The Daily Dose: Gas Masks and Investing

 | Aug 29, 2013 | 8:00 AM EDT  | Comments
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joy

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bud

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The most fascinating aspects of this holiday tinged week are the live reports I am receiving from a news friend stationed in Israel. On Tuesday, it was the sharing of being trapped in a line to score one of those alien-looking, but life-saving, gas masks. Since I was born in the U.S., and have basically traveled nowhere (hey, gotta study markets and hit up execs on the telli!) gas mask shopping is something I have never had to experience, and definitely not on a Tuesday evening.

Then, on Wednesday, said individual informed me they were trying to locate the nearest bomb shelter for their building was ill-equipped. For future reference, to survive a gas attack, apparently your underground bomb shelter has to be three feet or more below the bottom level of the building. Oh, and in Israel, when the sirens go off that an attack is imminent you have approximately 15 seconds to find shelter...or else. Umm yeah, just relaying the news.

As I mentally consolidate all of these nuances related to the conflict in Syria, as conveyed by real people on the ground, not a macro strategist toolbox sitting in a NYC office, the more comfortable I am with continuing to advise against enacting new long positions. Geopolitical headline risk to asset prices has the tendency to be swept aside as a short-term influence by those with ulterior motives or failing to do a bit of micro research. I can tell you those lacking proper preparation to navigate geopolitical headline risk, as well as forgetting to remember the market's concerns pre-Syria conflict, will have their portfolios gassed. Plain and simple.

Here are three things I am monitoring:

  • Splash cold weather on your face, hammer out 55 pushups, and re-read that Joy Global (JOY) earnings release. When you are done, read it again. First, compare its truthful and transparent global economic commentary to the nonsense spewed by the clinically delusional Caterpillar (CAT) CEO who raked in $22.4 million in total compensation in 2012 (Joy Global earnings release vs. Caterpillar earnings release. If you don't think that Joy Global's dreary comments have a tie in with the future earnings/backlog from a Nike (NKE), best start seeking a new hobby or job.
  • Twitter reiteration: Something is up with RadioShack (RSH), and it's bothering me that I can't figure it out (name is thinly followed on the Street). The only angles I have include: (1) a go private transaction via a financial institution believing there is hidden value due to the market cap being 42.9% below the enterprise value; or (2) an Amazon (AMZN) is interested in gaining cheap, instant distribution, establish a hub for same-day delivery service; each outcome would partially re-brand RadioShack to capture the Amazon involvement, which has far superior relevance in the minds of the consumer. Bottom line is that for shares of this zombie company to pop on strong volume in the past two out of three sessions, relative to a broad market under the gun, it's a sight that demands further investigation.
  • As I noted on Monday, shares of consumer staples continue to plunge. If this pace of decline persists, and given still low financing costs, expect more industry consolidation. Warren Buffett loves and understands the candy business (he helped finance Mars' purchase of Wrigley in 2008), and with a solid offer and a promise not to destroy the company's heritage (unlike what has arguably happened at Budweiser (BUD) following its acquisition by InBev) a Hershey could possibly be wrestled from the tight grips of the Hershey Trust. The stock is 7.14% off its52-week high set Aug. 9. 

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