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Thursday Blurbs

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Which Mountains?

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Texas Fleas and Pulling Teeth

The incessant smeltage in energy and metals has sparked a sharp sell-off in the CRB commodity proxy. The index, which includes everything from crude to copper to sugar to soybeans, is off 9% since the end of January. That's sparked fresh deflation chatter in certain circles despite Big Ben's reputation for fueling helicopters with cash.

What's interesting--and potentially actionable--is that the CRB is now sitting on the 200-day moving average and multiyear trendline support that's been in place since 2003. If the sharpest corrections occur in the context of a bull market--which is where I believe energy and metals are--this is an intuitive place for a bounce (while providing defined risk for a trade).

Could this be the beginning of a bigger deflationary spiral? Sure, my sense is that outright deflation has a 25% shot going forward. I just don't see it with the brokers at all-time highs.

The Evolution of Wall Street

John and I spent a good slab of our allotted Succofest last night talking about the changes in the financial industry. These are fascinating times as technology and regulation shift long-standing pillars of conventional wisdom. I've written about some of these trends and I believe many of them remain in play. Last night's discussions planted fresh seeds, however, as we cast our eyes towards the next five years.

Having been on both sides of the Wall Street equation--the sell-side with Mother Morgan and the buy-side with Galleon and Cramer Berk--I've eyed the process for quite some time. There are things that work (human capital will always have a role, albeit with a different compensation structure) and things that don't (risk management is typically scattered throughout a trading floor. There should be one "risk center" (derivatives) and sectors/stocks should trade together regardless of whether the 'flow' is listed, otc, converts or option related.

I've got further thoughts on this evolution and we'll surely drill a bit deeper in coming months. Alas, I digress, and there is a tape to trade and coin to be made.

Speaking of the Piggies...

The Minx sucked up the first (and intuitive) post-Bernanke probe as the financials stuck out with a sticky green gleam. They offered a steady hand (while some jittery midday supply made the rounds) and underscored a decent showing for the Matador Crowd. While Hoofy has to be happy, he's equally aware that S&P 1280ish (there now) is the '06 downtrend line. That's task #1 for the bovine in our midst.

Over in Rotation Station, I'll once again be eyeing energy and metals (in the context of the CRB trendline), the homies (HGX 260), Pharma (DRG 320) and the semis (on the heels of Applied Materials). In individual equityland, I'm keeping an eye cast towards looming resistance in GE ($35), IBM ($81ish) and Citi ($48). And I'll be watching the clock, as the Queen and I ready to head to Rubyville tomorrow night and see the Maven. Noice.


And Last but Certainly not Least...

Hear Ye! Hear Ye!

Back by popular demand, Minyans in the Moutains is being slated for the weekend of August 10-13th. Those who attended last year's fete can attest to the power of our community and the significance of human capital. We set a pretty high bar but our squad is certain they can once again beat expectations.

The critters are anxiously awaiting final word from the powers that be regarding the venue of choice. It's become a two horse race in that regard and both are wild stallions. Stay tuned for more information in the coming weeks as we ready to take our show on the road. It promises to be a stone cold groove!



Good luck today

R.P.

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