $142.70, has seen its shares touch a 52-week high again, with a strong push of more than 15 per cent in the last four trading days. The chart below, courtesy BigCharts.com, shows that the shares are now above the Bollinger Bands, indicating the rally will probably cease and a probability in a price drop has increased. The only fundamental that could allow the shares to rise in the next few days would be a positive report from the Beige Book - to be released Wednesday Sept 8 at 2 PM EST.
With a higher potential for a negative trade in the next few days, we could implement two types of trade: A long put or a bear put spread.
A long put is a pure play on a negative move, but with time value on the weekly option representing almost half the option value, a move below $140.40 would be required to make a profit.
Instead, if we take a look at the 145 ($4.60) and 140 ($2.20) puts, we can create a debit spread of approximately $2.40 (this spread may change based on the underlying price of Netflix), thus requiring a drop below $142.60. If the stock drops below $140 on Friday, your total potential earnings per contract is $2.60 or 108.33 per cent! The only risk is $2.40 per contract (or $240), a safer bet than shorting the stock.
Before I begin this week's PTE, I wanted to make sure people understood the reasoning for creating spreads, instead of writing the options uncovered. Spreads, which do lower one's profitability, increase protection. In the last two weeks, the long portion of the spread was not required, but due to the high cost of the underlying security, one contract can eat up a lot of margin, thus, we create a spread, so that the total margin used is only the net debit of about $800 versus the uncovered margin requirement of about $13,500.
This week, we have two trades that I want to bring up, both are bear put spreads. The first is, once again, Google [GOOG:NSD]. This week we will implement a bear put spread on Google, trading at $461.10. The overall market's two-day rally will more than likely halt on Friday, and if there is a bad jobs report, we could see more selling. This week, I suggest you go long the 470 put (in the money) and sell the 460 put (out of the money). The current natural prices respectively are $9.30 and $2.00, creating a net debit of $7.30, meanwhile, the stock is at $461.26.
Unlike the previous recommendations, this trade has an out-of-the-money option. In this scenario, your break-even is $462.70, but you can also make money two different ways. The first is having the long option increase in value. If Google were to close on Friday at $460.05, your long option would be worth $9.95 (increase of $0.65) and your short option will expire worthless, allowing you to capture the $2.00. The maximum profit is $2.70 for a $7.30 trade, or 36.99 per cent.
Disclaimer, my fills, prior to writing this, were $8.00 and $1.70 (net debit of $6.30 and a max profit of $3.70).
The second trade is a bear put spread on Goldman Sachs [GS:NYSE]. The company, trading at $139.10 now, has had trouble creating real support at $140. Today, I tried to buy the 145 put for $5.10 when the stock was at $139.99, but due to my broker's requirement on trader review, I cancelled the order; I did not want to wait a minute just to get the order opened and approved. Anyways, implement the bear put by buying the 145 put and selling the 140 put. As of right now, the stock is down, and time value has disappeared on the 140 puts, but if the stock rallies back near 140, consider buying the 145 put for $5.20 and selling the 140 put for $1.00 (natural values when the stock was at $139.99 earlier today), creating a net debit of $4.20. Your break even price is $140.80, and your maximum profit is $1.20 for every $4.20 spent, or 28.57 per cent.
Remember, you can follow all P.T.E. recommendations above, or clicking here.
