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Hump Day Hop Scotch

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Hit 'em hard Minyans!

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"And I want the rest of you cowboys to know something, there's a new sheriff in town. And his name is Reggie Hammond. So Y'all be cool." -48 Hrs.

Good morning as we ready to zoom into the Boom Boom room. With yesterday's spirited sprint in the rear-view, all eyes are on Big Ben for future clues on the interest rate fuse. After eighteen (count 'em!) years of trying to read between the lines of Elmer's obtuse vernacular, popular perception believes that Mr. Bernanke will be a bit clearer in his message. That remains to be seen, of course, but the first chapter of our new novel will turn a fresh page this morning.

While retail sales is the obvious hindsight catalyst for the most recent rally, the likelihood exists that part of the move, or perhaps the sustainability of it, was predicated on the belief that law and upside order will be Sheriff Ben's mission in life. Remember, the Minx began her spirited sprint last autumn when word first leaked that Boom Boom was firing up his helicopter. It makes intuitive sense that similar jig would greet his first hints at policy. What is yet unknown, however, is whether Boo's late day musings will manifest as traders sell the news.

There is a very fine line between fighting the tape and using price to your advantage. That line is called "discipline" and its the facilitator of capital preservation and trading longevity. One of my consistent themes this young year has been the belief that volatility will uptick in Equityland and I nibbled anew late yesterday. That's not a directional bet, in and of itself, although the lion's share of yesterday adds were "underneaths." To wit, and because the clock is starting to tick a bit quicker, I posted this vibe on yesterday's Buzz:

That's like putting your whole mouth right in the dip. From now on, when you take a chip, just take one dip and end it!

In between meetings, markets and trying to identify the perfect Valentine's Day gift (other than myself), I've been doing a round of nibbles on some cheap vols. Maybe I'm wrong--it wouldn't be the first time--but I continue to feel that equity volatility will uptick in the months ahead. And I wanna proactively position myself with further gamma.

As we pride ourselves on forthright communication in the 'Ville, I'll humbly offer that IBM spring puts were among the accumulated positions. Is that an emotional double dip? Given that Big Blue couldn't take out yesterday's high (in the context of a stellar rally), I've got long side exposure against it (SunMicro) and we're still under the '06 trendlines, I figured it was worth the dabble.


And Finally, some off-the cuff Hump Day Vibes:

  • This Bird Flu is no joke as it has now spread to Germany. This hasn't gotten the type of press that, say, SARS got but I'm not sure if that's necessarily a good thing. Personally, I would rather hear chicken littles than see dead chickens.

  • All those Dick Cheney jokes were pretty funny when we thought (read: were told) that Harry Whittington was "in good spirits." After the heart attack, it's no longer appropriate to make light of the situation. Mea culpa.

  • Minyanville Publishing and the Ruby Peck Foundation for Children's Education are teaming up to help fight Canavan Disease. Our friends at Jacob's Cure are hosting their family bowling event on March 5th at Chelsea Piers and the critters will be there in force. If you have an interest in joining us at this fun event for a worthy cause, please let us know. We're a community that cares and we strive to help our own.

Good luck today.

R.P.

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