Morning Thoughts / Grilled Rib-Eye July 26, 2012

Zynga Zaps Investors!  I mean – can you really be surprised?  This is an online game company – “Farmville”, “Cityville”….representing irrational exuberance on the part of investors…Like FB – Zynga (ZNGA) fueled the internet investment “frenzy”….causing investors to fight over allocations on the IPO last year….valuations pushing $10 bil……that is a far cry from the valuation last night – $4 bil –  after the stock took a beating – down some 40%  based on 2Q results – the company MISSED on every single line and not by a couple of pennies………can you imagine what that conf call was like last night???  ….and the interesting piece to this is the relationship to Facebook……as Facebook derives a large chuck of their revenue from Zynga and Facebook is due to report tonight…will Marky Mark step to the plate?  Is another high profile disaster just on the horizon?   Not for founder Marc Pincus…he just happened to unload a bit of stock – $400 mil + at an avg price of about $12/sh…..when asked why investors should continue to buy this “dog” he chimed because “We are the most optimistic long term believer in the opportunity for social gaming”  and he expects it to be “an even bigger business in the future”….OF COURSE HE WOULD SAY THAT……would you expect that he is going to tell you that his company is crap? So what happened yesterday?  Stocks mixed -again…Dow up  but NASDAQ down and S&P flat…..So far, 60% of SALES of the 201 S&P 500 companies who have reported 2Q results have been below analysts’ estimates but – that is NOT the way the game is played……the bogie to beat is the earnings estimates and so far 71% have BEATEN analyst – reduced – earnings estimates…and on top of that guidance going forward is being discounted even further for the next quarter. It felt like the FED and the primary dealers wanted (needed) the S&P to close above its 50 DMA of 1332 – and in fact they did just that….what did they target??? Financials…..they were yesterday’s leading sector…GS, JPM and C leading the group….after they set themselves up – then the chatter about more FED action kicks into high gear…..mkt moves higher and everyone is happy……How much longer can the Fed manipulate prices via stimulus programs….while the US and global economy continue to weaken?  How many more billions of dollars will they spend to keep up the illusion?  but hey – you can not fight the FED….at least in the beginning……They cannot fix the hostile business and regulatory environment that exists in DC….. What are the options for the FED now?  Hmmmmm…..another QE3 (print more money), they could change their language, they could start buying houses, they could create a derivative of Operation Twist, they could start buying ETF’s….I mean come on…..the field is wide open….if they pitch it right…..desperate times call for desperate measures – no?  I mean this morning Mario Draghi said the ECB will do WHATEVER it takes to save the Union….and he no sooner got those words out of his mouth and futures went from -2 to +8….. European mkts are all higher right now – after the Draghi commentary – FTSE +0.5%, CAC 40 + 1.3%, DAX + 0.45%, Eurostoxx +1.3%, Spain +1.4% and Italy + 2.2%! US futures continue to move higher…now +15 at 1350…weak macro data today will only force Uncle Benny to come to the table with something…….we are now back in the 1332/1375 range as global talk of coordinated monetary easing efforts take to the airwaves…..DOW chemical just reports a big miss – earnings in at 55 cts/sh vs. est of 64 cts/sh…..Lots of macro data today…..Durable goods – these are big ticket items – things like refrigerators, TV’s, Computers, furniture, cars etc… exp of 0.3% vs. prior reading of 1.3%, Durable goods EX transportation exp of 0.1%,  Cap goods orders non defense exp of 0.1%, Init jobless claims exp of 380k, cont claims of 3.3 mil, Pending home sales of 0.3% and the Kansas City Fed manf exp of 4….(recall prior reg fed surveys have been horrendous). Take Good Care KP Grilled Rib-Eye (w/ a great Marinade) Grilled Steak w/really great marinade….Had this while on vacation…..was a great steak because the marinade was perfect… gotta try it…simple to make and easy to grill. For the Marinade you will need: 2 chopped onion, 10 cloves of garlic, equal parts (1 cup)  of white vinegar, olive oil, and soy sauce, fresh chopped rosemary, 2 tbls of Dijon mustard, s&p.  – If you are making more steaks then adjust accordingly Put all of this into the food processor and blend well.  Now place the steaks (your choice but I always like the Rib Eye) and the marinade in a ziplock bag and marinate for 2 or 3 hrs. Now light the grill – heat up and then grill the steaks to your liking…..serve with a large mixed green salad and your favorite bottle of red wine. Buon Appetitio.
Kenny PolcariMorning Thoughts / Grilled Rib-Eye July 26, 2012