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Monkey Business


Who you callin' a monkey?!?


Once upon a time there was an engineer.
Drove a locomotive both far and near.
Accompanied by a monkey that would sit on a stool
Watching everything the engineer would do

(Grateful Dead)

Good morning and welcome back to the tip-toe shack. With yesterday's action thin as a reed, it's time for this rhyme to pick up some speed. We've waited in vain in this Minxy domain and didn't complain with the ticks so mundane. Now Elmer's on tap (with minutes so smug) as Hoofy and Boo both tug at the rug. Will the stagflation nation digest his new spiel or will Matador City soon let out a squeal? It's turnaround Tuesday, sit back and relax as we digest the news and uncover the facts!

A perfect storm has arrived in Minyanville as earnings, Elmer and expiration collide over the city of critters. The fundies, widely believed to be the saving grace of the bovine race, are starting to pick up in pace. While everyone knows that business conditions are decelerating, hope springs eternal as we listen for forward guidance. The poster child for the i-conomy (Apple (AAPL)) will paint the tape tomorrow before traditional powerhouses Citigroup (C) and General Electric (GE) bring some bling to life on Friday.

The monkey in the middle will play an afternoon organ grinder and that'll set the tone for today's tape. It seems absurd that so many are focused on a few choice words but the absence of excitement has a way of honing popular perception. Last month's minutes seemed to validate the existence of inflation and the hawks are now circling overhead. I doubt we'll get anything "new" although once-just once-I'd love to hear some tough love. "We've got inflation in input prices, deflation in labor markets and our efforts to reflate the economy have been futile." It won't solve our dilemma but some forthright dialogue would be very refreshing.

The last of the Easy E's is this week's expiration which should manifest in the sessions ahead. While some folks lay claim to gaming these monthly premium funerals, I've always believed that it's virtually impossible to discern an edge with the field as crowded as it is. My belief is that 1) index volatility has the potential to exacerbate during the week of expiration and 2) individual options are drawn to strikes with outsized open interest (relative to average daily volume). Please note that S&P 1200 and 1205 have some meat to their lines and IF we migrate higher, a paper chase could ensue.

Be that as it may-and it may be nothing-I enter today's tape with two legs in my metaphorical bear costume (50% conviction on the short-side). I slapped the fur on during Thursday's lift above S&P 1190 as a function of looming resistance (S&P 1200), lethargic action, defined risk and non-confirmations. I've sat tight as breadth and leadership have left a lot to be desired but I'm conscious of the itchy trigger fingers around the Street. If we get some further slippage, I'll likely look to roll down my risk-profile and lock in a few shekels.

We power up this morning pup to find Europe and Asia pretty in pink while the stateside futures sit on the brink. The Trade "Balance" was released this morning (-$61B vs. exp. -$59B) and the dollar has knee jerked higher in response. Perhaps folks were bracing for a deeper ditch although it's too early to tell if the grubby greenback will hold the mold. As it stands, the metals are hanging tough as Gold tries to push through current resistance ($430).

Good luck today.

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