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Bucket of Beans

By

May peace be with you!

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You imagine me sipping champagne from your boot
For taste of your elegant pride
I may be going to hell in a bucket, babe
But at least I'm enjoying the ride

(Grateful Dead)


The Tuesday soiree is a crimson display as the bovine all search for something to say. The reflation efforts were par for the course as they have lifted (pick an asset) for a few years and buoyed the tape in tough times. Today, however, the dollar drubbage is a function of a double-edged wedge.

Not only has Elmer opened the spigot (yawn)--which is contributing to an all-time high in the CRB--but South Korea offered tangible proof that isolationism is more than pure vernacular. If they're looking to increase their investments in assets denominated in other currencies, the thinking goes, there are likely other Asian, Middle Eastern and European countries looking to do the same. That subtle distinction is likely why equities aren't along for the ride or enjoying today's rising tide.

I offered last week that a 'three-pronged' prognosis could be in the cards (down/up/DOWN). The risk to the guts of that thesis is the delicate dance between the dollar, rates and pain thresholds. If you are Saudi Arabia, for instance, and your primary export was denominated in dollars, the basis of your revenue has been cut by a third in the last three years. Ditto for Asian holders of our debt and real estate. Please don't let patriotism muddy a proper assimilation of the financial fabric--the market has become increasingly political and we must respect the global agenda.

As it stands, Hoofy is getting lambasted as the pickers and grinners start to turn tail. Breadth is almost 3:1 negative, the financials have broken down, commodities are through the roof and the hiding spots are fading fast. Again, this very well may be an alleviation of some of the excesses we discussed last week (and necessary before a punch through recent highs) but the probability spectrum remains wide open. The only thing we know, for sure, is that discipline and risk definition are common denominators of any successful trading strategy.

I'm gonna juggle this struggle and head back to the Buzz for the final fray. I know that today has been a rough road but it's important that we don't let today's mistakes turn into tomorrow's disaster. With Beeks on tap (CPI) and tensions approaching DEFCON levels, lucidity will serve us all in good stead. Hit for average, not power, and wait for your pitch. It may take a while to find it, I know, but at least this way you'll stay in the game.

Fare ye well into the bell.

R.P.

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