The shares of Twentieth Century Fox have exploded upwards recently and Wall Street is asking why. In any discussion of this company, we believe it is important to stress the backdrop underlying the market’s fervor.
Many observers of the economy have raised questions about the vitality of the consumer sector (they cited the dip in the savings rate, the sapping of real spending power by inflation, the consumers’ fear over the President’s energy message, his leveraged position, and so forth). Others questioned the lasting power of capital goods spending, pointing to rising capital costs, reduced profitability, and so on. Within this context, investors (and speculators) were focusing on pockets of the U.S. economy which could defy broad GNP classification.