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Monday Morning Quarterback


Bubble me once, shame on you. Bubble me twice, shame on me.


"I was in the Virgin Islands once. I met a girl. We ate lobster and drank pina coladas. At sunset we made love like sea otters. *That* was a pretty good day. Why couldn't I get that day over and over and over...?" Phil Connors, Groundhog Day.

Good morning and welcome back to the flickering pack. It's a brisk morning in Gotham as we awake to shake the morning rags. We've got the Carlos and the Mets putting the squeeze on poor Petie. The Raiders are officially the worst team in the NFL. And, lest you've been napping, the stock market is putting on the Ritz in a manner that would make the good doctor proud. Indeed, as we gear up for the meat of the earnings line-up, the tone and tenor in the mainstream media is understandably sanguine.

Interestingly enough, the Wall Street Journal shunned Goldilocks this morning in favor of the three bears. They are, with no particular mention of the Mama, Papa and Baby, Rich Bernstein of Merrill, Doug Cliggot of Race Point and Byron Wein of Pequot Capital. All three have their fret bets (hefty hefty debt, '07 earnings and higher oil, respectively) and the article reads like a necessary disclaimer for the blind ambition crowd.

I did alotta thinking this weekend about where we've been, where we are and where the heck we're going. I remember mapping out a bovine case for a year-end rally (on the back of Vail) that included higher homies, slippage in the dollar and newfound traction in the commodities. The homies, as you know, have bounced in a manner that would make O-Dog blush, to the tune of ten percent in a matter of months. The dollar and commodities? Uh, not so much.

In fact, as we spoke about last week, the dollar is making an upside run at the five year downtrend (and the 200-day). That, coupled with the heretofore churn in commodities, would seemingly imply that this rally is on borrowed time. Yeah, yeah, I know--pull this leg and it plays jingle bells. BUT, given the proximity of S&P 1365 (that Bennet and others have highlighted), dear prudence might be more than a catchy tune from another time.

The caveat for all things ursine is a very simple emotion. Fear. Fear of missing the rally. Fear of underperforming the indices. Fear of not getting paid by a hedge fund industry where you eat what you kill. In that vein, psychology remains the most important metric as we ready for the fundamental faucet to open. The reaction to news--rather than the news itself--will be uber-important as we fit together the year-end puzzle.

Last week, we saw two IPO's spurt ahead 21% and 63%, respectively, at the same time we saw Google pony up $1.6 billion for YouTube. That sparked chatter of an echo-bubble, or another wave of outsized and eye-popping gains for equity players everywhere. Can it happen? I suppose, if debt (the consumer) can exhibit a certain sustained elasticity. But I'll simply say this: Bubble me once, shame on you. Bubble me twice, shame on me.

If the bulls wanna bring it, be my guest. Until they push through S&P 1365, however, all bets are off.

Good luck today.


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