For anyone holding an inkling of concern about the EU, mark your calendars: December 9th is the next big summit in Brussels, and it's built up to be the "make-it-or-break-it" moment for the eurozone.
When the EU leaders meet and greet in Brussels next Friday, they'll be charged with the noble task of creating solutions for some of the finer points driving the sovereign debt crisis.
Difficult times
Germany, France, and Belgium are currently experiencing rising bond yields, a situation that had been previously contained in the more troubled nations like Greece, Spain, and Italy. Now that the credit of the stronger nations is at risk, it's time to take some serious action.
With hope, this conference will have more effect on the crisis than the last two years of half-measures that have been judged as too weak, or too late, to curb the bond market contagion.
"Resolving the sovereign debt crisis is a process, and this process will take years," German Chancellor Angela Merkel (pictured left) told parliament, vowing to defend the euro, which she said was stronger than Germany's former deutschemark.
Dashed hopes
"Even so, expectations that EU leaders will live up to the kind of endgame that investors are talking about are probably overblown," writes Simone Foxman of Business Insider. "Germany has time and again opposed ECB intervention or eurobonds without substantial change -- the kind of change that would only come with revisions to its Constitution, and at the end of the day any decision in the EU will require Germany to be on board."
He speculates that instead of a quick fix, we'll see a long-term outline of the measures leaders are going to pass and the criteria for an expansion of the ECB's powers in the medium term.
International markets "will gauge their reaction upon how credible this plan is, and how far it goes toward truly resolving the problems of the EU currency union."
Investing ideas
The stock market's spikes and dips often coincide with breaking news events, and the situation in Europe has been no exception. Surely the events of the December 9th summit will have the power to swing the markets (in either direction) like those that came before it.
So, we were wondering, if good news comes out of Brussels, and stocks rally, which names could have the most to gain?
For ideas we looked at S&P 500 stocks that have high short floats and bearish short trends -- meaning short-sellers believe the share prices will fall.
If the share prices rebound, the highly shorted candidates could become short squeeze candidates, meaning that short-sellers would rush to cover their positions, and in doing so push prices higher than they might have otherwise.
Do you think these highly shorted stocks would see a short squeeze? (Click here to access free, interactive tools to analyze these ideas.)
1. AK Steel Holding Corporation (NYSE: AKS): Produces flat-rolled carbon, stainless, and electrical steels, and tubular products primarily in the United States and internationally. Market cap of $906.42M. Short float at 21.04%. Shares shorted have increased from 22.90M to 25.79M month-over-month, a change representing 2.66% of the company's 108.74M share float.
2. Pitney Bowes (NYSE: PBI): Provides mail processing equipment and integrated mail solutions worldwide. Market cap of $3.70B. Short float at 13.18%. Shares shorted have increased from 26.26M to 34.92M month-over-month, a change representing 4.35% of the company's 199.11M share float.
3. Urban Outfitters (Nasdaq: URBN): Operates lifestyle specialty retail stores under the Urban Outfitters, Anthropologie, Free People, Terrain, Leifsdottir, and BHLDN brands. Market cap of $4.17B. Short float at 16.1%. Shares shorted have increased from 17.46M to 18.39M month-over-month, a change representing 0.96% of the company's 96.65M share float.
4. Whirlpool Corp. (NYSE: WHR): Engages in the manufacture and marketing of home appliances worldwide. Market cap of $3.78B. Short float at 10.17%. Shares shorted have increased from 7.73M to 8.98M month-over-month, a change representing 1.65% of the company's 75.98M share float.
5. United States Steel Corp. (NYSE: X): Produces and sells steel mill products in North America and Central Europe. Market cap of $4.0B. Short float at 22.45%. Shares shorted have increased from 32.20M to 36.00M month-over-month, a change representing 2.65% of the company's 143.22M share float.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Disclosure: Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Short data sourced from Yahoo! Finance.
