WASHINGTON, March 26, 2013 — The market looks to open in a mildly bullish mood today after yesterday’s bipolar trading episode, caused it is said by a brief case of diplomatic foot-in-mouth disease perpetrated—and then retracted—by a European politician who probably should have thought before he spoke. In any event, as of 9:15 a.m., futures are pointing up for the Dow, the S&P 500, and the NASDAQ.
The Eurozone kerfuffle, which derailed what started out as a lovely trading day on Wall Street, was perpetrated by a fellow whose name I’d never heard of before: current EU Chair Jeroen René Victor Anton Dijsselbloem, the 46-year old Netherlands finance minister, elected to that post to replace Luxembourg’s Jean-Claude Juncker. The Maven does not guarantee that the spelling of this fellow’s name is 100% correct if only because it’s hard to type. And as to its pronunciation, we’ve looked at a variety of online sources and we still have no clue.
To make things easier for us Yanks, however, Wall Street already pinned its own spin on Dijsselbloem’s name: “Diesel Bomb.” That’s probably close enough for government work, particularly in this Administration. At any rate, Diesel Bomb casually remarked Monday that the recent alleged solution to the Cyprus crisis would “serve as a template” for future such issues.
“’If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders,’” he said.
That’s all it took to cancel yesterday’s swell morning rally, as the market reversed itself and began a sickening swan dive that seemed to gain momentum as the day progressed, ensnaring nearly every group of stocks on its way down.
Diesel “walked back” his remarks later in the day. But it just goes to show you what can happen, and how quickly, in a thinly traded market that moves these days not on fundamentals but on how quick the HFTs pick up the headlines and start lobbing fusillades of real and phony trades into the system. Meanwhile, the EU Chief’s remarks can’t have helped stoking the growing worldwide fear that dysfunctional governments are moving toward feeding their bad habits with the hard-earned money of savers and bank depositors.
Housing prices still appears to be on the upcurve according to preliminary reports, good for beleaguered sellers, not so good for bargain-hunting buyers, so we’ll see how that goes toward readjusting the market’s tone.
On the plus side, durable goods orders were up in February, but March consumer confidence was in the tank. We have to admit, though, these consumer confidence numbers yo-yo so frequently that we rarely pay attention to them anymore except for the occasional cheap trade they occasion. This country is entirely too over-polled and what the heck do these numbers mean anyway when they change on a dime, just like this week’s favorites on “Dancing with the Stars.”
We’ll sit on the sidelines for the most part today, taking a few more profits if we can—which we certainly could not yesterday. We just can’t shake the feeling that trading in early April—or maybe even later this week—will take a nasty turn once the last 1st quarter window dressing team turns out the lights.
Today’s market moves:
As we just indicated, we don’t plan to be too busy today. After editing a couple of CDN articles, our major market action today is likely to occur at the local Trader Joe’s where we’ll pick up our occasional mass buy of perfectly good vin ordinaires, with this one, hopefully, lasting through spring before we need another trip.
A heads-up, though, on what could be another decent IPO, Pinnacle Foods, proposed symbol PF. Never heard of Pinnacle Foods? Frankly, neither had we. But a glance at the prospectus caught our undivided attention.
Pinnacle is actually the relatively new name attached to Vlasic, long the manufacturer of America’s best pickles in our humble opinion. It’s hard to follow these things over time, but Vlasic was spun off from another food company years ago (1998, maybe?) and trading in the stock was iffy as we recall. Then we didn’t see it anymore. (You can’t follow everything.)
Apparently, via a number of market moves, it morphed into a larger, renamed company carrying additional brands it had acquired. But the company was taken private circa 2006 by Blackstone (BX)—not a very good year to do that as it turns out. Under Blackstone, Pinnacle’s acquisition list has become an enormous who’s who (or what’s what) that probably occupies much of everyone’s fridges and pantries.
According to an excellent report on the upcoming IPO in Seeking Alpha, just some of the brands produced or licensed by Pinnacle include:
“Duncan Hines, Hungry Man, Bird’s Eye, Snyder of Berlin, Mrs. Pauls, Open Pit, Log Cabin, Comstock, Husmans, Aunt Jemima Frozen, Hawaiian Snacks, Armour, Bernsteins, Brooks, Mrs. Butterworths, Lenders, Celeste, El Restaurante, Nalley, Van de Kamps, Vlasic, Tim’s Cascade Snacks, Erin’s, Bird’s Eye Voila”
“According to the company’s website,” continues the report, “over 85% of American households have Pinnacle products in their home. The company maintains a #1 or #2 market share in 10 of 12 categories it operates in.”
That puts it right up there with some of the consumer staples majors.
The issue could warm up, as the recent Heinz acquisition may have proved to be a leading indicator of consolidation in the packaged foods business, so we’re paying attention, and will follow up tomorrow.
Pinnacle is supposed to be priced after the close on March 27 and begin trading the following day. Current pricing range is estimated to fall between $18-20 per share but that can change. We’ve requested some shares but, as always, that doesn’t necessarily mean we’ll get any.
More on this tomorrow. But remember: Don’t construe the Maven’s various adventures as recommendations. You’re always traveling at your own risk in an IPO, just as you do in the market for that matter, except you often don’t have anything but preliminary numbers to go on in an IPO.
We’re interested in Pinnacle here not only for the spec aspect of the play, but also because it’s a real company with a boatload of major brands. And in addition, since we still expect the market to get clobbered soon, it could be a good place to hide, as healthcare stocks and consumer staples tend to hold up reasonably well in a downdraft. So consider this a “defensive spec.”
U.S. Markets have a short week this week because of the Good Friday holiday. Bond markets will close early at 2 p.m. THURSDAY, while equity markets will keep their usual hours. On FRIDAY, all markets will be closed for trading.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Any positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
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