Editor's Note: The following was posted in real time on our premium Buzz & Banter. It's being shared here for the benefit of the Minyanville community. See also Sock & Awe!, Mercury Rising and Where's Alan Greenspan?


Calls and Puts - 1:10 pm

I've spent the last hour making calls around the Street trying to get a handle on the current psychology. What I've found is consistent with what we posted earlier. 

The current tape is a very simple tug-o-war. On one side, there is "artificial bullishness" as a function of tight borrows and prohibitive short sales. On the other, there is deteriorating credit and fragile psychology. 

Will that lead to a binary outcome? For a trade, most probably.

Do I profess to "know" which way it'll play out? My friends, if I knew the way, I would take you home.

Some odds and ends as we together walk the path:
 

• Mother? Not Mother. At least not the Mother I grew up with. Either way, note the action in Morgan Stanley (MS) as the stock is quietly off 4%.
  
  
• Professor Bennet has had a "decent" handle on the credit market (ya think?). As such, his current views are an assimilation that factors into my own personal thought process.
  
  
• First the free markets, then the balance of powers. 
  
  
• Can the First Amendment be that far behind?
  
  
• We've spoken at length about how the more things change, the more they stay the same. In particular, we've drawn attention to the rotating bubbles that were the Nikkei, Homebuilders, NASDAQ, China and Crude.
  
  
• While we've long said that Debt is the MOAB (mother of all bubbles), I wonder if the powers that be are trying to save it with a "bailout bubble."
  
  
• Not that I'm "focusing" on this but the SA-100 speaks to the power of the Minyanville community. If you haven't clicked on this link (then "popular" then the up arrow), please feel free. It's not about "me," it's about drawing attention to our cause.
  
  
• As always, I hope this finds you well.

Minyan Mailbag: ETF Bubble - 1:33 pm

Toddo,

You wrote, "Has the ETF bubble popped?"

Care to expand on your thinking or why you are posing the question? I imagine that a lot of your readers use these heavily and should know what they are investing in. Personally I'm starting to have structural concerns. Currently for example the DUG is down -6.6% while its purported inverse, the DIG, is up +0.6%.

-Minyan JP

MJP

That sorta sums it up--everyone in ETF's and the structural mechanics have shifted. To be honest, I'm still trying to sort it out myself as I love to trade 'em (and love to trade period). It was simply something that popped into my crowded keppe and I tossed it out to ye faithful as fodder.

Thanks for the snaps, Yo.

--Toddo

Frisky Buffett! - 3:13 pm

I stopped my jugglefest to listen to Liz's interview with Warren Buffett on Fox Business. He's a pretty sharp fellow and I, for one, wanna hear as many intelligent opinions as possible during these tenuous times.

The quote that stood out to me was "If congress doesn't help us, heaven help us."

That echoes our sentiments exactly, as painful as it is to admit. While we can debate the merits of the proposed plan--and tweak it such that there are balance of powers--we must remember that it introduces the possibility of regulated containment that didn’t otherwise exist.

The proposal isn't a panacea--there will be numerous unintended consequences--nor does it guarantee success ("buying cancer" is an ominous best case alternative). If nothing is done, however, we will witness a Code Red unlike anything the world has ever seen. It's really that simple (well, not really, but you get the point).

I'm a free market guy. 

I weep for capitalism the way Lt. Sam Weinberg wept for Santiago. 

The entire mess is "grotesque and incomprehensible" but we, the Minyans, have no choice but to fight the good fight and stay true to ourselves. Indeed, whereas the single biggest determinant of success used to be my bank balance, it's now the eyes that return my stare when I look in the mirror each morning.

That, of course, doesn't mean that money is meaningless (at least not unless hyperinflation arrives). In that vein and while I'm here, I'll offer some top-line vibes as we balance the scribes:
 

• Warren B (Not him. Him!) also noted the 3-month T-bill auction yielding 0.05% as a pretty scary sign. I concur, sir. If making no money on your money is indicative of social mood and risk appetite, that sorta sums it up.
  
  
• I continue to view this tape as binary, with artificial structural agendas on one side and psychology on the other (and make no mistake, it can go either way). I only hope that IF we get the relief rally, folks will remember our lessons learned.
  
  
• Many politicians are saying "Move along folks, there's nothing to see here!"  I understand and appreciate their efforts to calm the crowds (we've been buyers of clarity and lucidity for years) but would offer that there's plenty to see and people truly need to pay attention.
  
  
• Credit continues to deteriorate and that warrants a mention through the lens of our previous discussions. What I don't profess to know is how credit will respond if this plan is passed. Based on the growing disconnect, however, I would offer that something has to be done and soon.
  
  
• Wowzers--Ye Faithful rock. San Dimas High School Football has nothing on our community!
  
  
• As always, I hope this finds you well, balanced and breathing deeply.

Engine Room, More Scream! - 3:36 pm
 

• Did we mention today that 3:30 will bring the double whammy of stock buyback haltage and redemption notices hitting? I'm having some serious vuja de from back in the day (Old School Minyans know what I mean).
  
  
• Blast from the Past: Well Contained!
  
  
• And there goes the television signal. What is this, Mercury Retrograde?
  
  
• "Toddo-if the "smart people like Buffett and Gross are saying we need the bailout or heaven help us, why not just buy some calls for the mother of all Snappers?"
  
  
• To which I'll reply, "How do you shoot the devil in the back. What if you miss?"
  
  
• It could most certainly occur--it's one of two binary outcomes--but I will remind folks that when speculating, you should only risk what you can afford to lose.
  
  
• I'm going to physical therapy. I'm going to physical therapy. I'm going to physical therapy. (I'm putting it out in the universe so I don't get sucked in front of these screens all night (again).)
  
  
• May peace be with you.

R.P.