You don't understand...that's Kelly Leak!
"Listen, Lupus, you didn't come into this life just to sit around on a dugout bench, did ya? Now get your ass out there and do the best you can."
-Coach Morris Buttermaker, The Bad News Bears
Good morning and welcome back to the yawning. It's been a tough run for the Matador Crowd but they're looking to finish the week feeling proud. The Intel (INTC) boost last night should aid their efforts although the pizzazz wasn't as jazzy as it first appeared. While their guidance was strong (they chopped off the lower end of the forecasted range), the gross margins bump was aided by fewer start-up costs. Expectations were lofty heading into this report so, while there is meat on the bullish bone (and a fabu SOX chart), keep that in the back of your keppe as we edge through the freak that is Friday.
One short week ago, the acne fervor was rampant in the city of critters. The S&P and Dow were breaking out, the "Dow Theory" crowd was loud and Red Dye was a lonely place for the ursine uglies. The lopsided lean became apparent as we failed to follow through and bonds planted seeds of sorrow in the land of borrow. It may be too early to pen the equity epitaph but it would be equally myopic to entirely discount the danger. Our goal in Minyanville is to tell the truth, the whole truth and nothing but the truth. Sometimes the truth hurts and other times it's financially flattering. The onus is on us to keep our eyes wide, our minds free and our thoughts open.
If it feels like alotta things are competing for your attention, you're not alone. The macro variables (crude, the dollar, fixed income) are in our face every day and the stage is getting crowded. How are we supposed to respect a Fed that promotes a strong dollar policy while the basis of our investment is melting? Who are we supposed to listen to when it seems like the U.S. is losing leverage in the global marketplace? When will we know if the big picture blues finally arrive without validation from the ultimate arbiter (price)? These are interesting times, my friends, and the stakes have never been higher.
There are a few things that seem obvious to me. Isolationism. Debt. Desperation. That isn't a near-term death knell as the coordinated agenda is quite clear: do what it takes to "buy time" with hopes that a legitimate recovery will ultimately unfold. If you think I'm exaggerating, I'll take solace in the company I keep. Paul Volcker. David Walker (comptroller general of the USA). Buffett. Soros. Gross. Roach. Rogers. Templeton. Succo. Boo. These people (critters) didn't get to where they are by being fashionable so think twice before ignoring the common thread and consistent theme.
The "balance," for lack of a better word, is a function of the time. Just as the dollar has devalued 32% in the last three years (and equity levels remained buoyant), the probability spectrum must allow for further manifestation. Still, with the election behind us and compression as coiled as can be, we must acknowledge that there is no such thing as "easy upside." That's not to say we can't enjoy spirited spurts--we know better--I'm simply saying that all Minyans should know that risk definition and capital preservation are common denominators of success.
We power up this freaky pup to find Europe and Asia a bit better, the dollar slippin' on the Trade Balance (-$58.3B vs. exp. $56.8B), bonds off 13 ticks, metals that continue to trade with a bid and stateside futures that want to be higher but aren't. A week ago today, I humbly offered we'd be lower now and that'll likely survive this Freaky Friday. Risk remains to the downside although it's not yet clear whether it's today's business. We'll figure it out on the Buzz until noon before I rail to Baltimore for a long overdue hugfest with Maia and Bradley.
Good luck today.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
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