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Random Thoughts: Financials Again Set the Pace


A good rule of thumb: always respect the banks.


I'll tell ya, if it weren't for the traction in the stubbornly sticky financials, the tape would be in alotta trouble right now. Breadth is 2:1 negative, Beta is breathing heavy (even Apple (AAPL) is pretty in pink!) and the commodity complex is playing whack-a-mole in the face of a frisky dollar (asset class deflation vs. dollar devaluation).

Here's what I'm watching, in no particular order:

  • Myself. I mean, hey, it could be worse!

  • Yahoo! (YHOO). If this deal falls apart, there will be alotta blood in the risk-arb space.

  • Gannett (GCI) (+4%), McClatchy (MNI) (+9%) and the New York Times (NYT) (+1%) as the newspaper plays start to perk up.

  • Goldman (GS) and the banks, for they are Hoofy's Cliff Branch. Would that make Hoofy Ken Stabler? Either way, respect (don't defer) the tenor of that sector.

  • Big Ben. Why? That JT song about the Fed in a Box could come back in vogue as we eyeball next week's FOMC meeting. The perception that a pause--or a less aggressive FOMC--is a nod to 'the tied hands of stagflation' rather than a wink to the firming economy could bring our seemingly obvious conundrum to bear.

  • If I ever find that table I left all the money on (Schlumberger (SLB), FXI), I'd be as happy as a clam!

Minyan Mailbag!


Regarding your purchase of calls in GCI, is this a position you would be willing to look at for a long term investment (3-5 years) if that was your objective, or is this a short term investment for you?

I don't invest for the short term (not saying that it doesn't happen every once in a while), and I have been eying GCI for a long term investment given the consensus on the company and the feeing that when everyone has thrown in the towel it may be the best time to buy. But I am a touch gun shy on this name.

Minyan Dave

Minyan D,

I have January 30 calls, as discussed on MV and TV, so my horizon is early '09 with defined risk (cost basis is roughly $1.60). That, of course, doesn't mean it cant work 3-5 years out. Remember, it's down from $90 (for good reason, which is the migration of advertising online) but I think the catalyst could shift.

The portal pipes-or the spigots of centrally served content-needs just that, content. There are risks (what portal wants to deal with the Teamsters?) but with the analyst community hating 'em and a viable potential catalyst ahead-even if the perception of the value of assets is subjective-it fit my mold for an upside try.

Thanks, and good luck!


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Positions in GCI, GS
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