MORNING BID – The Forty Thieves Await

Sep 19, 2014 12:21 UTC

Reading the tea leaves on what’s likely to happen with the debut of Alibaba Group Holdings isn’t an easy task given a few of the weird quirks of this IPO that come into play. Shares will start trading in an hour or so after the open of trading on the New York Stock Exchange, and while it’s tempting to think the various wrinkles that come with the stock will prevent it from being as volatile as first-day activity is in hot deals, it’s hard to see how it doesn’t turn out any other way than the usual crazy way.

The company has made a show of saying it wants most of the shares to end up allocated to the fewest of large shareholders possible – the big active managers (since index funds can’t get in there just yet) and sovereign wealth funds that see this as a long-term play to appreciate over a period of time. Fund managers are in the midst of finding out how well they did (and with about 40 institutions requesting $1 billion allocations on a $22 billion deal, a lot of people are going to walk away from the table hungry), and the dynamic it creates after the open is sure to create a lot of activity.

Finance professor Jay Ritter laid it out pretty well in a Reuters story, pointing out that those that don’t get what they want and instead get a heck of a lot less – say, 1000 shares instead of 15000 – might turn into sellers rather than buyers, especially if the early anticipation for the stock among hedge funds, retail investors and other types who won’t get much of the first bite of the deal dive in for a chance at the company on its first day. If that happens, as one event-driven manager put it, it changes the calculus. A $68 stock that trades at $68.50 stays in an investor’s portfolio; a stock that jumps to $90 a share is another story, and institutions that don’t get what they want might take their gains and go home, thankyouverymuch. In addition, as Alibaba is selling 320 million shares along with an additional 128 million or so that could hit the tape as a result of not being restricted through lockup predictions, it’s hard to expect anything but a heck of a lot of trading in its debut.

Twitter’s first day of trading was 117 million shares in the fourth quarter of 2013, and Visa’s first day volume was 177 million shares. General Motors, in its return to the market after restructuring, had 458 million shares traded in its first day. The infamous Facebook IPO saw 580 million shares of trading on its first day, but some of that has to be attributed to the epic snafu that accompanied that offering and the inability of investors, market-makers and traders to make heads or tails out of what was going on (it’s not a record Alibaba wants to emulate…but of course Facebook debuted on the Nasdaq, not the NYSE). There were a number of other big deals that opened up with volume of 40 to 50 million shares in the first day, but Alibaba seems assured to exceed that.

MORNING BID – Apres Fed, le Deluge

Sep 18, 2014 13:34 UTC

The Kremlinologists turned out to be right, and the Federal Reserve left its “considerable time” language in its statement to assure the markets that it would be around for a while longer with rock bottom rates. It’s the divergent (to a point) reaction out of the markets themselves that is interesting to parse, and will be key to watch in coming weeks and months. The action in the stock market was to suggest the entire exercise was a snooze-fest, with stocks ending marginally higher (yes, the Dow at a new record) but not too far from where the major averages were trading just before the news. Which is to say the equity market, always the most optimistic of U.S. markets, has it in mind that low rates stay for now, and until “now” is “then,” it’s time to party.

Bond markets, inflation-protected securities and the currency markets saw things differently, and it’s those markets that may be more instructive to watch as the days and months go on and on. The five-year TIPS note saw its yield break above zero for the first time in ages, a sign that investors are starting to worry more about inflation, or higher Fed rates, which is interesting as consumer price data showed year-over-year inflation fall to a 1.7 percent rate earlier in the day. The dollar put together another strong rally, meanwhile, with the dollar index hitting highs not seen in 14 months and big rises against its main companions, the euro and the yen. And this is where the dot matrix comes in.

The dots, of course, are not an array of Janet Yellen’s prowess (or lack thereof) at the firing range, but the expectation from Fed officials on where they see rates in coming years. With 2017′s dots all suggesting rates at greater than 3 percent – and closer to 4 percent – the currency market has taken the hawkish outlook here, as Jens Nordvig, strategist at Nomura, said in an email to Reuters. There were two dissenters – the usual suspects, Charles Plosser of Philly and Richard Fisher of Dallas – who were not thrilled to see the statement so dovish, and so Nordvig takes all this and says that this should be “enough to sustain USD uptrend vs G10″ currencies, so, against the yen, euro, Swiss franc, pound and all the others.

He does warn, however, that the kind of uncertainty that would drive significant outperformance against the emerging markets currencies is not yet present, given rates are going to be low for some time, so that firm is closing some call options outstanding against the peso and ringgit while sticking with long bets against the yen and euro. “It will also soon be time to ask new questions on the Dollar. What will be the pace of tightening the US economy can cope with? What is the strength of capital flows into the US? Answers to these questions will determine whether the relatively sharp Dollar move in the last 2-3 months can be extrapolated over the next 3-6 months,” he wrote in late commentary Wednesday. There’s also the possibility, of course, that markets overreacted to the Fed – another soft jobs report would undo a lot of the recent gains in the dollar, or even a couple of other second-tier indicators reinforcing the notion that the outlook from individual Fed members on rates is just that – an outlook – and as a result cannot be trusted insomuch as the data will tell them what to do, dots and dollar strength and models be damned.

The dollar strength may be temporarily interrupted as investors await the overnight results of the Scottish referendum to decide whether the movie Braveheart was all for nothing (I think that’s what the vote is for, anyway). Varying polls have swung the pound wildly in recent days, but the latest set of polling seems to suggest a modest win for those who want to maintain the current situation, where Scotland remains the northern part of the United Kingdom rather than strike out on its own and force the English to build a 700-foot wall to keep them out (again, not sure if that question is on the ballot or not).

MORNING BID — Breaking it down, Fed style

Sep 17, 2014 14:58 UTC

It’s all over but the dissection of the Fed statement, due later today, which will follow with a Janet Yellen press conference after the U.S. markets get word of whether the Fed did or did not eliminate the “considerable time” bit from its statement that saw markets go into a tizzy all of Tuesday. At this point the market believes that phrase now may *not* be eliminated, which marks the second reversal in about a week on this point. No matter what, somebody is going to be caught leaning in the wrong direction, but if the latest intelligence is that the Fed’s statement won’t change materially until the October meeting, then the freshest bets are probably in the direction of those betting on that much. So if the statement does cut out that language or modifies it in any way, you could see a selloff in equities, the dollar and bonds.

The meeting also brings with it the update on the Fed’s “central tendencies,” that is, its sure-to-be-incorrect projections on where the economy is going. Given the rebound in the second quarter that seems to have at least been somewhat sustained in the third quarter, it wouldn’t be surprising to see the Fed outlook for GDP bumped up for 2014 (currently 2.1 to 2.3 pct) and 2015 (at 3.0 to 3.2 pct – the Fed will predict 3 percent growth for the year-out period until we’re all Morlocks), and the unemployment rate expectations are projected to drop to maybe 5.7 to 5.8 percent from the current 6 to 6.1 percent expected at year-end. Which is all well and good, but it doesn’t give us a good sense, really, of what’s to happen going past the meeting.

What we may be looking for over a longer time frame is an elevation in volatility. Richard Leong, in a story last week, pointed out that the market is starting to see more options-related buying that suggest rising rates in the federal funds and eurodollar markets. In a Tuesday story he noted that various measures of volatility – including the Merrill Lynch MOVE Index, a measure of fixed-income volatility, is at levels not seen since mid-summer. The dollar is showing similar activity, with volatility in the currency markets finally picking up after being stagnant (ok, about as exciting as watching grass grow) for a good long period of months now. Nomura strategists are anticipating a further pickup in volatility post-Fed meeting among currencies, judging by options positioning.

The equity market isn’t quite there yet – the VIX still remains low, trading below 13, but volatility would be expected to pick up in other risk markets if the interest-rate arena begins to exhibit more gyrations. That’s because the moves in that market make it more difficult to fund carry trades to buy other assets – the dollar remains a cheap source of funds right now, but the cost of carrying such bets increases as rates rise and more importantly as the market gets more volatile. Where that leaves investors is unclear – Bank of America/Merrill Lynch notes that credit investors are going with shorter durations (which adjust more quickly as rates rise) and leveraged loans as the best choices over the next 12 months, and are a bit less sunny on high yield, which has the potential for some ups and downs in coming months.

MORNING BID – He’s an importer-exporter

Sep 11, 2014 12:49 UTC

The stock market has, over time, gotten somewhat more used to the idea that U.S. federal government activities add to market consternation and volatility, not reduce it. In the 1990s, there used to be a catchphrase that “gridlock was good for equities,” but that came during a long period of economic growth and on the back of policies that Wall Street generally supported – financial services reform, welfare reform, and not much else. That’s no longer the case. We’ve already seen the detrimental effects on the markets of the U.S. debt ceiling fiasco that led to the first-ever downgrade of the U.S. credit rating in 2010 and subsequent fights about the debt ceiling (though that has abated somewhat).

The talk about “uncertainty” coming out of Washington is a somewhat overstated game – be it tax policy and the like, there’s always uncertainty in life – but the latest cause for volatility has been specifically related to the renewal of the Export-Import Bank, currently being batted around in Washington with the idea that Congress will end up renewing its charter for a few months (right now mid-2015 looks like the best bet) before invariably taking up the issue again.

It’s not unprecedented for this to be a political football (votes have been close in the past and it has been used as a poster child for Washington-related excess), but this year’s battle is more heated than most in its past. Ex-Im head Fred Hochberg, who spoke at a Reuters summit Wednesday, said the bank was at par with what others were doing and eliminating it would tilt the balance against U.S. exporters, threatening 205,000 jobs.

About one-fifth of its $37 billion in annual loans are for small businesses, but many in the GOP are unmoved. With the idea of an on-again, off-again situation emerging similar to the now-annual debt ceiling extension back-and-forth, some investors believe companies using the Ex-Im bank may head elsewhere for more secure sources of funding that are sure to be around for more than a few months before having to face another annoying fight about its future.

For evidence that the market is keeping this mind, look no further than shares of Boeing. That stock dropped 3.7 percent in the two days following the primary loss by Eric Cantor, one of the steadier supporters among the GOP of Ex-Im, and it took another hit later in the month, losing 2.9 percent in three days, after several other Republican leaders announced their opposition to the bank.

The ongoing attacks from the right, opposed to the idea of any kind of government-related financing device, pushed Boeing shares to a 10-month low in mid-August before shares started to recover. Of course, the aerospace giant is nobody’s idea of an aggrieved party, so there’s that, but they, and some of the other names that benefit from exports, might have to start dealing with more equity-market volatility if their future is to be thrown into question every few months.

MORNING BID – Laboring for insights

Sep 4, 2014 13:02 UTC

The unemployment report occupies a unique position as a bit of a lagging indicator (especially when it comes to wage growth) and yet the most important economic figure that markets look at on a monthly basis. Various indicators point to the likelihood of another strong report come Friday that should accelerate recent trends in markets – more gains in the stock market (with a helping of the “this means the Fed is going to cut us off from the punch bowl blah-blah” stuff) and more strength in the dollar, regardless of whatever incipient gains the euro can muster after the European Central Bank meeting.

Underlying indicators to watch suggest that the U.S. economy has started to move more dramatically higher, whether it’s from the Federal Reserve’s Beige Book or Goldman Sachs’ analyst indicator, a composite of analyst commentary that functions as sort of a “corporate Beige Book.”

Some of the striking data out of this include better-than-expected strength in the consumer spending area, where Goldman expects consumption to rise to about 2.5 to 3 percent over the rest of the year. Their index is above 60 now for the fourth month running – like the ISM data, 50 signals growth – and they’re seeing particularly good strength in new orders and sales/shipments, also pointing to better demand.

That should translate once again to more hiring as the economy moves into the middle of this expansion, one that didn’t see the post-recession pop that many expected and instead as a substitute has put together a long, grinding string of more than 60 months of steady but unspectacular growth.

With the recent shift in jobless claims to a consistent figure around 300,000 on a weekly basis – and sometimes lower – and consumer confidence rebounding, the key figure to watch on Friday is probably again the U-6 figure on labor force underutilization, the broader measure of unemployment the Fed likes to look at rather than just the unemployment figure itself. Since the beginning of 2013, as the regular unemployment rate has dropped to 6.2 percent from 7.9 percent, the U-6 rate has dropped more sharply to 12.2 percent from 14.4 percent. The number of unemployed has dropped to 9.67 million from 12.32 million in that time. The labor force has been stubbornly stagnant, rising to 156.02 million from 155.69 million in Jan. 2013, and so the participation rate hasn’t budged all that much – it’s actually fallen to 62.9 percent from 63.6 percent, and the inability of people to get back into the labor force because they’re discouraged has been an Achilles heel for the jobs market since this recession ended.

There’s some hope this is changing, again, based on consumer confidence figures and manufacturing and service-sector surveys pointing to improved demand and confidence. And the Fed’s Beige Book pointed to specific job shortages – tech workers in the Boston region, truck drivers in New York – but still yet not enough to really suggest the increase in demand that brings out 300,000-plus jobs reports every month. For August, the expectation is for about 225,000 in nonfarm payrolls growth, and for earnings to rise 0.2 percent on the month.

MORNING BID – Long in the tooth

Sep 3, 2014 13:28 UTC

A frequent refrain among commentators is that this ongoing growth in the stock market has to ‘come to an end’ at some point because of, well, mostly because it’s been going for a while and that it’s gone entirely too far in the last few years.

Given the market’s penchant for 50 percent corrections since the turn of the century, the latter point can’t be discounted entirely, but the former – that essentially, the bull market is endangered because it’s long in the tooth – feels a bit reductive. The day’s figures on car sales due out from the major automakers are likely to support the worries people have about a slowdown that’s just a short drive away from the economy going into a ditch, or something like that (it’s not as if the economy is awesome right now), but the belief in a mid-cycle slowing in some key consumer metrics is probably more the ticket.

Right now the business cycle points to the U.S. being in a mid-cycle area – business inventories are 6 percent higher than a year ago but that doesn’t appear out of whack, notes Dan Greenhaus of BTIG. Job growth has been better than it has been since 2000 (1.375 million private sector jobs in the last six months), and that may underscore how sluggish the growth has just been for 15 years and perhaps less about what’s happening now – the new normal many discuss isn’t emerging now, just confirming the activity of the last decade-and-a-half, where the heaviest fuel for job growth was in the ill-considered housing bubble era of 2005 and 2006.

Furthermore – and the recent August experience probably overstates this – low volatility and still ho-hum capital spending suggest the expansion has further to go as well, as the kinds of imbalances present (too much spending on pie-in-the-sky projects that will take too long to finish) aren’t there just now (examples would be the Empire State Building, World Trade Center, Shanghai World Financial Center, Burj Khalifa in Dubai – basically, when the world’s next tallest building is under construction, it’s time to sell).

With this in mind Morgan Stanley even predicts the S&P could get all the way to 3000 if the economy continues to grow at this steady pace with 6 percent earnings growth for the next five years. Those types of predictions are the kinds of things that usually get people in trouble amid long-running expansions, but Morgan Stanley also points out that the jobless claims figures dropping to the 300,000 range and consumer confidence moving up into the 90s readings really reflects (finally) recovery from the deleveraging that dominated the last several years. (We pause once again to consider just how awful this recession was.)

MORNING BID – I was dreaming when I wrote this…

Aug 25, 2014 14:37 UTC

The move by Roche to buy biotech company Intermune for $8.3 billion at a 38 percent premium isn’t going to make Janet Yellen happy, given her thoughts on the valuation of certain biotechnology and Internet retailing names. Still, with the Fed chair on board for low rates for some time given the slack situation in the labor market that the Fedsters keep talking about (basically, the unemployment rate, like the old grey mare, ain’t what she used to be), the long march to 2,000 on the S&P looks like it’s probably going to be over before long (it’s been done on an intraday basis, and now we’re just waiting on a close above that level), representing a tripling in that average in a bit more than five years and raising again all those questions about whether this all makes sense and if anyone cares anyway.

On the first point, well, nobody knows anything – earnings were generally strong in this most recent quarter, particularly when one expands the universe to the Russell 1000, where Credit Suisse points out more companies that are beating analyst expectations are growing sales, a sign of improved demand.

About 70 percent of the Russell 2000 beat on earnings estimates (about 62-65 percent if you exclude the ones that only beat due to reducing share counts through buybacks), and of that group, 84 percent did so while growing sales, pointing at least to some hope on improved demand. But there’s always weakness out there somewhere, and it appears to be among the true small-caps – the Russell 2000, which has been trailing the S&P and yet still looks overvalued based on a number of measures and has been seeing more negative revisions even as the stocks struggle.

The weakness in those names, along with some lackluster stock performance out of consumer discretionary stocks, explains in part why hedge funds are once again struggling, up less than 1 percent for the year compared with about an 8 percent gain in the S&P 500 for the year (after 2013’s ridiculous rise, of course, when hedge funds wouldn’t have been expected to keep up in the first place).

Still, it’s been a rough outcome this time this year – heavy overconcentration in a lot of the social media names early in the year dampened performance when those stocks went belly-up, and after that heavy exposure to discretionary shares did them in, so just kind of an uphill battle ever since – which actually suggests the desire to catch up may result in more gains for the rest of the market throughout the rest of the year. To wit – Credit Suisse’s most recent data shows health care becoming a net overweight position among hedge funds, with long exposure increasing in the last few months.

MORNING BID – Retail therapy

Aug 13, 2014 13:11 UTC

All that’s left for investors now when it comes to earnings season is the shouting, but if the rest of the retailers post results anything like Kate Spade did on Tuesday, the shouts will be screams of terror rather than anything that assuages investors over the state of the overall economy. Kate Spade’s executives went into some detail on its conference call as to the nature of its margins shortfall – which Belus Capital chief equity strategist and longtime retail analyst Brian Sozzi said are not likely to improve until the middle of 2015 – and the company then did itself no favors by declaring that it wouldn’t be discussing the margin issues any further on the call. (Craig Leavitt, the CEO, violated that rule to some degree, but basically, investors don’t like it when you tell them flat-out that you’re not going to talk about your problems, and when you’re a company with a forward price-to-earnings ratio of 77.5 and a price-to-book value of 119, that’s going to be particularly true.)

Other luxury retailers have noted their own problems with attracting customers at this time, including Michael Kors Holdings, which saw its own shares stumble of late after also warning of margin pressures due to expansion in Europe, but at least Kors has a forward P/E ratio around 19, which puts it in line with peers like Coach and Ralph Lauren.

After Macy’s, which reported this morning – and put some ugly numbers out there

Wal-Mart has trailed the S&P for the last several years.

Wal-Mart has trailed the S&P for the last several years.

- the next big retailers out of the gate are Kohl’s, Nordstrom and Wal-Mart, and of course they’re all over the map when it comes to big retailers; Nordstrom profiles a bit more like Coach and Kate Spade in terms of clientele, but they’re a big department store, so not really comparable at all. Nordstrom’s growth, though, is expected to come from the Nordstrom Rack outlet stores, with same-store sales estimates for the entire company at 3.3 percent, but a 1.2 percent decline expected in the full-line sales, according to Thomson Reuters data.

Either way, investors will be keeping an eye on margins at Nordstrom’s and Tiffany & Co (which reports later in the month). Nordstrom, in its last release, said it expected a 30 to 50-basis point decline in gross profits for fiscal 2014 (which ends early 2015), compared with 10 to 30-basis points prior to its May earnings release, and its earnings before interest and taxes fell to 7.9 percent in the May quarter 2014, from 8.7 percent a year earlier. While some companies this quarter talked of margin pressures as a result of rising prices, with retailers it seems more to be their inability to get away from hefty discounting to bring consumers into the stores.

Wal-Mart is a trickier case. Sozzi, for his part, believes the company could fall short of results if inventory growth continued to grow faster than net sales, and if they relied heavily on clearance zones to move inventory, that will hurt overall margins as well. The company forecast second-quarter profit below analysts’ expectations in May, and so investors are going to see if there’s any sign that its execution is changing now that it has appointed a new CEO and new head of online business. The company has seen margins slipping as well, as its pre-tax, pre-interest and depreciation margins dipped from the high 7s between 2011 and 2013 to 7.5 percent in 2014, and it’s trailing the S&P badly in the last several years.

MORNING BID – Margins, China and whatever else

Aug 12, 2014 12:46 UTC

We’re deep into a period where the earnings calendar has basically dried up and the news flow overall is pretty slim, so the market will hang whatever gains it can on thin reeds – deals involving master-limited partnerships here, results from the likes of Sysco (the food services company there), and maybe in the mix too. The broader economic signals remain the more important ones for markets right now, and while they’re not uniformly outstanding, there are some hopeful signs for those finally looking for an acceleration in activity.

The earnings situation has been better than anticipated – Goldman Sachs notes that margins broke out of an 8.4-to-8.9 percent rate in the second quarter, ticking up to 9.1 percent, and the firm’s corporate “Beige Book” – a compendium of company comments – shows that the concerns the C suite has looks more like the concerns of those seeing accelerating demand and rising prices, and not slack demand and weak pricing power. They cited a strengthening corporate outlook, margin forecasts coming under pressure as a result of inflation expectations, and a combined focus on spending money on both buybacks and capital investment. Furthermore, companies have been less negative than in the recent past when it comes to revisions, and guidance for the fourth quarter of this year and first quarter 2015 was revised higher.

China – per Goldman Sachs, company conference calls that had a focus on international and emerging-markets growth say everything hinges on China. The expectation is for rates to remain lower for longer, but the country is dealing with a real difficult time in its domestic property/construction. Citigroup researchers believe that the central bank is going to keep the spigot going as best as they can – so they revised their 2014 growth forecast higher, to 7.5 percent from 7.3 percent.

Not all is hunky-dory. Until the Fed exits the game, at least from its bond-buying and then as it eventually starts to slim its balance sheet, there will be plenty of fuel for some to argue that the gains are built mostly on cheap money that isn’t having the required exponential effect on economic growth as it should. Underemployment remains a problem, one that isn’t easily sloughed off as the ‘cheap money’ argument, and while some credit dislocations are being seen, they’re not nearly as big as has been seen in the past. The relative calm that pervades is also a risk, particularly if the Fed heads in the direction it is expected to and gets out of QE. Volatility rose after the ends of QE1 and QE2 (events played a role too) so that’s always a concern, but the markets will have to learn to walk again eventually.

MORNING BID – ‘You don’t wanna go long into the weekend’

Aug 8, 2014 12:50 UTC

Get ready for one of those days where people say a lot about not wanting to be “long going into the weekend.” Except perhaps in bond markets, where the rush to government debt intensified with President Obama’s remarks that the US is ready to provide air support through airstrikes against ISIS, which now controls a big swath of Syria and Northern Iraq. That’s forced a big move into U.S. and German yields, among other things, which is undermining some of the recent strength in the dollar as well. (That’s not to say it’s a strong-euro move, more of a weak-dollar move, given the declines in the dollar against the yen as well.)

What’s striking here about the rallies in U.S. debt and German debt is that even though there’s a substantial safe-haven bid behind both markets, the difference is the German 2/10 spread has narrowed from about 1.73 percentage points to 1.04 percentage points since the beginning of the year thanks to a big move in the 10-year, a bull “flattening” trade that reflects ongoing concerns about economic growth in Germany, and more broadly, in Europe.

The United States has also seen a flattening as well, and also about 60 basis points, from 2.59 percentage points to 1.97 percentage points. There’s a slight rise in the two-year note embedded in this move, though, and while the 60-basis-point move in the US 2/10 isn’t as big as the 70-bp move in Germany, it’s still significant.

The US yield curve remains relatively steep.

The US yield curve remains relatively steep.

The difference is that the difference of two percentage points is still closer to the historic norm that suggests a stronger economic outlook. Short-dated rates are of course being held back by the Fed and ECB, but that’s becoming less so on the U.S. side of the equation. Either way, the move below 2.40 percent and the big increase in central bank custody holdings ($28 billion this week) supports the idea that there are growing worries, mostly of a global political nature, that are affecting markets right now that’s likely to persist in a vacuum where earnings season is winding down and economic figures have been relatively consistent.

So where might the market go next? Analysts at CRT Capital see the likely strongest performance in the 5-7 year area, in part because next week’s supply of 3s, 10s and 30-year bonds will likely imply a concession in those maturities that will keep a bit of a lid on the strength there.

However, CRT suggests that the 10-year yield would find support at about 2.55 percent (if it ever gets that high again) and likely resistance around 2.35 percent. Watch for the weekly CFTC data late in the day as well – short positions in the 10-year have been steadily worked off (or beaten out of those stubborn enough to keep those positions on) to a point where net shorts were nearly even last week at short 5,800 contracts, smallest since a long position in July 2013. If all of that is worked out that short-covering may finally have run its course.

The stock market is an odder duck right now. Futures are higher, having rebounded from big post-Iraq-worry losses during the night, but it’s hard to imagine any kind of buying power taking the market all that much higher on a Friday and uncertain situations in Ukraine, Israel/Gaza and Iraq/Syria. The total revenue of U.S. companies to most of those areas is very, very small, but at times like this that’s not the calculus investors are using.