Quotable Quotes and Notable Notes From The Week That Was

Can I say this week was a real turkey, as far as the equity markets go? Nonetheless, I enjoyed our day with family and our undefeated high school football team wrapping up a league championship on Thanksgiving morning.

But I digress and let’s get to some of the quotes which helped define the week. “It was the worst Thanksgiving Week for U.S. equities since 1932.” --several media sources, commenting on the 4.7% drop in the S&P and the longest losing streak for major indices in four months

“The equity and fixed income markets are trying to send a clear and very tough message to Euro leaders and the ECB. It is only a matter of time before they have to step up and take dramatic action.” --Bloomberg Surveillance

“We don’t have any new bazooka to pull out of the bag. We see no alternative to the policy we are following.” --Michael Meister, finance spokesman for German Chancellor Merkel’s party

‘If Germany can’t complete a bond sale, who can?” --commentator on the “disastrous” German bond auction, while others claimed this was not so unusual for the sales to fall short, although becoming increasingly worrying

Then three very different takes on the matter of valuations in the U.S. equity markets: When you look at valuation measures for global equities, they’re all running well below historical averages. Very tough economic conditions are already priced in, probably something approaching a global recession.” --guest on Bloomberg TV

“American shares still look expensive. On a cyclically adjusted price-earnings measure, they trade on a multiple of 19.4, compared to a historical average of 16.4.” --the Economist (Ok, which is it, undervalued or overvalued?)

“Can valuations save the market? Corporate profits are still very good. That is what we are counting on, but we have obviously been too optimistic much of the year.” --paraphrasing Blackstone’s noted and somewhat controversial strategist Byron Wien, who entered 2011 predicting the S&P at 1500 by year-end.

“From now on it should be called Black Thursday Night.” --variations of which could be found all over media sources, with very few positive comments on what one called the “race to arms” to see what retailer could have the earliest “Black Friday” openings on Thursday. From a business perspective, many question the true net positive impact for retailers, given the emphasis on extreme discounting and the “zero sum” game of Holiday season consumer spending.

(According to Wikipedia, the day's name originated in Northeast urban areas, where it originally was used to describe the heavy and disruptive pedestrian and vehicle gridlock which would occur on the day after Thanksgiving. Later an alternative explanation began to be offered: that "Black Friday" indicates the point in the year at which retailers begin to turn a profit, or are "in the black”.)

“Black Friday arrived with consumer sentiment at levels previously reached during recessions, as a record share of households said this is a bad time to spend. The Bloomberg Consumer Comfort Index reached minus 50 or less in nine of the past 10 weeks, an unprecedented performance in its 26-year history. “ --Bloomberg (Consumers understandably might be cranky but that is still no justification for pepper-spraying your fellow shoppers over an Xbox).

“You now will have an extra Christmas Day present under your tree.” --New York sports radio talk show host on the resolution of the NBA labor dispute and announcement that the season will go on, as if anybody really cared… (Sorry NBA fans…)

“FED announces new bank stress test with worst case scenarios of severe global recession, equity market shocks, 13% unemployment and a 6.9% reduction in real GDP.” --Financial Times (At least the FED emphasized that “the worst case was a scenario not a forecast.”)

“We still believe 4th Quarter GDP can come in over 3%.” --Atlanta FED President Dennis Lockhart

“As he battles rumors that the brokerage company he runs is the next firm to fail, Jefferies & Co chief executive Richard Handler is weighing whether the firm can remain independent. The firm may become an acquisition target very soon.” --Charlie Gasparino of Fox Business News

“Netflix spent $200 million to buy back 899,847 shares earlier this year and raised the same amount by recently selling shares, but had to issue over 2,800,000 shares to do so.” --the WSJ on NFLX’s poor timing of a stock buyback and reissuance program.

“Nothing runs like a Deere.” --one CNBC commentator in reporting DE’s earnings, which blew away estimates and led DE to one of the few major stock positive performances last week

“It’s not illegal, but it’s highly unethical, highly offensive, and just plain wrong.” --the Hoover Institute, on the new flap over U.S. legislators “trading” on “insider information”.

“Latest Twilight Film Takes $283.5 Million Global Bite.” --on the latest blockbuster Twilight series movie release, which features unusually attractive vampires and even a vampire wedding

The we have our go-to source, the NY Post business section, which can always be counted on for some snappy headlines:

“Lockup Loss Lashes LinkedIn” --on the drop in LinkedIn shares (LNKD) after the end of the insider IPO lockup period, combined with an announcement of a secondary stock sale, leading to a stock price decline of 12.5% on the week and off 49% from post-IPO highs (from $122 to $63, ouch!)

“Groupon Gets Clipped” --referring to GRPN dropping 36% this past week and now off 46% from IPO initial highs. At a close Friday of $16.75, GRPN is now under the watershed $20 IPO offering price.

“Cracked-Berry” --on RIMM’s drop to 52-week lows at $16.00 and off 77% from 52-week highs, with major share losses to both Apple and Android systems.

And finally, from the President’s official reelection website, "Why brave the crowds when you can shop at the Obama 2012 store in your pajamas? 10% off all orders over $10."

Good Trading!
David W. (aka The Underground Trader)

 

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