Mr. Sensitive

October 21, 2011

FSX Friday Update

Filed under: Uncategorized — lbej @ 17:12

To be honest, I expected hair-raising volatility from the markets this week as earnings and business outlooks poured in.  Instead, the markets were resolutely irresolute: earnings reports were emboldening and forecasts were surprising robust (Apple’s huge miss, its first in four years, notwithstanding), but all the sector- and company-specific exuberance was reliability capped by continued fretting and temporizing from Eurozone politicians.  Someone says yes, someone else says no; someone says now, someone else says later; someone says $2 trillion for stabilization, someone else says $ bupkiss.  I’m not sure what Merkel and Sarkozy are waiting for, but pretty soon they’re going to get what’s coming to them.  Greece couldn’t grow its way out of its fiscal chasm even if austerity measures weren’t being forced on it by international lenders, but as it is, the Greek economy is more likely to contract than to expand, and revenues available to service debt will contract along with it.  Default is inevitable.  Greece can’t service its existing debt and it can’t refinance that debt—but Germany and France can, if and when they recognize the necessity of doing so.  Here is the face of Germany’s continuing vacillation, everyone’s favorite spinster librarian/Bundeskantzler:

Angela Merkel is the person the Germans want the Greeks and the rest of the Mediterranean ne’er-do-wells to think of as they reconcile themselves to the Franco-German fiscal line.  Of course, the Greeks loudly complain that they are thinking of someone else:

But they’re lying.  They’re just being provocative to buy themselves time and keep the toga party going.  The person they really think of when Germany comes knocking at the budgetary door is this man

and the millions of Germans like him.  This is Wolfgang Schäuble, the German Finance Minister, and he’s not here for the party.  He and his friends think the party is too loud and too expensive and they would love to call the cops to shut it down.  The problem with the Eurozone right now is that they are the cops.  But they don’t want to be the cops because, well, you know.

So there are no cops, and the toga party is out of control.  Personally, I would favor a reimagined Eurozone that jettisons the peripheral economies (Spain, Portugal, Greece, Ireland, and even Italy) and pursues even greater unification within the Carolingian core (France, Germany, and the Low Countries).  A true, unified Frankish state at the heart of Europe would be the dynamic, stable economic power—right now—that the U.S. once expected broader Europe to become.  The Frankish Reich could partner with the U.S., China, and Japan to stabilize the non-core European states, but it would not have its own currency destabilized as a result of those countries’ profligacy.  Wolfie and Angie could call the cops—the IMF, JP Morgan, the Bank of China, whoever it is—and not have to worry about everyone bringing up, well, you know.

The Family Stock Index was nearly flat on the week, but it needed a massive 250-point Friday rally to get close to breakeven.  At 10,926, the FSX finished less than 0.2% below its closing level a week ago, and the advance/decline ratio of 10-to-14 further underlines the lack of direction we demonstrated this week.  Still, there’s a lot in motion behind the headline numbers, and I still expect another strong upside move before the year is out.

Advancers

  • Jenny (LEN) +9.3%.  Jenny got in some trouble earlier this month for blowing a couple spelling tests and a vocabulary quiz—her mother, hall-of-fame yearbook editor that she is, won’t stand for that sort of tomfoolery—but she’s put together a string of As since then and may have even accepted the need to prepare for tests from time to time.  Jenny herself attributes her rise this week to the excellent otter she made from a small pumpkin:

This, frankly, is as plausible an investment thesis as any I’ve heard this week.

  • Lucas (LEI) +8.9%.  Lucas has been the best performer in the FSX for the first three weeks of the final quarter, racking up 41% in QTD gains after an astounding 80% move off the first-week lows.  What is the appropriate explanation?  Well, I must admit to some puzzlement.  Yes, the market sold Lucas heavily leading up to his fateful enrollment in middle school (down 20% in Q2 and 54% in Q3), so anything short of spontaneous combustion on the first day would have merited a rebound.  But Jenny again was quick with an explanation: “probably he ran for school secretary and won.”  Never mind that they probably have grade-level elections, and never mind that what in the world?  That explanation is so specific and so Jenny that it must be the case.  So there you have it: Lucas ran for school secretary and won.
  • Nicole B. (NI) +5.3%.  It occurs to me that I have quite possibly taken the wrong angle here.  I had been assuming that Justin needed to get his act together and bring home the (vegan) bacon, this being a man’s world and whatnot, but Nicole’s handsome investment profile—steady capital gains, substantial dividends, and low volatility—cannot but force me to reexamine my assumptions.  Yes, men are stronger, faster, smarter, and more creative than women, but are they prettier?  Sometimes.

Where was I going with this?  I’m not sure, exactly, but Justin’s probably planning to apply to another grad school to get his doctorate in dog-kissing, and Nicole’s prospects have to be better than that.  Better, but not as stellar as some.

  • Charlotte (ICE) +1.7%.  The Empress tells me that Charlotte can’t imagine how she will survive another Chicago winter without a bathtub.  Katie was bereft of ideas herself, and hypothermia seemed to be a real possibility.  But a late-week rally suggests that Charlotte has found a solution, or that the market is confident in her ability to do so.  But what could it be?  Hopefully I will come up with a suggestion by the end of the update.  I only have the one sister, after all.

Decliners

  • Lee (MSTR) -2.0%.  The market’s initial reaction to my aggressive Book War plan is to sell me, a decision I respect.  Even if I somehow come in ahead of plan, there will be plenty of time—months rather than weeks—for bulls to build positions.  It’s going well so far, but I’m up 25% since early October, and it’s still very, very early.  Separately, the heavier selling in Legacy Lee (LEE -4.4%) suggests to me that the potential spinoff isn’t being well-received.  To which I say, respectfully: don’t tell me, or Legacy Me, what to do.
  • Reagan (REGN) -2.8%.  Reagan’s definitely going to be famous, but sometimes I’m afraid it might be more in a Richard-Simmons way than in a Barack-Obama way.  http://youtu.be/WNLiZoXATBE
  • Wilson (WILC) -5.5%.  Wilson doesn’t want friends.  He wants peace and quiet in which to cultivate his inner darkness—he’s very like me in that way.  But Brinky wants to be friends, not just with Zondro and the cats, but with every living thing on Earth, and his take on friendship is that it involves a lot of mutual punching and hair-pulling.  Thus the risks, and the market losses, continue to mount for poor Wilson.
  • Zero (FRZ) -12.4%.  It’s an extreme solution, but we’ve all seen it work before, and on the ice plains of Hoth, no less.  So if it gets really chilly in Chicago this winter, Charlotte can simply wait for Zero to freeze first, cut open his belly, and sleep in him like he’s a Taun-Taun.  Be warned, though: he almost certainly smells better on the outside.
Name Ticker 10/21/2011 Change
Brinkley BCO $27.55 +0.31
Charlotte ICE $126.51 +2.06
Dustin DST $47.05 -0.59
Icarus FLOW $2.52 +0.04
Jenny LEN $16.73 +1.42
Justin WOLF $2.22 -0.12
Katie CATY $12.82 -0.24
Lee MSTR $133.04 -2.74
Legacy Lee LEE $0.69 -0.03
Lisa LSI $5.86 -0.08
Lucas LEI $1.83 +0.15
Lulu LULU $50.10 -4.14
Marcus MCS $11.54 -0.31
Mario T.E. PBY $11.33 +0.04
Mario T.Y. SUP $18.29 +0.51
Marisa MOLX $23.12 +0.34
Nicole B. NI $22.90 +1.15
Nicole L. COL $55.16 -0.42
Reagan REGN $62.17 -1.78
Ruby RBY $3.60 +0.10
Wilson WILC $5.72 -0.33
Winston HWD $10.86 -0.83
Zero FRZ $0.99 -0.14
Zondro ZQK $3.15 -0.13
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