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The Golden Road to Unlimited Devotion


Can it be that someone is caught the wrong way and the sharks are circling?


Indians scattered on dawn's highway bleeding
Ghosts crowd the young child's fragile eggshell mind

(The Doors)

Good morning and welcome back to the sweltering shack. The mercury's rising and it's not alone as it tries to become a commodity clone. You can't blame the shimmering silver for feeling frisky--virtually anything with tangible supply and demand has been chugging off the charts. Metals? The XAU is up 71% since we left our Ojai fest, including a 60% spurt in silver since February. Crude? Texas Tea has two-stepped 20% in the last month as geopolitical concerns commingle with anticipated Asian demand. In fact, since the CRB held multi-year trendline support last month, the commodity index hasn't looked back on its way to a buff 12% lift.

We've discussed the dynamic often on these pages and you know my humble thoughts. Boom Boom and the Feds are stuck in a sticky situation. They can flip the switch on the printing press and buoy all boats at the expense of the dollar, which is 27% off its 2002 highs and 3% lower in the last month. Or they can take their foot off the gas and let nature take its course, which would no doubt deflate asset classes en masse. One thing is clear--they can't have their cake and eat it too. Not on Passover, and not thereafter.

But something else is afoot at the Circle K, a vibe that started resonating in my crowded keppe yesterday. I discussed it with John at last night's abbreviated "we'll do it right tomorrow night" Succofest and found that he shared the same sense. I've been watching markets for 16 years and while I've got no "inside information," the action in the metals--and silver in particular--reeks of forced buying. I've gotta believe that this parabolic frolic has left blood on the streets and, in a derivative-laden financial fabric, we must be conscious of a potential hemorrhage. This intuition has nothing to do with the underlying instrument--I continue to think that metals are long-term secular winners--it's all about the tone, tenor and nuances nestled in the way it trades.

Can it be that someone is caught the wrong way and the sharks are circling? We linked an article yesterday (dated April 8th) that talked about a potential crisis in the form of a hedge fund collapse. Given the multitude of funds out there--somewhere to the tune of 9000 at last count--it certainly wouldn't be a shocker. Alotta risk managers weren't around when Thai Bhatt become a household name or Russian Rubles were everyday news. LTCM? Alotta newbies would simply say "Buy two-fitty and lemme know how it trades coming out." Yeah, Succ and I both agree that the dichotomy between perception and reality is historic. The question, of course, is whether--or, when--the chasm closes.

There's clearly a lot going on---from earnings to to the Beltway blues--and we're noodlin' it all over on the Buzz. Before I hop the fence and join my brethren, I wanna make sure you saw that the gates to Vail are officially open. Minyans in the Mountains III will feature the best and brightest human capital I know, all in the context of a laid back mountain vibe. Take a peek at the speakers. Eyeball the agenda. Circle some activities. And don't forget your marshmallows! We've got a limited amount of rooms available and, as we sold out last year's fete, interested Minyans should lock their spot for the mountain trot!

Good luck today.


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