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Monday Morning Quarterback


Be the pigskin, Minyans!


The Red Eye from Red Dye

There's nothing like a cross country overnight flight to snap the critters back in track. After spending a few days entertaining--or, holed up in eight hour meetings as the case may be--they're back in the saddle and ready to run. With last week's freak behind us and Elmer teeing it up at Del Boca Vista, all eyes on Boom Boom and Beeks as we ready ourselves for another fresh five.

From a field position perspective, last week's leak tossed the ball back to Boo. With the NDX and BKX below January lows--and the S&P eyeing important support at 1260--Hoofy has his work cut out for him. Toss in a spate of high profile situations (General Electric (under $35), Citigroup (under $48), IBM (under $80), Google), fresh geopolitical tensions (watch crude) and ever-compressed volatilities (VXO 12ish) and the cause for pause becomes readily apparent. THE question, for critters in our midst, is whether the bovine can absorb these negatives and focus on the positives (read: the inevitable end to the rate hike cycle).

I peeled out of alotta energy and metals early last week as I sensed they were getting a bit ahead of themselves in the near-term. I still dig 'em long-term and will look to buy dips if and when they arrive. On the trading side of my book, I'm trading "long gamma" (read: I own options and my risk profile looks like a "V") as I sense a disconnect between perception and reality. I've tried to pair risk when possible (long sunw, short ibm) and continue to own some puts in the financial space (which haven' truly kicked in yet). And I've gotta lotta powder dry as I practice proactive patience and wait for my pitch.

Politics, Politics, Politics

The wildcard for the financial markets isn't the Middle East, per se, but rather when the collective perception deems it problematic. As a leading indicator, prices will fully reflect angst before the angst actually arrives. That's the art to the trading science and our task at hand when discounting risk. After a few years of low volatility, traders are conditioned to expect slithery sideways movement. We've seen what volatility can do to commodities and, to a degree, fixed income and must remain aware that those swings may edge into equities.

We take great strides to remain "sans politics" in the 'Ville as this is a financial forum. However, it would be myopic to ignore the Beltway Banter as it has ramifications for the flickering ticks. Psychology is a fragile and somewhat amorphous metric but one that can control the tape. The old saw on the Street is that "when the President is in trouble, the market is in trouble" and while Dubya is seemingly skating by the principal's office, patience is wearing thin on both sides of the aisle. Actionable? Not in a defined sense but something that we'll wanna keep an eye on as we dance with the lame duck.

Alice the Housekeeper

  • We continue to work to improve the 'Ville and welcome your comments in that regard. With the MV site launch behind us and a slew of tweaks ahead, we're beginning to turn our attention to added features, functionality and content. It's been a heckuva journey, this Minyan thing, and we rely on ye faithful to help us improve the experience. Donke Shoen.

  • Tom McManus, BofA's talented strategist, believes that last week's strong employment report (indications of upward wage pressure) is the start of disrupting the "cozy consensus" that the Fed is close to the end of their hike. He believes that the possibility of two more tightening would be enough to surprise the consensus and pressure the tape lower.

  • Professor Succo and I will be heading to Harvard tomorrow afternoon to offer our take on the state of the tape. These "Town Hall Chats" have become a staple of the Minyanville community and we enjoy connecting with the decision makers of tomorrow. Boston area Minyans interested in joining us in Cambridge are welcome for hugs and handshakes.

  • And finally, snaps to the Pittsburg Steelers for running the table and winning Superbowl XL. I'm not sure either team played well enough to win but, in the end, the Seahawks made enough mistakes to lose. This was a particularly disappointing bowl, both on and off the field. The commercials, in my view, hit an all-time low in terms of creativity and psychic traction. The big winner? Disney, which managed to commingle their family of properties into a four hour commercial.

    Good luck Minyans and hit 'em hard.

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position in sunw, ibm, financials
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