Hump Day Hop Scotch
That's alotta Hopscotch!
What a difference a week makes!
Twas' only last week that the gold jitterbugs were in a feisty frenzy and the yellow metal tagged $540/oz. As of this morning, and after yesterday's all-out smelting, the bloom was off thy precious rose to the tune of 9%. We've discussed the metal dynamic profusely on the 'Ville and shared alotta variant views.
For my part, I'm gonna stick with the shtick that A) the sharpest corrections occur in the context of a bull market, B) wider 'scales' may be warranted (the 200-day is down at $448 and C) if you're time horizon is long-term (as mine is), lower prices should be viewed as an opportunity rather than a hindrance.
Ho Ho Huh?
Portfolio managers across the land are on the lookout for a fat guy in a little (red) coat. As is often the case in our business, folks tend to focus on risk when the tape is down and reward when the other guy is getting paid. Such was the case in the home stretch of '05, as alotta players dressed as bears for Halloween and stuffed their bellies full of risk on Thanksgiving.
The broader averages have slithered sideways since, as motion trumped movement and sector rotation set in. With 8000 hedgies staring at the tape, psychology patience--and their willingness to ride out risk--will shape the tape till the final tick. The technical framework remains constant as BKX 106, XBD 200, S&P 1270 and SOX 485 are levels of lore for the home stretch score.
I've chewed through the year-end dew from a few different seats. On the sell-side, as market maker on Mother Morgan's derivative desk, I saw skeletal staffs side-step risk. On the buy-side, as the President of Cramer Berkowitz, I felt the stress of every single basis point as I held a #2 in one hand and my calculator in the other. And as someone who now wears a litany of hats, I've arrived at a place where I'll patiently pick my spots and take what the tape gives me.
The '06 Fix
We've heard alotta thoughts from many circles on what awaits us next year. I've tossed a few ideas in the mix-the shift in leadership (as energy edges to top dawg in the S&P and the metals settle into the mainstream), the broken clock volatility shock and yes, a disciplined respect that renewed jig in the trannies and brokers could lead to a snazzy first half. Would that rally be on borrowed time? I believe so as it-along with many other elements of our immediate gratification existence-is dependent on a low cost of capital and the elasticity of debt.
I will also offer that a spate of land mines litters our road to recovery. These aren't popular topics, I know, but pretending something doesn't exist doesn't make them go away. I offer these thoughts without pride or political prejudice and in no particular order:
- Societal acrimony is a particularly prickly problem as the middle class gets squeezed by the lifestyles of the rich and the struggle to exist. This chasm will likely widen in '06 as pension problems proliferate and the manufacturing sector migrates to foreign soil. Indeed, the "haves" and the "have nots" will continue to crystallize from a social, financial and political standpoint.
- Is Dubya in trouble? His approval ratings say so and his once staid supporters are taking a long look at the lame duck. I won't get into an eavesdropping debate (lest someone is listening) and, truth be told, we don't know what the other side of that trade would have been. But when Breakfast with Cheney offers that "the post 9/11 world demands a restoration of presidential power eroded by Watergate and Vietnam," it's time to take a step back and a hard look.
- Is Iran on the radar? As we continue to assess and address the current occupation, we gotta keep an eye on Iraq's neighbor to the east. It seems as if something is cooking in Mo's Kitchen and it's a very spooky situation. It's not "actionable," per se, but we certainly must remain aware. This is a scary world we live in and geopolitical unrest is not reflected in current volatility readings.
Move over Rover, and let Collins take over...
Finally, and this is exciting stuff, we're proud to announce that Greg Collins will be shifting lids and joining Kevin "Tickle Me" Tuttle and his asset management team in Florida. Greg arrived at MVHQ two years ago, greener than grass and suitcase in hand, and said "I'm the guy who is gonna dig the puck out of the corner for you."
I tried to talk him out of it but the kid was resolute, earning a spot on the roster and rising up the ranks to editor-in-chief. This is a tremendous opportunity for the young lad and an all-around win for thy faithful as Greg and Kevin will tag-team content from their snazzy southern digs.
Please join me in congratulating Collins on this "next step" and wishing both he and Kevin continued success. Hit 'em hard, boyz.
Good luck today.
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