One more time (before we celebrate
), I wanna touch on a point that was postured in my Ten Themes for 2010
My inbox is inundated with emails highlighting a handful of financial prognosticators who are now saying, "Duh! Of course the government is buying futures!" and "It would be irresponsible for them not
to buy futures."
To this I'll again say that the only difference between intervention and manipulation is communication.
Way back, when we traded with Quotrons at Mother Morgan
(MS) at 1251 Avenue of the Americas, headlines routinely crossed the tape that the Bank of Japan was buying Yen. That was fine; desperate times called for desperate measures and the dealing was done above the table.
The current day frustration emerges on two levels. First, the playing field is artificially skewed and traditional metrics have, in many cases, been overwhelmed. I suppose, in hindsight, seeing it and not blindly betting on it is worse than not seeing it at all.
The deeper level of angst isn't about the next five days or five percent. It's about the next five years, or the ten after that, when we pass this baton to our children and wish them well, as they weigh the world.
What most folks don't get—and what keeps me up at night—is that this dynamic is cumulative
. While a synthetic wealth effect is certainly better than a cataclysmic crash, we must learn from the past or it will repeat with increasing magnitude. It will arrive in waves, with each seismic shock incrementally larger than the last.
Modern day society, awash with zero percent financings, government sponsored euphoria and the constant transference of obligations from one perception to another, is running to stand still, at best, and swimming backwards at worst. Seriously people, have we already forgotten what happens with risk gone awry?
Moreover, conventional wisdom dictates that the ultimate backstop is in place; Uncle Sam on steroids, flying Bernanke's Apache helicopter with an arsenal of never-ending ammunition. It's an image that makes the Greenspan Put look like chicken feed, a mere pimple on an elephants arse.
Feel free to dance to the music, but keep an eye on an open chair. While it's difficult to imagine, nobody is larger than the market, at least for a prolonged period of time.
That truth may take some time to see, but it will again be obvious with the benefit of hindsight.Perspective Check
You wanna see 21 reasons why we're not embarking on a new secular bull run, despite what you’ll read in the popular press?
Check out the table below, courtesy of our friends at Gluskin Sheff:
Click to enlargeRandom Thoughts
- We’ve got Breakfast with Beeks tomorrow morning with the release of the orange crop, er, non-farm payrolls and today’s action should be all about posturing. The whisper number is north of +100,000 (vs. expectations of –35,000) so keep that in the back of your crowded keppe.
- You know what else you should file back there? Rally phases typically end (pause) on good news, much akin to news being worst near the lows.
- We’ve long offered that the next crisis will be one of confidence. As that begins to unfold, high-profile policymakers -- such as the US Treasurer -- and formerly “faceless” companies -- such as American International Group (AIG) -- will likely be at the heart of the dark matter.
- If you’re trading like this, give yourself a break and take a step back!
- Can you guess the fifth most populous state? Hint: They’re $9 billion in the hole.
- Market views seem particularly polarized between raging bulls and grizzly bears.
- And you're surprised the Raiders didn't make the playoffs?
- Snaps to Quint Tatro (as he awaits his 2nd born any day) for some very nice trades recently in our FlexFolio. If you're looking to follow an active portfolio with trade alerts before each trade, take a 14 day free trial and let Q-Man guide you.
- I'm all about respecting both sides of the tape—I've learned through the years to stay humble or the market will do it for you. I can't tell you how many times I've seen folks champion an agenda only to fall silent when the mood of the market shifts.
- Who was it that said excess breeds excess?
- The homies (KB Home (KBH), Lennar Corp. (LEN), Ryland Group (RYL)) stand out, as does retail (Sears (SHLD), Lowe's (LOW)). The dollar, for its part, is better bid.
- Is anyone else really looking forward to January 16th?
- Do you have any idea how much discipline it takes to eat chicken noodle soup and leave the noodles at the bottom of the bowl?
- You got a dope beat?
- The VXO is back in the Miley Cyrus zone. Anyone wanna wager on the direction of the next ten handles?
- Professor Jason Goepfert noted on the morning Buzz & Banter that Individual Investor exposure to stocks is currently the highest since October 2007 and Individual Investor exposure to cash is currently the lowest since August 2000.
Click to enlarge
- Breathe, Minyans; we’ve got another 51.2 weeks left in 2010. Let’s make ‘em count!
No positions in stocks mentioned.