Mr. Sensitive

March 22, 2013

FSX Friday Update

Filed under: Uncategorized — lbej @ 16:54

So…Cyprus—does it matter?  Short answer: no.  If Cyprus is saved from default by an EU bailout under the current terms—imposing a tax on currently-frozen deposits held in Cypriot banks—the damage would be minimal (outside of Cyprus, of course).  If Cyprus rejects the deposit tax and Germany, I mean the European Union, refuses to modify the terms of a bailout, forcing Cyprus to default on its external debt, the damage would, again, be minimal.  Cyprus just isn’t that big.  There are two ways in which the problem in Cyprus could become a global problem, at least that I can see.

The first would be if the EU/Germany mismanages perceptions in countries outside of Cyprus.  Cyprus has a weak banking system, an insolvent government, and a tiny economy; the third and last item I listed is what makes the problem a manageable one.  Like Cyprus, Spain and Italy have weak banks and empty Treasuries; unlike Cyprus, they have big populations and large, globally-integrated economies.   It doesn’t really matter what the Germans force the Cypriots to do to pay their debts…unless the Spaniards and Italians start to think they’re next.  If depositors in those countries think they’re about to have their deposits seized and taxed, they’ll withdraw their money en masse from banks, precipitating a banking collapse.  So far, the Germans have insisted that Cyprus is a special case and no precedent is being set.  So far, Spanish and Italian depositors have believed their Teutonic overlords.  The risks of miscommunication here are well understood by all the parties involved, and should, therefore, remain contained.  In other words, don’t worry about this one.

The second possibility has to do with why Cyprus is a special case.  It seems that Russian gangsters have been using banks in Cyprus to launder money, and it is these deposits that Germany is targeting with the tax.  Russia has also loaned several billion dollars to Cyprus—totally unrelated to the money laundering arrangements, I’m sure—and so all told, Moscow has more skin in the game in Cyprus than Berlin or Brussels.  This is a situation that, frankly, the EU should never have allowed to develop: a country that is a member of the EU, that is part of the Eurozone, and it’s more beholden to Russia than to any of its treaty partners.  Russia could accept the confiscation of some of its citizens’ deposits—it can hardly officially acknowledge all of them, anyhow—or it could play ball with the EU and Cyprus to come up with an alternative exit strategy.  But maybe the wrong oligarch’s funds have been seized this time, and cooperation isn’t the option the Europeans think it is.  In that event, this situation could get very messy.  I guarantee you that none of the global markets—ours included—is pricing in anything like that.

Not yet, anyway.

While the broader market took a bit of a breather this week (S&P 500 -0.2%), the Family Stock Index continued its upward trek, notching a new all-time high (15,312) on Wednesday before settling out at 15,206 (+0.4%).  Decliners actually outnumbered advancers 13 to 12, but Ruby’s 105% gain in the quarter has given her such an outsized weighting in the index that she practically counts as two components now.  That means that as Boo-boo goes, so goes the FSX…at least for one more week.

Advancers

  • Wilson (WILC) +9.3%.  I think we can all agree now that the groundhog did a lousy job this year; he called for a short winter instead of six more weeks, and he whiffed on his prediction, big time.  Well, it’s been six weeks since Groundhog Day and the botched prediction is about to become moot.  With April approaching and warmer weather on the way, Wilson should get to spend his days in the backyard—away from Brinky—very soon.
  • Ruby (RJET) +6.6%.  I remember that Katie and Mario TY had to clean the house on good ol’ Arrow Lane every Sunday, and it didn’t particularly matter whether the house was dirty or not.  I also remember thinking I would never want to clean my house every Sunday, let alone make my children do it.  Boy, was I wrong.  Sunday is about to become cleaning day for the girls, or as I’m calling it, Boo-Boo Was Right Day.
  • Zero (ZAGG) +4.9%.  Whole Foods plus Guitar Center is equal to more than 2 times Starbucks.  How about that math?
  • Marcus (MCS) +3.6%.  I hope Marcus spends his entire upcoming Spring Break playing video games.
  • Nicole E. (NICE) +2.9%.  Katie noticed yesterday that Nicole is the only one of our true in-laws (family members not related by blood to either of us) who participated in our NCAA tournament pool.  That warrants some kind of special in-law upgrade, I think.  Since my own sister didn’t love me enough to participate, maybe Nicole should just replace her.

Decliners

  • Brinkley (BCO) -1.5%.  Brinky’s mother is constantly standing in the wrong places, forcing him to reposition her.  It must be really stressful for him.
  • Katie (CATY) -2.2%.  Katie is constantly standing in the wrong places, forcing Brinky to reposition her.  Eventually he’s going to get fed up with her incompetence, and there’s no telling what might happen then.  I’m guessing a tantrum will be involved.
  • Zondro (ZQK) -2.0%.  With April approaching and warmer weather on the way, Zondro will be forced to spend his days in the backyard—away from Brinky’s food—very soon.
  • Jodi Ann (JOY) -6.0%.  I hope Marcus doesn’t make Jodi Ann spend her entire upcoming Spring Break playing video games.
  • LULU -9.0%.  Lululemon Athletica (Lulu’s company) was forced to recall a bunch of ladies’ yoga pants this week because they were unintentionally, um, see-through.  The moral of the story: don’t buy pants from cats.

 

Name Ticker 3/22/2013 Change
Brinkley BCO $27.69 -0.43
Charlotte ICE $162.31 +1.33
Dustin DST $69.37 -0.38
Ghost Marisa MOLXA $23.80 +0.18
Icarus FAST $51.51 +0.71
Jenny JNY $12.82 +0.17
Jodi Ann JOY $58.41 -3.72
Justin SCI $16.36 +0.10
Katie CATY $20.12 -0.46
Lee TGI $78.04 -0.64
Lisa LNCE $25.02 -0.12
Lucas LEI $1.26 -0.08
Lulu LULU $62.35 -6.13
Marcus MCS $12.40 +0.43
Mario T.E. MGEE $54.87 -0.64
Mario T.Y. MAR $39.85 -0.50
Namilita NL $12.60 -0.22
Nicole E. NICE $37.17 +1.03
Nicole M. COLM $58.71 +0.73
Reagan REGN $172.25 +0.41
Ruby RJET $11.61 +0.72
Wilson WILC $6.67 +0.57
Winston ED $59.09 -0.08
Zero ZAGG $7.87 +0.37
Zondro ZQK $6.38 -0.13

 

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