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A sucker rally, defined:
"A temporary rise in a specific stock or the market as a whole. A sucker rally occurs with little fundamental information to back the movement in price. This rally may continue just long enough for the "suckers" to get on board, after which the market or specific stock falls."
This is the first thing I thought of when watching the Dow rip at the open on Monday. The word on Twitter was that the Crimea vote was widely expected, and that the U.S.' initial sanctions on Russia wouldn't be that intense.So the market focused on improved industrial production data that are off a low prior month's base and, theoretically, priced into stocks a couple months ago. Gold was bid down, industrial stocks were bought, and all was well, except homebuilders, which were dumped amid industry data that were released ahead of key earnings reports from KB Home (KBH - Get Report) and Lennar (LEN - Get Report). Back to Russia. The execs I talk to are concerned about this matter, and the issue adds real uncertainty to their international expansion plans. Believe you me, over the next couple of weeks you will hear more talk about the next Cold War. It doesn't take a historian to know that this would be bad news for investors who have portfolios weighted in global companies. My opinion is that investors have gotten too complacent on geopolitical risks and are in for a punch to the face. Russia is frequently mentioned by execs as a fast-growing market that is getting more investment dollars. Here are two examples of companies that could be hurt by the rising tensions.
- Nike (NKE - Get Report) has 99 stores in Russia, 57 of them factory stores. In 2013, revenue from Russia rose a cool 28%. By the way, Nike also designed the jerseys for the Russian ice hockey team, and it is supposed to be a major player for World Cup 2018 held in Russia.
- Yum! Brands' (YUM - Get Report) KFC segment has 250 restaurants in Russia, and it plans to raise that total to 400 by 2015. In the past two years, KFC Russia has had the highest same-store sales growth rate for the brand globally.