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Random Thoughts


With volatility this low, "stock replacements" or "married puts" make a TON of sense for those in the know on the popular mechanics.

  • President Fish and I take a quick dip in the D.O.

  • In the ten minutes following the release of Big Ben's bold text (hinting at "diminishing inflation pressures") we saw north of $7 billion worth of S&P futures bought and multiple sevens to buy in IWM, SPY and QQQQ.

  • Will it last until tonight's roll in ze hay? As it stands, our tells are tingling. Breadth is 3:1 positive, the financials are frisky (and through BKX 119), the dollar is on its heels (DXY -70 bips) and, well, all is well in the world. The big test for the bulls will be in the next hour or so, following that flurry of buy programs that has taken the S's right back to a technical level of lore.

  • The reaction to news is more important than the news itself? Note the price action in LEND (+3%) and AMAT (+4%). Bad news is shrugged off, good news is embraced. Respect, don't defer, but "hear" what the market is saying regardless of your positioning.

  • There are reasons to remain cautious. S&P resistance, at least for now, and the VXO (-8%, to 9.21) come to mind. The "20-odd" percent of bulls in the hood is also jockeying for mindshare.

  • Pack Laggage? The retailers, which are pretty in pink and starting to stink. IF (huge if) the tape turns, expect these names to lead the bleed.

  • Yes, I'll say it again. With volatility this low, "stock replacements" or "married puts" make a TON of sense for those in the know on the popular mechanics.

  • How am I positioned? Light on both sides of my trading pad and bare bones metal cores (along with a chunk of SunMicro, among others, and some cheap and cheaper gamma) on the longer-end of my book. I would love to tell you I'm "all in" but I'm not and that's alright. If you don't know, don't go. Fo sho'.

  • This snow storm is pounding down in the big City as we've already accumulated six Jewish inches (three inches in real terms).

  • As Ruby used to say, keep your right hand up. Between the weather and the three (four) day holiday, liquidity will thin for the rest of the week. That could make for some outsized action.

  • I don't tout--I think anyone who knows me understands that I say what I mean and I mean what I say. With that said, I think last night's Fast Money was fantastic, with a particular nod to Macke as he vibed with the folks from Playboy and the WWE. And we got to see Beulah the Bulldog, which was nice.

  • The weekly Investor's Intelligence survey finds a drop in bullish sentiment to 51.1% from 52.2% last week, as well as a drop in bearish sentiment to 21.1% from 22.2% prior. Those expecting a correction rose to 27.8% from 25.6%.

  • Bad gift ideas for your spouse on Valentine's Day, as submitted by ye faithful:

    • A vacuum cleaner
    • A mop
    • A book entitled "Kiss Me Better or I'll Kiss Someone Else"
    • $100 gift certificate to Score's
    • A trip to the South Pacific-for one.
    • Soap
    • Deodorant
    • Thigh Master
    • Lance Bryant Gift Certificate
    • A nude photo of her sister
    • Appeasiotomy
    • Two fish wrapped in newspapers with your Mother in law's picture

  • The Following Vibe was posted on the Buzz (by Mr. Practical) between 9:00 AM and 10:00 AM

    Since Blackstone closed its deal with Equity Office Properties (EOP) five days ago, it has sold $14 billion worth of properties. This clearly shows that it is quickly trying to reduce risk because it took too much on in doing this deal. With an assumed cap rate of 5% and treasuries at 5% and taking the leverage of this company from two times to nine times, a rational person might wonder why this deal was done at all until one looks at the fees the managers of Blackstone will receive.

    If you were an investor with Blackstone, what would you think about your manager selling out supposedly very valuable assets so quickly?

    Accredited Home Lenders (LEND) and some REITS are down big again this morning. The subprime sector of the mortgage market continues to deteriorate and in my opinion is showing only the first signs of pressure in the mortgage markets. Blackstone may have paid top tick.

    It is all about the incredible risk investors are taking due to free money. That free money has astronomical risk as the world is borrowing free in yen and taking risk with it in dollars. The world is levered as never before. Only when investors want to/must reduce risk will the thorns be exposed for all to see. Since most of this debt is in the form of mortgages, we are seeing the first signs here. It will eventually spill over into the rest of the world's developed economies as deflation.

    Don't look to the bureaucrats for answers. They are desperately creating more credit to fight the deflation that becomes stronger with more credit. When things turn over, they will run out of answers and will get busy assigning blame. The blame will go to hedge funds and other speculators that are using the credit central banks are begging them to use.

    (position in lend)


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Position in sunw, metals, financials
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