On an otherwise quiet day, where the stock market puts the finishing touches on a 10% bounce in less than a week, Nike has realized, “Just Getting It” is now enough. “Just Doing It” is so 1900’s. Why actually DO something when you can get all the benefits from sitting around and talking about doing something. CEO’s at major pharmaceutical companies are allegedly worried that in a world that talking about “getting healthy” is enough to ensure good health, their products will be useless.
Sure, we can continue to rally, but it seems that the market is building in a lot of positive results on the belief that Europe now “gets it”. Europe has failed many times in the past, and still isn’t even finished with their prior “official” plan that was announced on July 21st. The problem of too much debt with too few people paying and the complexities of 17 diverse countries trying to agree to something remains the same.
The “Europe Gets It” catch-phrase has been used almost as often as “Lehman Moment” in the past week. I still struggle to see the “Lehman Moment”. Lehman filed on a Sunday and by Thursday of that week, stocks were higher and credit markets were tighter. Saying there was a “Lehman Moment” may make it easier to think about the past, but the reality was it was a very confusing time, and Lehman played a part of it, but the system as a whole was fragile and Lehman filing is not the only reason that the devastation to the market and the economy followed over time. We avoided using Bear as a catalyst (which I think was a mistake), but ultimately we would have hit another catalyst as we limped along. There was too much debt. Salaries and benefits were out of line. The real estate market was a shambles and the loans made against real estate broke all rules of prudent banking, and the loans those loans were re-packaged into were simply an abomination too big to comprehend. If all the problems in the market and economy really stemmed from just Lehman, wouldn’t we have seen a more full recovery 3 years later? If TARP was such a cure-all (and I do believe it helped) why did stocks not bottom for 6 more months. We all like to cling to simple explanations and catch-phrases make their way into the collective thought process, but it doesn’t make them completely correct. It makes it a lot easier to be long thinking that if Europe can get it and avoid a Lehman moment, all will be good. First, they need to DO something now, and secondly, if we avoid whatever this Lehman moment is (Dexia? Greece? Etc.), unless the underlying problems are fixed we will soon be facing another “moment”, this time with an even worse economy and fewer resources.
Thinking about that slogan really made me remember when I cared about the NBA.
On a completely separate note, Jets vs Pats, Jets score touchdown to go down 27-20 with just a few minutes left to play. Jets kick extra point and go on to lose. I was wondering why not go for 2? Down 27-21 means that if you stop the Pats and get a touchdown you win. But that depends on stopping the Pats who have already run up 27 points on you. If the Pats grind some time off the clock and get a field goal – which is what happened and seemed to be a high probability event in any case, then you lose. If you went for 2 and made it, the score is 27-22. If the Pats kick a field goal you are down 30-22, but a touchdown with 2 point conversion gives you a chance to tie. That is the one scenario where going for 2 and making it has a huge impact. Going for 2 and missing means that you are realistically playing for a time, but that is still contingent on stopping the Pats from scoring. I don’t know what the odds are, but personally I think in that situation, go for 2, because you have a decent chance of making it (I think 50% of the time it is made) which means a field goal on the Pats’ next possession isn’t as horrible. Just curious what the “right” decision is here.
Anyways, it’s time to lace up some Nike’s and just do it, because this market is painfully dull, and we won’t see until tomorrow how many weak credit shorts have managed to get themselves hedged and wedged by selling protection in Europe and buying some SPX today while the bond market is closed.