Mr. Sensitive

October 28, 2011

FSX Friday Update

Filed under: Uncategorized — lbej @ 17:28

We finally have something that looks somewhat like the beginning of an attempt to try and come up with a resolution to the Greek debt problem.  Is all the market gyration really about Greece?  In a word, yes.  If I have multitudinous words I can cite multitudinous market drivers, but the Greek problem is what is moving the market from a macro standpoint.  The company-specific crucifixions (NFLX, AMZN) and coronations (GOOG, CAT) will continue, but the ETFs and futures that shift the averages in one direction or another are being pushed and pulled by the news coming out of Europe.  The problem is not Greece itself.  Do-nothing pundits use the size of the Greek economy as a red herring, saying it’s smaller than California, it can go belly-up and it won’t kill the Euro or economic demand (it certainly won’t hurt supply—do the Greeks actually make or do anything?).  This is all true, but it’s beside the point—that’s what a red herring is, after all.  You make a provocative point that, for all its verity and profundity on a stand-alone basis, has little if any bearing on the issue being discussed.  Thus a clear statement of fact adds to confusion.  Of course the Greek economy is irrelevant.  The problem is Greek debt, specifically how much of it is sitting on the books of large financial institutions, institutions that appear sound so long as that Greek debt has some value but will become insolvent overnight if the debt is written off.  Greece is a domino; if it stood there by itself, you’d flick it over without a second thought.  But if Greece falls—without a credible backstop for the banks that hold its debt—the global financial system goes with it.  Banks are insolvent and can’t lend, not even to fund credit lines or support crucial foreign exchange spot and forward transactions.  With no credit available, global trade in goods and services can’t continue, and economies everywhere will seize up.  Hundreds of millions of people will be thrown out of work and there will be chaos.  That’s why you should care about Greece, and why a European (read: Franco-German) solution to Greece’s problems is so essential.  It appears that the time, effort, and expense being channeled into Greece is out of proportion to its stand-alone economic significance—and it is.  We don’t really care about Greece—we care about all the dominos lined up behind it.

Greece is also standing at the head of a second row of dominos, the other European sovereign debtors.  Countries like Spain, Ireland, Portugal and Italy that might otherwise be given some leeway by international creditors will be lumped in and thrown out right alongside Greece.  They won’t be able to roll over short-term debt so they won’t be able to service long-term debt and they will default as well.  It doesn’t matter that the second wave of default will be caused by self-fulfilling market panic; what matters is that the second wave will drown more victims than the first one.

The Family Stock Index scored a market-beating 4.5% gain this week, although nearly all of that came in a 500-point burst on Greek Thursday.  We are now up more than 14% for the month of October and 24% from the Oct. 4 low.  So far, at least, this is exactly what I predicted last week (unless it was the week before last that I made my prediction—I’m determined not to repeat myself, but I’m also determined to grow another four inches, and you see how well that’s working).  We are, however, undeniably and massively overbought.  Greece was a significant threat—a threat that was lessened at best, tabled at worst, and eliminated only in the rosiest dreams of Berlin bureaucrats—but it’s become even more significant as a distraction for the U.S. markets than as a threat.  Now that it’s diffused for the time being, we can focus on what really matters—the state of Kim Kardashian’s marriage.

Doesn’t look good, does it?  What I love about this—besides everything about it—is Kim telling Kris to get to work.  God, I hope that’s true.  Amazing.  Yeah, Kris, get to work!  Never mind that you’re an NBA player, and the NBA owners have locked out the NBA players so you can’t get to work.  Never mind that Kim has probably never done anything that anyone other than her sisters would consider work at any point in her genetically-engineered life.  Never mind that the entire misbegotten Kardashian coven is draining the vitality out the universe through some form of psychic vampirism and they should all be thrown in the nearest available bonfire immediately.  All of that is fine and dandy.  But you, Kris, need to get to work.  I love it so much.

Advancers

  • Ruby (RBY) +16.9%.  Katie reports that her mother survived her annual dental cleaning, albeit only after multiple sorties and substantial sedation.  And still it was a close-run thing.  Again, we are talking about a cleaning, not any sort of procedure.  I shudder to think what my mental state would be if I had any such qualms about dentistry (not including moral reservations), as often as our dentist is all up in my mouth.  In fact, I think I can feel a new, inexplicable hole in one of my molars right now.
  • Lulu (LULU +15.6%) and Marisa (MOLX +10.2%).  There seems to have been a sort of cat population explosion in our neighborhood, with three other felines now in residence in the cul-de-sac alone and several others not far removed along PP Drive.  That Marisa is holding her own in the highly-competitive world of bird-murdering is a testament to tenacity.  That Lulu continues to spend all day sleeping in Brinky’s room is a testament to her obesity.
  • Winston (HWD) +15.3%.  Further reporting by Katie reveals that Mario is out of town at a conference related to whatever he does for a living—I continue to have no idea what that is and, vociferous protestations notwithstanding, neither does Katie.  Anyhow, Mario’s absence means Nicole is in charge of Winston, and the market seems to be betting on an increase in table scraps, if not still greater leniency.  Don’t feel like going outside in the cold for nighttime poopies, Winston?  Don’t worry about it.  My advice to Mario: if he has any shoes he didn’t take with him, he might want to take a good look inside before he sticks a foot in.
  • Katie (CATY) +14.4%.  Well, year-end has almost ended well.  Was I ever this stressed out about meetings and emails, audit reports and financial statements?  You know, I think I was.  What was up with that?
  • Zondro (ZQK +9.5%) and Icarus (FLOW +4.4%).  The dogs that don’t really hate other dogs really like other dogs—there’s not a lot of ambivalence in the dog world.  Wilson?  Nothing says ambivalent like unch, and Wilson (WILC) was unch on the week.  Also, he’s not a dog.
  • Dustin (DST +7.9%) and Lisa (LSI +7.3%).  Lisa’s new niece arrived this week.  Lisa loves nieces, and Dustin loves Lisa (and probably, also, nieces).  Do I really have to try any harder than that?  I say no.
  • Lee (MSTR) +7.8%.  Brinkley’s thrown his lot in with the book in the Book War, just as I knew he would.  That’s fine, effer.  You take your shot, I’ll take my shot, and we’ll see who walks away and who doesn’t.  Cruising doesn’t count as walking, just so you know.
  • Brinkley (BCO) +3.4%.  And his sisters taught him to climb the stairs.  But that’s okay; he can only do what he can do.  Until he can do more than he can do, I can handle him.

Decliners

  • Nicole B. (NI) -1.7%.  It hadn’t occurred to me until today, but do you think that this Greek debt restructuring is going to mess up Nicole’s credit?  Food for thought, Justin.  As opposed to food for poop.
  • Reagan (REGN) -10.5%.  This week I had to have a discussion with Reagan that I would have titled—if I titled my conversations with Reagan—Ever Do Anything I Tell You.  Reagan has a lot of crazy thinking to do, and sometimes she gets borne away on a great wave of crazy thinking so that she doesn’t do ANY OF HER CHORES EVER.  A modified state of domestic affairs could well be negotiated between us—no chores, no allowance would be my opening and final position—but no chores, yes allowance is going to be a non-starter.  If you’re going to try and get out of doing anything that you’re supposed to do, ever, you should at least have the decency to fake illness or injury like Jenny does.

 

Name Ticker 10/28/2011 Change
Brinkley BCO $28.50 +0.95
Charlotte ICE $132.44 +5.93
Dustin DST $50.77 +3.72
Icarus FLOW $2.63 +0.11
Jenny LEN $17.05 +0.32
Justin WOLF $2.29 +0.07
Katie CATY $14.66 +1.84
Lee MSTR $143.36 +10.32
Legacy Lee LEE $0.71 +0.02
Lisa LSI $6.29 +0.43
Lucas LEI $1.78 -0.05
Lulu LULU $57.94 +7.84
Marcus MCS $12.46 +0.92
Mario T.E. PBY $11.40 +0.07
Mario T.Y. SUP $18.42 +0.13
Marisa MOLX $25.47 +2.35
Nicole B. NI $22.52 -0.38
Nicole L. COL $55.81 +0.65
Reagan REGN $55.66 -6.51
Ruby RBY $4.21 +0.61
Wilson WILC $5.72 unch
Winston HWD $12.52 +1.66
Zero FRZ $1.04 +0.05
Zondro ZQK $3.45 +0.30

 

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