Mr. Sensitive

June 29, 2013

FSX Friday Update

Filed under: Uncategorized — lbej @ 11:27

The market seemed prepared to continue its taper-tantrum this week, as worries about U.S. monetary policy and a nasty overnight plunge in Chinese stocks caused the Dow to open Monday down over 250 points.  But as the day wore on, buy-the-dip investors—unexpectedly AWOL last week—returned in force, and the stock market rallied as a result.  The Chinese Communists were able to calm the markets by insisting they are tightening credit selectively in order to reign in the country’s elaborate shadow banking system, and that the People’s Bank of China can and will provide liquidity to whatever extent might be necessary to ensure stability.  More importantly, the many mouthpieces of the Federal Reserve went on a barnstorming tour (of really boring places) to stamp out erroneous market expectations spawned by last week’s policy pronouncements.  As you recall (ha!), last week Ben Bernanke told the markets what they already knew, namely, that if the performance of the economy matches Fed projections over the next several months, the pace of quantitative easing could be reduced later in the year.  Bernanke distinguished between quantitative easing—the unprecedented bond-buying program being used to keep long-term interest rates low—and the Fed Funds rate used to set short-term rates and balance inflation against economic growth under normal conditions.  QE became necessary because the collapse of the housing bubble and the 2008-2009 financial crisis did extraordinary damage to the economy, and extraordinary measures were necessary to prevent a deflationary spiral and a second Great Depression.  Bernanke is now telling the markets that he believes this risk has been largely contained, and if the evidence continues to support that conclusion, the extraordinary measures taken to avert disaster can be curtailed.  He insisted that the Fed Funds rate is an entirely separate matter, and that it will remain at or near zero for a long time to come.  Despite that, long-term rates spiked last week and traders began to price in a Fed Funds rate hike in 2014.  This week’s powerful equity rally was fueled primarily by Fed officials’ repeated insistence throughout the week that a Fed Funds increase in 2014 will not happen.  No one said it will not happen—they can’t see the future, after all—but they did everything but say it, and everything-but was more than enough.

So is it safe to buy stocks again after last week’s rout?  Nope.  Friday was the last trading day of the second quarter, and vacation season is about to really get underway.  That means lower volume and a lessening of market depth that will exacerbate price swings over the next two months.  When Q2 earnings hit next month, that’s the thin market they’ll hit in, and it’s no place for long-term investors.  If you can’t get in and out quickly—and you can’t—your best bet is to stay market-neutral through August.

The Family Stock Index outperformed the S&P 500 for the second straight week, rising by 1.6% to close at 15,327.  This week’s gain allowed the FSX to finish the second quarter in the green, albeit with a market-lagging 0.3% three-month gain.  Our technical position has improved this week, as well.  After closing below 15,000 on Monday, the FSX regained that critical level on Tuesday and held it for the rest of the week.  We also notched two straight closes above the 100-day moving average on Thursday and Friday, suggesting that the intermediate-term bull trend is still intact.  We need to get back above the 50-day to reestablish momentum, but the technicals are no longer deteriorating.

I’m sure you were all worried.


  • Zondro (ZQK) +7.2%.  Zondro made it through the week without Jenny and Reagan—the dog crates are in the girls’ room—even though we didn’t leave the TV on at night for him and the little fat one like we have when the girls have been gone in the past.  The times that it seems that he’s a pretty good dog are gradually outnumbering the times it seems that he isn’t.  The same can’t be said for his insane compadre, Wilson.
  • LULU +5.8%.  The less said about the stupid cat, the better.  She rallied this week despite still having no replacement for her ‘retiring’ 51-year-old CEO.  It’s been rumored for years that Nike should/will acquire Lululemon, considering that Nike has a keen interest in expanding into yoga wear, a market segment dominated by LULU.  But the stock’s relentless climb–$20 in 2010, $40 in 2011, $80 in 2012—has lessened the chances of a takeover.  Now that LULU is trading 20% below its highs and appears (temporarily?) rudderless, the speculation has picked up again.  Nike would probably have to pay upwards of $100 a share to get a deal done, valuing the company at $15 billion.  On the other hand, I’d take $100 for my Lulu, with no messy shareholder vote or antitrust review.  Phil Knight—call me.
  • Zero (ZAGG +4.7%) and Charlotte (ICE +3.0%).  They survived The Vampire Diaries; can they survive Crazy Random Question Time?
  • Reagan (REGN) +4.4%.  Crazy Random Question Time isn’t a show, but it really should be.  The world needs to know about Reagan.
  • Justin (SCI) +3.8%.  Justin and Nicole sent me some eBay money for my birthday, and this is what I bought.


They are obviously great patrons of the arts.

  • Mario TY (MAR 3.7%) and Katie (CATY +3.2%).  The latest season of Mad Men is over, and Katie and Mario managed to survive the depredations of Dong Draper without being bored to death.
  • Winston (ED +3.4%) and Nicole M. (COLM +1.8%).  Second-hand Mad Men isn’t usually fatal, but its stultifying haze lingers longer than the unwary might expect.  I believe I may have lapsed into a coma once or twice while Katie marathoned it during her last maternity leave.


  • Marcus (MCS -0.9%).  So Marcus and Jodi Ann are having a girl.  The market seems slightly disappointed that there will not be a little Demarcus joining the FSX, at least not yet.  All this reaction proves is that the market has not spent all day, every day, trapped in a house with a two-year-old boy, and should really shut up about things it doesn’t understand and horrors it can’t possibly fathom.
  • Jenny (JNY -1.1%).  Jenny was bad when she was a toddler, don’t get me wrong.  But she mostly kept her badness to herself, destroying toys, books, and clothes in relative quiet and contentment, something I failed to appreciate at the time.  It was infuriating to have Jenny mistreat her things, but at least she left my things alone.  Brinky believes he knows what must be done with everything in the house.  There are many examples.  The cough drops I have on my nightstand must be placed, one by one, in my bed, where they must remain, forever, under penalty of fit-pitching.  The silverware does not go in the silverware drawer, as I previously believed, but instead must be arranged artfully on the opposite kitchen counter or possibly on a stool.  And of course, drawers and doors must never be left open for any period of time, and I have no one to blame but myself for my inability to get food out of the refrigerator and clothes out of the dryer without opening either appliance.  None of this bothers Katie, of course, because Brinky is her sweet, baby boy.  Whereas if Jenny sends a text message with a dismissive tone (?) and bad grammar, it’s not funny (as I think) so much as it’s the worst thing in the world.


There’s something to be learned from this parental juxtaposition.

  • Jodi Ann (JOY -3.5%).  I expect little Josephine to educate her parents herself in a decade or so, probably with a dismissive tone and bad grammar.


Name Ticker 6/28/2013 Change
Brinkley BCO $25.51 -0.18
Charlotte ICE $177.76 +5.20
Dustin DST $65.33 +0.47
Ghost Marisa MOLXA $24.86 +0.31
Icarus FAST $45.79 +0.72
Jenny JNY $13.75 -0.15
Jodi Ann JOY $48.53 -1.77
Justin SCI $18.03 +0.66
Katie CATY $20.35 +0.64
Lee TGI $79.15 +0.30
Lisa LNCE $28.41 +0.46
Lucas LEI $1.29 -0.01
Lulu LULU $65.50 +3.60
Marcus MCS $12.72 -0.11
Mario T.E. MGEE $54.76 +1.38
Mario T.Y. MAR $40.37 +1.44
Namilita NL $11.30 +0.17
Nicole E. NICE $36.89 +0.31
Nicole M. COLM $62.65 +1.13
Reagan REGN $224.88 +9.41
Ruby RJET $11.33 -0.08
Wilson WILC $6.86 +0.04
Winston ED $58.31 +1.92
Zero ZAGG $5.35 +0.24
Zondro ZQK $6.44 +0.43

June 22, 2013

Maybe Stick To Fireworks, Gandalf

Filed under: Uncategorized — lbej @ 11:22

I watched Two Towers again this week–that’s what I wanted to do on my birthday, besides eat a box of Cheez-its–and I noticed something I hadn’t picked up on before.  About a third of the way into the movie, Theoden’s sitting on his throne in Meduseld being lectured by Gandalf; this is like ten minutes after he got de-Sarumaned and five minutes after his son’s funeral, so Theoden’s not feeling too chatty.  Gandalf wants Theoden to ride out with his army to meet Saruman’s orcs head-on.  This new, silky-haired Gandalf really lays into the king, and admittedly, Theoden’s initial plan (sit around and wait) is maybe not the best.  But then Theoden decides to take refuge in the near-impregnable Hornburg fortress at Helm’s Deep, and Gandalf completely loses his shit.  He bitches to Aragorn about how Theoden’s leading his people into a trap, and he’s a fool, and he runs to the mountain when he should stand and fight–harsh stuff.  Aragorn counters that Theoden is doing what he thinks is best and that Helm’s Deep has saved Rohan in the past.  He gives Gandalf a look that says, clearly, ‘all you had to do was kill one Balrog and it took you like two months, so maybe you should shut your fancy, white pie-hole.’  Gandalf’s not having it, though; he rides off, silky hair ruffling in the wind, and leaves Aragorn to hold down the fort.  Ultimately, Helm’s Deep is breached, but only after it buys Theoden enough time to be reinforced by Eomer and a smarmy, unapologetic Gandalf the Silky.  So it all works out, but does Gandalf deserve any credit?

Hell no.

Let’s review Gandalf’s plan, shall we?  Big Silky wants Theoden to leave the people of Rohan at the unfortified city of Edoras and lead his men–3000 of whom are miles away with Eomer–out to do battle in the open with Saruman’s army of Uruk-hai.  We’re talking 10,000 Uruk-hai, at least, and Theoden’s men can barely even handle the fifty or so warg-riders they run into on the way to Helm’s Deep.  Plan Gandalf would make for a much shorter movie and spare us Aragorn’s inexplicable cliff-diving scene, but that’s about all the good it would do.  The Rohirrim would be wiped out in half-an-hour, the poor folks at Edoras would be butchered, and Gondor would end up as the meat in a Sauron-Saruman orc sandwich.  So Gandalf’s a big, silky idiot.  Naturally, he later accepts his mistake and gives Theoden credit for his wisdom and foresight.

Ha ha ha of course he doesn’t!  He swoops in with his pretty hair and his pretty horse (and his ravishing friend, Eomer) and saves the day, with no acknowledgement whatsoever that there’d be no day to save if Theoden had taken his advice.

God, I miss Gandalf the Grey.

Something else I noticed: I’m pretty sure every single one of the crap elves Elrond sent to Helm’s Deep gets killed in the battle.  Every single one.  Clearly Elrond and Galadriel didn’t want to show up in Valinor with those losers, and they sent them to Rohan to get slaughtered.  Pretty clever, actually.

June 21, 2013

FSX Friday Update

Filed under: Uncategorized — lbej @ 18:23

We’re celebrating the end of Lee’s Father’s Day/birthday week with a guest/joint update here on the FSX today.

Overall: S&P 500 -2.1%., FSX -1.8% (6 advancing to 19 declining)

Lee: I’m sure you’ve been paying attention when I’ve discussed the market selloff this week, so you should have no problem explaining it…right?

Katie: And I’m sure this comment isn’t directed towards me, but towards you, Mr. Sensitive readers. So go ahead, explain the market selloff in the comments.

Lee: Wow.  You just did that.


  • Ruby (RJET) +7.9%. The girls are bringing a friend to Hilton Head for the first time when they head there for their first summer trip on Sunday. Why would that send Mom’s stock up? Because she’s out of town for work and she’ll get to miss a little bit of time in said friend’s company.  (Lee:  She-Who-Must-Not-Be-Named?)
  • Marcus (MCS) +5%. I think school’s just about done up north, which is plenty of reason for Marcus to experience a little stock bump.  (Lee: I just blamed the end of school for last week’s stock swoon.  Leave it to a three-time preggo to gloss over the terror that’s coming.)
  • Lucas (LEI) +4%. Brinky will also be heading to Hilton Head without his beloved mother this summer. Not this weekend, but later in the summer (I swear I think I’m ready to let him go). I mentioned to Dad a little while ago that Lucas might want to be there then, too, and this stock spike tells me I must be right.  (Lee: This doesn’t make any sense.  Brinky can bench press Lucas.)
  • Lisa (LNCE) +2.6%. Hmmm…maybe Lisa wants to be in Hilton Head with Brinky too? Or maybe she’s glad she won’t be. It’s up to her.  (Lee: No, it’s up to you, because you’re writing the update.  That’s how it works.)


  • Jenny (JNY) -4.3%. Poor Jenny, spending so much time traveling this summer, missing her parents almost more than she can stand. That’s totally not true, but she did tell me before she left with Charlotte on Wednesday that she was really going to miss her tire swing while she’s gone. I’m glad to know where we stand.
  • Mario TY (MAR) -4.5%. Going to a Rolling Stones concert and hanging out with all those oldies probably aged Mario a good 10 years this week. Also, Mad Men’s season ends Sunday night, so Mario and I will be back to no current TV shows to discuss.  (Lee: also, Mad Men sucks.)
  • Jodi Ann (JOY) -4.8%. I may have mentioned this, but it bears repeating. Pregnant +summer heat = swelling and exhaustion and general uncomfortable-ness.  (Lee: And terror.  Don’t forget terror.  I never will.)
  • Icarus (FAST) -5.5%. Weird, Icarus and Zondro are down the exact same amount. What could that mean? Um…
  • Zondro (ZQK) -5.5%. Maybe they’re both messing up their respective gardens. We’re suspicious Zondro’s been tromping around in ours messing stuff up. Maybe Icarus does the same. Talking about the pets is so hard some weeks.
  • LULU -6.4%. Except Lulu. I can always come up with reasons she’s down. Lulu, stupid Lulu, is refusing to accept summer schedule. Summer schedule simply means sleeping until 6:00 (or 6:20 or 6:40) instead of getting up at 5:30 because of stupid early middle school. The only one having a problem with summer schedule? Stupid Lulu. Coming in and loudly (seriously SO loud) meowing at us when we’ve decided to stay in bed a little bit. Someone may be sleeping outside every night this summer if she doesn’t get with the program.
  • Zero (ZAGG) -7.8%. Vampire Diaries hater?
  • Reagan (REGN) -9.1%. Poor Reagan. She just prefers life during the school year. I think she’s set to enjoy her summer break, but she’s really at her happiest during the school year – making her teachers love her, getting good grades, generally learning. She’ll get through it though.


Name Ticker 6/21/2013 Change
Brinkley BCO $25.69 -0.96
Charlotte ICE $172.56 -0.59
Dustin DST $64.86 -2.23
Ghost Marisa MOLXA $24.55 -0.27
Icarus FAST $45.07 -2.62
Jenny JNY $13.90 -0.63
Jodi Ann JOY $50.30 -2.56
Justin SCI $17.37 -0.44
Katie CATY $19.71 +0.10
Lee TGI $78.85 -0.10
Lisa LNCE $27.95 +0.70
Lucas LEI $1.30 +0.05
Lulu LULU $61.90 -4.25
Marcus MCS $12.83 +0.61
Mario T.E. MGEE $53.38 -1.11
Mario T.Y. MAR $38.93 -1.84
Namilita NL $11.13 +0.05
Nicole E. NICE $36.58 -0.91
Nicole M. COLM $61.52 -0.18
Reagan REGN $215.47 -21.46
Ruby RJET $11.41 +0.84
Wilson WILC $6.82 -0.02
Winston ED $56.39 -1.43
Zero ZAGG $5.11 -0.43
Zondro ZQK $6.01 -0.35

June 20, 2013

Dear Bulls: I TOLD YOU SO

Filed under: Uncategorized — lbej @ 10:57

Ben Bernanke explicitly addressed the eventual winding down of the Fed’s QE bond-buying program yesterday, and the result was a 200-point drop on the Dow.  This morning we’re down another 225 points.  Bear in mind, Bernanke didn’t say the program was ending now; he talked about potentially scaling back purchases in September if the economy continues to strengthen.  He also made it very clear that short rates will remain at zero for a long time after the non-conventional stimulus measures (bond-buying) are withdrawn.  And still we’re down more than 400 points because the Chairman acknowledged that the Fed can’t prop up asset markets forever.

Have otherwise rational people ever been more panicked about something so inevitable?

I told you so, bulls.  Anyone who paid any attention to the market’s jittery behavior during this massive rally could see that the Fed’s QE program was the psychological floor under asset prices.  Now the idea that the floor might one day be taken away–even with the proviso that the economy will have to prove its strength first–slashed 400 points off the Dow in less than a full trading session.

The market will stabilize and it may very well return to rally mode.  But this is a Fed-driven market.  If you’re bullish long-term, you buy portfolio insurance in the form of puts and short futures, and you look for opportunities in the pullback.  If the rally has a legitimate, fundamental foundation, the pullback will present some great buying opportunities.  That’s the only thing that remains for investors to determine.  The Fed’s paramount role in the most recent leg of the post-crisis bull market is now indisputable.

June 18, 2013

Niall Ferguson is Bill O’Reilly Now

Filed under: Uncategorized — lbej @ 14:42

Niall Ferguson is the Harvard professor and Republican political consultant whose deceptive and error-filled Newsweek cover story bashing President Obama pissed me off last fall.  I saw him on CNBC this morning lamenting the stifling American business climate–while the Dow hovered near its all-time highs, of course–and I wondered what he’s been up to since he crapped on his credibility for Mitt and Paul.  More crapping, apparently.

At a conference in California last month, Ferguson made the assertion that influential economist John Maynard Keyes didn’t care about the long-run impacts of his economic policies because he was childless and gay.  Reporter Tom Kostigen wrote that “Ferguson asked the audience how many children Keynes had. He explained that Keynes had none because he was a homosexual and was married to a ballerina, with whom he likely talked of ‘poetry’ rather than procreated.”  As you might imagine, this was not well-received.  Ferguson apologized ‘unreservedly,’ and some folks have moved on (CNBC) while others have not.  I think it’s much ado about nothing–not because Ferguson’s comments aren’t significant, but because he isn’t.

Niall Ferguson is simply not the man he once was.  He was a respected historian, and as such, he depended on intellectual rigor and integrity for his status and his salary.  Now he is a media personality, a creature of celebrity shock-and-awe, and as such, depends upon his ability to give his found audience (social and political conservatives) what it expects.  He depends upon the approval of his audience for his fame and fortune now, and he’s not stupid; he knows who’s listening, what they want to hear, and what they’re willing to pay to hear it from someone with his credentials and reputation.  So there’s no point in asking if he believes the homophobic nonsense he spouted.  In fact, there’s no point in asking what he believes, if anything, about anything.  He is and will be what his audience expects him to be.  Envy him for his success or pity him for his captivity, but don’t think of him as more or less than what he is: a well-compensated cipher.  What Niall Ferguson says now has nothing to do with him and everything to do with his audience.

In this case, it seems Ferguson misjudged his audience (investment analysts and managers).  Kostigen reported that the crowd fell silent when the remarks were made–certainly not the reaction a professional rabble-rouser like Ferguson wants.



June 15, 2013

FSX Friday Update

Filed under: Uncategorized — lbej @ 19:47

The markets were whipsawed by Japan and the Fed last week, and losses in the range of 1-1.5% for the major averages should hardly be shocking.  Well, it may not look like it just yet, but I believe that the low-volatility bullish uptrend in U.S. stocks has decisively failed.  Last week’s payrolls-driven rebound was short-lived, the VIX has continued to climb, and short-term positive technical levels have all failed to hold.  Commodities remain weak and the dollar has given back much of its recent advance, suggesting that the markets have little faith in the U.S. economy.  The Family Stock Index slid alongside its bigger siblings, dropping by 1.5% to close at 15,360.  Internals were ugly (18 decliners to 7 advancers), the FSX closed below the 50-day SMA three of the last four trading days, and our YTD performance advantage versus the S&P 500 has contracted to a mere 15 bps.  That would hardly be enough to cover my management fees, if I charged any (to myself?).  I was feeling pretty good about my stock-picking prowess when I was beating the benchmark by nearly four full percentage points through the first quarter of the year, but now I barely have enough alpha left to pay for a sandwich.  I’d say maybe I shouldn’t quit my day job, except I already did.  Like three-and-a-half years ago.



  • Zero (ZAGG) +7.2%.  Jenny’s coming to visit!  Zero wants to catch up on Pretty Little Liars but he’s too embarrassed to sit and watch the show by himself—well, now he can shuffle around disdainfully in the background while Jenny and Chawly watch PLL, all the while soaking up the teen angst he secretly lives for.  Really, this week’s market pop should be more like 72%.
  • Ruby (RJET) +4.9%.  We had a lovely overnight stay at Aunt Dottie’s Bed & Breakfast in Wytheville, and Boo-boo is clearly destined for a second career in property management.  Why were we there?  Well, maybe Katie and I decided to have a romantic Blue Ridge weekend getaway, inspired by the Dustin-and-Lisa Hawaiian escapade.  Or maybe our entire family was driven out of our home by a two-day power outage and a furious, Dora-less Brinky.  I’ll leave it to the readers to guess, but here’s a hint: Katie and I certainly watched more Nick Jr. yesterday than on our last romantic getaway.
  • Lisa (LNCE) +2.3%.  Lisa and Dustin are determined to move to Hawaii after Lucas graduates from high school.  I have two responses.  #1—why not now?  Hawaiian schools were good enough for our president, weren’t they?  #2—nice try, sharks!  Dustin and Lisa are lovely people, but I wouldn’t fly to Hawaii to visit my own children.  Go back to the microscopic-sharks-in-the-shower idea fellas, that one had potential.
  • Jenny (JNY) +1.7%.  Jenny finished with straight As for the final quarter of the year.  Let that sink in.  I’m incredibly proud of her because she worked hard and maintained focus, and these outstanding results were as much about her attitude and effort as the second- and third-quarter disappointments were about carelessness and overconfidence.  Not only did Jenny make the changes in work habits we asked her to make, but she embraced the challenge and took responsibility for the outcome.  There were times when I would have been angry with the way one teacher in particular graded, had it been me, but Jenny doesn’t have that kind of anger and negativity in her.  (Reagan, on the other hand, is my Sith apprentice-in-waiting.)  I believe she learned that scoring well on academic placement tests doesn’t mean you don’t have to work—if anything, you have to work harder because the curriculum will be that much more challenging.  It was a terrific first year of middle school for Jenny, from her father’s perspective, and the market agrees (+31 YTD).


  • Katie (CATY) -3.2%.  1999.  1999 was our last romantic getaway.  That’s not even in this century.
  • Marcus (MCS) -4.5%.  Another school year is coming to an end, and Marcus is preparing to spend many, many sweltering, scorching weeks trapped in a house with a pregnant lady.  Too bad there’s no way to prepare for that.
  • Reagan (REGN) -8%.  Jenny finished with straight As for the final quarter of the year.  Let that stink in.
  • LULU -19%.  Oh, man, what a mess.  Lulu hit a new all-time high of $82.50 on Monday ahead of earnings, beat on the top line and the bottom, but then got taken to the woodshed by investors, dropping $10 after hours and continuing to trade lower in the following days.  What happened?  The CEO abruptly announced her retirement, which would be problematic in and of itself.  Now consider that there’s no successor in place.  And not only is there no successor in place, but the company doesn’t even have any candidates—the board is only now forming a search committee.  And the ‘retiring’ CEO is all of 51 years old.  Maybe it’s all legit and there’s no fire whatsoever behind all this smoke, but with a P/E multiple of 45 (the market P/E is around 17), investors aren’t waiting to find out.  Good luck finding a new CEO, Lululemon investors.  Good luck brushing cat litter off your bed every night, new CEO.
Name Ticker 6/14/2013 Change
Brinkley BCO $26.65 -0.07
Charlotte ICE $173.15 -1.55
Dustin DST $67.09 -0.99
Ghost Marisa MOLXA $24.82 -0.03
Icarus FAST $47.69 -0.72
Jenny JNY $14.53 +0.24
Jodi Ann JOY $52.86 -0.81
Justin SCI $17.81 -0.18
Katie CATY $19.61 -0.65
Lee TGI $78.95 -0.50
Lisa LNCE $27.25 +0.60
Lucas LEI $1.25 -0.02
Lulu LULU $66.15 -15.28
Marcus MCS $12.22 -0.58
Mario T.E. MGEE $54.49 +0.67
Mario T.Y. MAR $40.77 -0.89
Namilita NL $11.08 -0.28
Nicole E. NICE $37.49 -0.13
Nicole M. COLM $61.70 +0.78
Reagan REGN $236.93 -20.57
Ruby RJET $10.57 +0.49
Wilson WILC $6.84 -0.08
Winston ED $57.82 +0.39
Zero ZAGG $5.54 +0.37
Zondro ZQK $6.36 -0.47

June 8, 2013

FSX Friday Update

Filed under: Uncategorized — lbej @ 16:39

Stocks were down on the week prior to Friday, when the Labor Department delivered the Goldilocks employment report the market needed (payrolls +175K vs. +167K consensus) and the Dow jumped 220 points.  The S&P 500 finished the week up 0.8% and the bulls are back in the driver’s seat, at least for now.

The Family Stock Index was flat on the week.  Flat, flat, flat.  The index closed at 15,595, virtually unchanged from last Friday’s 15,604 level, and advancers barely edged decliners 13 to 12.  On a positive note, the FSX broke through its 50-day moving average on Wednesday—a significant short-term bearish indicator—but then rebounded sharply off that level.  We’re now trailing the broader market badly in the second quarter and our 2013 YTD outperformance has dwindled to 73 bps, but the technicals suggest consolidation more than deterioration.  Katie’s handling the A/D section this week; I had such a successful comic con yesterday that I just can’t summon up the cantankerousness I need to provide the level of snark you’ve all come to expect.  Don’t worry, though; I’ll be annoyed enough with the world by next Friday to resume my duties.


  • Reagan (REGN) +6.5%. She’s now practically a pro at the comic book convention, not too shy to walk right up to artists and ask them to sign her book. And she’s so cute and well-mannered that many of them offer sketches in addition to their autographs, even when she asks for something random like a grizzly bear. Next year she can start earlier and fill an entire book with cool art.
  • LULU +4.7%. She’s no sad cat. Because her owners are stupid and let her in and out all day long just like she wants and don’t kill her when she gets right in their faces and loudly meows, waking them up from a deep sleep and making them hate her. Life’s good for Lulu.
  • Lisa (LNCE) +2.8%. Now that she’s experienced Hawaii for the first time, she can start dreaming about her next trip.
  • Zero (ZAGG) +2.4%. He’s so ready for our girls to visit this summer that he can’t contain his excitement. Because he really wants to watch Vampire Diaries.
  • Lee (TGI) +2.3%. Another successful comic book convention, partially because Brinky did not spend the entire day there running around like a crazy person and distracting Lee from his target list. Plus we had Denny’s for what we both think was the first time ever (certainly the first time in our adult lives) last night when we tried for a Fuddrucker’s that was of course closed because Fuddrucker’s is the worst, and it was actually pretty tasty.
  • Charlotte (ICE) +2.0%. Really more ready than Zero for the girls to visit. But maybe she also feels a little bit of pressure to catch up on everything Jenny loves before she gets there because Jenny will be ready to talk about all of her obsessions the entire time she’s there.
  • Nicole E. (NICE) +2.0%. Because Icarus is bound to keep rodents and rabbits out of her garden. We think something may be getting into ours already.


  • Jenny (JNY) -2.0%. Jenny really wanted Reagan to start reading Harry Potter. For months (or years) she pushed Reagan to read it. But now that Reagan’s reading it? She’s doing it ALL WRONG. I’m not sure what Jenny’s plan was, but it’s just not turning out the way she expected.
  • Lucas (LEI) -5.2%. I always enjoyed my dad’s car music when I was a kid (Billy Joel and Rod Stewart specifically), but maybe Lucas is not enjoying that part of summer road trips with Grandpa.
  • Ruby (RJET) -6.1%. Mom’s been ready for the weather to turn too hot, but it does bring with it something she doesn’t like (and Jenny shares her pain) – curly hair. It can’t handle the humidity.
  • Icarus (FAST) -7.2%. Nicole and Justin won’t let him run right down here to help patrol our garden. They’re so opposed to summer adventures.
  • Zondro (ZQK) -13%. He doesn’t even know what goes on back in the garden. And if he saw a rabbit, he’d probably try to play with it.
Name Ticker 6/7/2013 Change
Brinkley BCO $26.72 -0.11
Charlotte ICE $174.70 +3.49
Dustin DST $68.08 -0.10
Ghost Marisa MOLXA $24.85 +0.29
Icarus FAST $48.41 -3.77
Jenny JNY $14.29 -0.28
Jodi Ann JOY $53.67 -0.41
Justin SCI $17.99 +0.01
Katie CATY $20.26 -0.03
Lee TGI $79.45 +1.80
Lisa LNCE $26.65 +0.73
Lucas LEI $1.27 -0.07
Lulu LULU $81.43 +3.62
Marcus MCS $12.80 -0.05
Mario T.E. MGEE $53.82 +0.45
Mario T.Y. MAR $41.66 -0.35
Namilita NL $11.36 -0.32
Nicole E. NICE $37.62 +0.72
Nicole M. COLM $60.92 +0.70
Reagan REGN $257.50 +15.62
Ruby RJET $10.08 -0.65
Wilson WILC $6.92 +0.09
Winston ED $57.43 +0.36
Zero ZAGG $5.17 +0.12
Zondro ZQK $6.83 -1.04

June 6, 2013

The Most Important Fictional Employment Report Ever

Filed under: Uncategorized — lbej @ 13:43

The stock market is selling off today (Dow -100 points) on the heels of a 200-point drop yesterday, and is now nearly 5% below the all-time highs reached just two weeks ago and below the 50-day moving average (indicating a critical short-term momentum reversal) for the first time in months.  Just as shockingly, the U.S. dollar is down 3% against the yen today–currencies almost never make moves of more than one percent in a day.  The yield on the 10-year Treasury just broke back down through 2%, reversing a multi-week trend of rising rates that led to a recent rout in dividend stocks.  Volatility (as measured by the VIX) is at the highest levels of 2013.  What in the world is happening?

The Labor Department releases its monthly Report on the Employment Situation tomorrow morning at 8:30.

That’s it.  That’s what’s roiling every major asset market.  Tomorrow’s employment report is expected to be the biggest event for the financial markets since last year’s presidential election.  The consensus of economists surveyed by Bloomberg is that non-farm payrolls increased in May by 167,000.   Why does this matter?   Improvement in the labor market is the the be-all end-all for the Federal Reserve when it comes to monetary policy.  The Fed has stated that it will continue monetary stimulus (setting short-term interest rates at zero and using quantitative easing to hold down long-term rates) until there is evidence of sustained strength in the employment situation and they’ve even targeted an unemployment rate of 6.5% (the current rate is 7.5%).  This is now the most scrutinized employment report ever.  If the increase in non-farm payrolls is deemed too high by the market (200K+ jobs added), it will fuel fears that the Fed will end QE early, pulling the rug out from under inflated financial-asset prices.  If the increase is too low (less than 100K added), it will fuel alternative fears that Fed stimulus is increasingly ineffective and the economy is sliding back into recession, reinforcing several other high-profile economic indicators that have disappointed in recent weeks.  The volatility in markets over the past five days is a result of two enormous sources of uncertainty: first, investors don’t know if Friday’s report will be good or bad; second, and more critically, investors don’t even know what the market will consider good or bad.  It’s a mess.

What’s truly insane about this entire situation is that the numbers in the Labor Department report are fictional.  That’s right: the non-farm payrolls number we get tomorrow will be a fictional number.  I’m not trafficking in partisan conspiracy theory here; there’s no evidence that employment numbers have been politically manipulated (Jack Welch and his goblin-grunts notwithstanding) by this administration or any prior administration.  The employment report is a highly professional, systematic fiction, because the reported numbers are seasonally-adjusted (how?) and subject to after-the-fact revisions according to formulas that are nowhere-near transparent if they’re accessible at all.  Basically, technocrats take raw survey data and run it through a model several times before pronouncing that X-number of jobs were lost or added in a given month.  Consider this: last month’s report gave the April non-farm number at +165,000, but it also revised the payroll numbers for February and March higher by 114,000.  That means almost as many jobs were “added” due to Labor Department revisions as were supposedly added by employers.  I’m not arguing methodology here–I don’t understand it well enough to argue with it.  I’m arguing–in advance–with the reaction we’ll get tomorrow.  It makes absolutely no sense for the market to so be acutely sensitive to reported payroll numbers being too low (less than 100K) or too high (greater than 200K) when the Goldilocks (just right) range is narrow enough to be wiped out by a statistical revision.

It’s a mess, and I have no earthly idea what will happen.  I’ll be in Charlotte at the comic convention tomorrow, though, so for once, I won’t be watching.

June 5, 2013

“What’s Wrong With People?” – Everyone on CNBC

Filed under: Uncategorized — lbej @ 16:25

“We keep telling them government is bad but corporations and rich people are good–when did they stop listening?”

Oh, I’d say sometime in the autumn of 2008, but that’s just a guess.

Bill Griffith and Maria ‘Leave the Big Banks Alone’ Bartiromo talking about the latest NBC News/WSJ poll this afternoon was high comedy.  Two numbers stood out to me.  First, 47% of respondents approve of President Obama’s job performance, versus 40% who disapprove.  Second–and this is the bombshell–when asked about the record-setting performance of the stock market this year, only 21% of respondents say it reflects an improvement in the overall economy, versus 68% who see benefits primarily for corporations and the wealthy.  Wait a minute…are the American people starting to understand how 21st century crony-capitalism works?  Bill and Maria were looking at each other like they just found out that Santa Claus isn’t real.  Well, if voters finally come to terms with the reality that ‘free-market capitalism’ in this country is as every bit as fictional as Old Saint Nick, we may see something even better in Maria’s eyes.


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