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Monday Morning Quarterback


Don't shoot the messenger...


Speeding arrow, sharp and narrow,
What a lot of fleeting matters you have spurned.
Several seasons with their treasons,
Wrap the babe in scarlet colors, call it your own.

(Grateful Dead)

The way we were....

Good morning and welcome back to the flickering flack. After a skippy round trip to acne and back, the Minx starts the week at the start of the track. Despite five year highs rides in a slew of mainstay indices (and all-time highs in standout sectors such as the brokers, trannies and small caps that were accompanied, of course, by the requisite media championing) stocks took it on the chin Friday as traders sold the "robust" economic news and assimilated the fresh stress from the Beltway.

Was that the pop & drop that we've been wary of? Is this the Goepfert two-step that he so astutely offered to Minyans last Tuesday? After all, as he mentioned on the Buzz Friday (and as Barron's quoted over the weekend), Friday's freak was the first time ever that the Minx notched a new yearly high the same day it logged 4:1...or even 3:1...negative breadth. That about face flickered the ticks back to S&P 1295 on the button which, as you know, is where the face of the base smiled in the first place (as past resistance and current support).

When the dust settled after a freaky five session set, the major averages closed flat for the week as rates tickled four year highs and the ten year touched 5%. Professor
Bennet Sedacca has been "all over" the back-up in rates and continues to offer some of the best bond commentary on the Street. They remain a focus, as do rate sensitive issues such as the banks, brokers and utilities, which are now at the lowest levels since last November. And be aware, Minyans, we've now witnessed 776 trading days without a 10% correction. If we don't spill--and spill hard--by Thursday, this will be the third longest streak since 1965, before many current risk managers were even a martini in their mom's eye.

Tis the season and for good reason...

(AA) will officially kick-off the Q2 brew with their earnings this evening. Given the macro landscape--the rate hikage, geopolitical risk, concerns in the Oval Office, higher input (commodity) prices and a spate of other "it won't matter till it does" scenarios--the Matador Crowd is betting on (hoping for?) strong first quarter earnings and, perhaps more importantly, upbeat guidance for the remainder of the year. I've spoken to alotta smart bulls of late and the conventional wisdom is that the market is "cheap" on a historical basis and liquidity abounds on an absolute basis. Both may be right, of course, so we must remember that a strong first half remains nestled within our probability spectrum.

The other side of that ride, of course, is that multiple contractions remain a distinct possibility (excess breeds excess) and that the carry trade may be carried out against our wishes. With foreigners assuming an ever-increasing role in our policy decisions and a stealth yet ever-present isolationism evolving, we must remember that we're a single cog in the global wheel of capitalism. I remain of the view that asset class reflation must come with a price tag of dollar devaluation and, as foreigners own a ton of our debt, they can't be happy with that trade. I expect a dollar debasing event this year or next that triggers a domino reaction (exacerbated by derivatives) to unnerve the delicate balance of global capitalism. And please don't shoot the messenger.

And now, a word from our sponsors...

For all you hitters and shooters getting ready to slap on exposure, please remember that this is a holiday shortened week that will get thin and thinner as we edge towards a (very) good Friday. With Passover on tap Wednesday and Thursday, expect alotta players to sneak out and log some time on the family front. For my part, I'm gonna be away from the fray Wednesday and Thursday as I join my clan in Baltimore for some well deserved quiet time. There was a time in my career that I would actually feel guilty for this but, alas, I've come to realize that times like these are precisely why we work so hard in the first place.

With regard to the upcoming Minyans in the Mountains III in Vail, Colorado (Aug 10-13), we'll be putting the final touches on registration site and should open the gates in a matter of days. Our Sundance of Finance promises to be the best fete yet as we host the very best in human capital for panels, presentations, seminars, softball, golf, spa services, fly fishing, hiking, biking and, of course, our world famous ranch parties with live music. With dedicated Minyans such as Jeff Saut, Micahel Santoli, Steve Shobin, Tom DeMark, Todd Deutsch, John Roque, Quin Mallette, David Slaine and our all-star roster of Minyanville Professors, this is one event you're not gonna wanna miss. Again, we'll have more dets in the days ahead so please stay tuned.

Good luck today.


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