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Monday Morning Cornerback?


I suppose the question now becomes one of acceptance vs. denial.


Good morning and welcome back to the flickering pack. A new month is here and we're ready to go as the critters prepare for a jazzy new show. While they're likely fried after a long weekend in the big city--we did, after all, host the NFL draft--they're chomping on the bit for another shot at the brass ring. Reggie Bush? Bring those smiles to the bayou. Matt Leinart? Best of luck in the dessert storm. Raider Nation? Oh my, with all due respect to Huff the Magic Dragon, how can you let Jay Cutler pass to the Denver Broncos? Why can't I shake the feeling that he'll be doing it for many more years at Mile High Stadium? Pangs of football regret? And it's only May!

Alas, I digress, as it's time to turn our attention back to the task at hand...

Friday night, before toasting the town with Television's JeffMacke and my lovely Queen, I spent a few hours noodling the current state of financial affairs. I typically leave work at my turret and use down time to be kind to myself but these are tricky times and my mind was a raging torrent, flooded with rivulets of thoughts cascading into a waterfall of creative alternatives. In particular, I was noodling the dialogue that we've shared for the last six months with regard to the state of 'flations in our great nation.

We posted a thread of thoughts in the 'Ville last week that spoke to this particular dynamic. Minyans may remember that we've been discussing the "dollar devaluation vs. asset class deflation" conundrum since well before last year's mingle in the mountains. Further, when Boom Boom was appointed to acting captain of the FOMC crew, we posited that the popular perception that he'd do "whatever it takes" to buoy the tape may indeed become a self-fulfilling prophecy. Fast forward six months and voila! The dollar has gotten thumped, asset classes have jumped and Mr. Bernanke is offering that he doesn't fear a weaker greenback. Should we really be that surprised?

I suppose the question now becomes one of acceptance vs. denial. In particular, now that we've come to accept our FOMC mandate, how long will it be before it's denied by our foreign partners? We must remember that we live in a world that is, for all intents and purposes, denominated in dollars and while many in the Midwest may not "care" that purchasing power is deteriorating, holders of anything "based" in greenbacks most certainly do. Therein lies the hidden pin to this current prickly situation and why a dollar "shock" (as opposed to, say, a gradual depreciation) has a higher probability than most are allowing for.

Forget the cracks in the sidewalk, what about the view?

The other big picture noodle that was resonated as I awaited the bald sage from San Fran was our long-defined secular winners, energy and metals. While these two complexes have been berry, berry good to me the last few years, I'm currently lighter than Kate Moss on Atkins as I watch them giggle day after day. Perhaps I should know better than to "trade" investments--as Jeff Saut likes to say, "there's no bull market like a gold bull market"--but I get nervous when I see them highlighted on the front page of the New York Times and spoken about at cocktail parties in lieu of Intel and Yahoo! Too cute? Tickle me Elmo, it just might be, but I'll be entirely more comfortable buying these pups when legitimate whiffs of change (or the perception thereof) begin to permeate.

I understand that we can't erase Katrina--Reggie Bush is good but he's not that good--and I know that tension in the Middle East is regrettably here to stay. Further, in a gentle reminder to myself, I'll again offer that energy will one day recapture the top weighting in the S&P as funds, clinging onto bellwethers of yesterday, come to understand that no such thing exists in today's investment landscape. So, in a nutshell, I'm offering that I remain entirely committed to these two groups but I wanna practice patience and accumulate exposure at lower levels (in the underlying commodities) or when opportunities arise (in individual plays).

On the other side of my trading ride, I've been playing with financial fire in the banks and brokers. As I've walked through a slew of thoughts in this regard, I'm not gonna waste your valuable time this morning. I will offer, however, that Friday's wishbone (as the brokers got hammered and the banks shrugged higher) allowed me the opportunity to further define my risk in the space. It's been a hectic coupla sessions of trading (my initial entry was poorly timed) but I've got some gamma on (leaning short with some trailing stops) and will again play the game. Just keeping ya up for those Minyans watching from home.

Home on the range....

And finally, before I flip lids and join my brethren on the Buzz, I wanna offer a quick update on our upcoming Minyans in the Mountains financial retreat. We've had an incredible response to our "Sundance of Finance" and have already locked almost half the spots at Vail Cascade (in the first week after opening our gates). If you would like to join us for a fantastic mountain mingle, we'll be offering the early-bird special through the end of May. Minyans from as far away as Australia and Sweden have already circled their S'mores and I wanna make sure that anyone who intends to attend knows the status of our quo.

Thanks kindly and good luck today!


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