Expiration done … market relaxes
Market enjoys a relief rallye after the October expiration is out of the way …
Ben and Hank keep talking bullish and keep the market on recovery course.
Interbank lending relaxes as well.
Dax held back by Volkswagen, so underperforming the FESX by more than 2% …
Barron’s highlighted the “slight outperformance” of VW 
They write about VW …
- The hottest stock this year among the biggest 100 companies in the world will be lumbering metal basher Volkswagen (VOW.Germany). But VW’s shares are up about 130% during a global bear market of historic proportions, and its price-to-earnings ratio is now 50% higher than Google ‘s and nearly all other top 100 companies’.
- With such a rise, you might think that VW, which makes some pretty good small cars among the six million it produces annually, invented a terrific new electric car or a vehicle that gets 100 miles to the gallon. Alas, the stock is up on anything but fundamentals and will likely drop like a Beetle pushed from a cliff once Porsche (PAH 3. Germany) completes its plan to own a majority of VW shares outstanding.
- Porsche, which holds about 35% of VW’s 294 million ordinary shares and owns deeply in-the money stock options controlling another 15% or so, intends to get to slightly above 50% by yearend. With Porsche’s move greatly reducing the number of shares outstanding, short sellers have had to scramble to buy shares to cover their bets against the stock.
- Another factor in the squeeze, he adds, might be the recent failure of Lehman Brothers, reportedly a big lender of VW shares to short sellers. Lehman’s downfall probably forced some bears to unwind their short positions unexpectedly as the investment bank called back its shares.
- VW’s P/E ratio of 33 times 2009 analyst consensus earnings estimates of €10.91 per share is unrealistic at best. It’s five times the multiples of other big car makers and far above VW’s own historical norm. What’s more, the EPS estimates have been coming down in recent weeks and are likely to continue to fall.
- values VW at about €100, or less than a third the current price.
- VW’s trading brings to mind the classic lyric wisdom: “The fundamental things apply, as time goes by.” When VW’s fundamentals come to the fore, the gravity-defying stock will come hurtling back to earth.
So … as one can see … even the VW share price “relaxed” after the expiration 
