We are effectively -- if not yet literally -- in a recession, so beware the daily unfurling of reorganization plans.
Reorganization plans -- dividing a company up into new silos or fiefdoms or whatever you want to term them -- are trader pleasers. Traders love them, at least in the moment, but the plans aren't worth the pixels they are printed on.
We'll get to today in a moment, but JPMorgan (JPM) had a strong day Friday when the company announced what MBA graduates and the journalists who love them call a "business-line realignment." If that sounds vague, ridiculous and redundant all at once, well, you are not alone.
Point is, the stock market loved it, at least for long enough to have a cup of coffee. Among changes upon changes, CFO Doug Braunstein would report to Matt Zames, a co-COO, instead of CEO Jamie Dimon. This set tongues wagging about succession implications, as traders nodded approvingly. Perhaps everyone involved can be forgiven, as the week contained the most comical moment in recent memory: Citigroup's (C) Sandy Weill waxed nostalgic about Glass-Steagall. Curiously, though, JP Morgan seemed to take Weill's prattle seriously. In addition to their game of corner office musical chairs, JP Morgan also announced the splitting up of consumer and investment banking, approximating Glass-Steagall. Traders cheered that too.
By Monday, though, it was all a mess. Traders and analysts spent the weekend deriding the change as playacting. The management change made no difference: Dimon would still be in power until the end of time, they said. The dividing up of consumer and investment banking amounted to little more than Glass-Steagall Lite, they snarked. A Deutsche Bank (DB) analyst downgraded the stock. The new alignment was no saving grace.
Also on Monday, Coca-Cola (KO) announced a realignment that had the market speculating on succession. Sound familiar? And wouldn't you know it? For good measure, they also divided the company into geographic zones. Coke doesn't have consumer or investment banking or they probably would have divvied that up too.
Even though the stunt seemed familiar, the stock was up. In the moment. But don't think for a moment that it will stick.
Look: even old reliable consumer companies like Apple (Apple), McDonald's (MCD) and Starbucks (SBUX) are disappointing. As in the case of every recession, companies look long and deep for a tool of distraction. They usually come up with a management reshuffle and reformatting of divisions. The market loves these moves in the moment. They are meaningless, though, and rarely inspire a sustained rally.