Leaps and Faith
Let the Madness begin!
Don't cry for me Argentina
You were supposed to have been immortal
That's all they wanted
Not much to ask for...
We've been chewing through the dollar dynamic for quite some time. Yesterday, as we were tying a neat little bow on our Hump Day show, I tossed out an oh-by-the-way Buzz that mused "Can I see the DJIA at 15,000? Only if the greenback devalues in kind. It's just that simple." Well, evidently it wasn't that simple as my inbox bum rushed with questions.
"Do you really think we get there?" asked a curious Canadian Minyan.
"If you believe energy and metals are long-term winners, that implies a weak dollar and that should make you bullish on equities." offered a Garden City Minyan.
To avoid any confusion and, dare I say, provide some clarity, lemme be clear with my thoughts on the great American asset class dance. I believe that three potential scenarios exist:
Asset classes (including equities) can continue to reflate (higher prices) only if the dollar devalues.
The dollar can stabilize (or potentially rally) only if asset classes (including equities) deflate.
The dollar can devalue while asset classes simultaneously deflate.
The one scenario I simply don't see is a simultaneous lift in asset classes and the greenback. We need to print money to sustain our debt dependent engine and it appears that Boom Boom will do whatever he can to keep the consumer bellied up to the bar. Are there caveats outside our control? You betcha, Bob--with the evolving isolationism, we will continue to see anecdotal evidence of non-dollar denominated agendas. And let's be honest with ourselves--would we really be that surprised if crude or gold is one day backed by Euros, Yuan, Yen or other next-gen standards?
Other Random Thursday thoughts....
The Matador Crowd has some pep in their step as they recently triggered a triple top breakout. No, this isn't some kinky Scaramanga plot, it's the point & figure acne that alotta hedgies have focused on. Given the action in the financials, trannies, small caps and breadth--coupled with the "middle of the road stochastics" and incremental nervousness (as measured by the Investor's Intelligence)--Hoofy seemingly has a leg to lean on.
Caveats to this bullish bent? The incessant compression as the disconnect between perception (VXO) and reality (Iran, , yield curve, debt) is perhaps the largest chasm I've ever seen. Plus, it's expiration tomorrow, which means that unforeseen crosscurrents will blow the show to and fro. For my part, and as I escaped from the Hump with two legs in my metaphorical bear costume, I've set my stop at S&P 1305. What does that mean (for newbies in the 'Ville)? My "edge" from a trading standpoint will be lifted as defined risk is only as defined as the discipline invoked when the best laid plans go awry.
I had a deep discussion with my brother Lionel at last night's Succofest about the roles and motivations of our government. As I told him, it's not only our right to question our leaders--it's our responsibility. So, when we dug into the dirt surrounding the evolving corporatocracy and high level agendas, I welcomed the spirited debate. I'm not alone in my concerns--Dubya isn't exact the most popular puppy in town--and it doesn't mean I don't love my country. I am, quite honestly, somewhat uneasy regarding what to expect next. If war is good for the economy, how many Beltway leaders believe that an Iran offensive would give us an adrenaline shot?
And finally, if there's anything we can rely on, it's that March Madness will tip off at high noon and start the world's greatest sporting event. All Minyans are welcome to participate in our annual brackets as we bridge basketball and benevolence. The winner will score a personalized gift package from MVHQ and the "non-winners" will have the choice (but not the obligation) to make a donation of their choice to the Ruby Peck Foundation for Children's Education. It's a win/win, Minyans, as we continue our drive to make a difference for the kids.
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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