The Minx City Dancers
By Todd Harrison Oct 30, 2003 9:09 am
Tickle me Toddo!
Good morning and welcome back to center court. After Tuesday's hard rip and yesterday's skip, the critters are back for a minxy new trip. All eyes were on Beeks and his rosy red cheeks and he'll be the one molding trading techniques. Can Hoofy snap higher and take a new flyer or will Boo slap him back to the harsh muck and mire? This morning, over a fresh batch of bagels and shmear, the menagerie (sans Daisy, who slept in) gathered for a little face time. It went a little sumptin' like this:
Hoofy: 7.2% GDP? Fire up the Ferrari, Daisy, we're going to Disneyland!
Sammy: Take it easy there, Hoofy. It's a solid reading--no two ways about it--and the ball is yours to fumble. I would remind you, however, that expectations were really pumped going into this number (whispers of up to 8%). As we're now in that famed resistance zone for the S&P, tread carefully as we edge into today's muck.
Snapper: Why don't you tread carefully, Sammy, I've got some jazz to play! This number will embolden the fence sitters to jump on Hoofy's back and the bears will scurry in a hurry!
Sammy: Perhaps--there certainly is a lot of performance anxiety out there. That said, bear market rallies typically end on good news and this is pretty juicy. If the economy was this strong and so many bellwethers aren't "seeing it," though, what's it gonna take for them to turn the machines back on?
Boo: (in a sour mood) Let's talk Fannie (FNM:NYSE) for a sec, shall we? I would like somebody to explain the virtues of a "computational error" to me. Is that supposed to make us feel any better? So....it's IN the computer? I'm tellin' ya, the F-troop has some serious smoke floating around and it seems to be getting thicker. The guy sneezed billions!
Sammy: Yeah, Professor Succo, who is arguably the sharpest derivative mind around, should get in there and take a look. The problem, quite simply, is that their books are so complex. Few people actually understand the inherent risks--both to the company and, by extension, to the housing, debt and derivative bubb,er, markets.
Hoofy: No offense, Sammy, but the bears have been banging this drum for a long time. These guys are too big to fail and there is no way that the government will let it happen.
Boo: But these companies are NOT formally backed by a government guarantee!
Hoofy: Maybe not formally, Hoofs, but they're clearly aware of the potential scare and will prop up the slop if need be.
Boo: I hope they've got a big mop then. Remember when all the Enron smoke was in the air? Took months before it "hit" the markets. If this unwinds, it'll make Enron look like a piss in the park.
Sammy: Alright, we all know where you stand Boo. Let's focus on today's tape, shall we? The economic numbers were greeted with an initial knee-jerk higher in the futes and they're tickling the intra-day yearly highs (S&P 1053/NDX 1440). Meanwhile, it's interesting that the dollar continues to come under pressure (and gold remains shiny) in the face of this report. Bonds are also getting creamed, as you might expect, although the bulls will argue that it's a natural (and welcome) by-product of growth.
Boo: Well, I'll say this--after the bulls lather themselves up in Giddy City, it'll be very interesting to see if they can stay clean, (licking his chops). Now, if you'll excuse me, I have a feeling I'm gonna have my paws full today!
The young bear walked out of the room as the remaining critters stuck around to finish their meal. They knew, as did I, that it was gonna be a hairy session and wanted to get some further nourishment. As Fokker furiously typed his chronicles, I leaned back in my chair and thought of Boo. I knew that the furry freak wants to fade (read: sell) this beast--the only question was one of timing.
Good luck today.
position in fnm, qqq
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