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Out House

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Trade to win Minyans!

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Good morning and welcome back to the forthright tact. With last week's infusion of minxy confusion, it's hard not to feel like we're trading illusion. Day after day throughout the stock fray, we listened to what the market would say. "There's all these events and we see what we see," said Hoofy amidst the crimson debris, "but I'm still intact and I think you'll agree that it'll take more than this for the bovine to flee!" Is the bull being brave to crave a big save or will a sloppy red wave dig his wet sandy grave? It's a new freaky week as we turn on the grill so ready yourself for a romp through the 'Ville!

We've spoken at length about the plethora of bubbles that have simultaneously inflated and the recent equity lethargy has brought that specter back into focus. Morgan economist Stephen Roach, who has steadily maintained a prognosis of pain, was quoted in a weekend rag as saying "By digging in its heels and keeping the fed funds rate negative in real terms, the Fed has now pushed America firmly into multiple bubble syndrome...this is shaping up to be a policy blunder of epic proportions."

The psychology bubble, which I consider to be at the top of the fragility list, has suddenly become quite vulnerable. There's a growing uneasiness with the current administration, an equally unsettling (unknown) alternative, frustration with the war, inconsistencies between what "is" and what "is said" (Bureau of Labor Statistics/Fed Heads) and a growing anti-American mindset (which matters to financial markets as foreigners hold a chunk of the stateside assets). The disconnect between (historic) sentiment levels and potential pin pricks has set the stage for a crisis of confidence. And if that happens, my friends, the rest of the dominos will sloppily topple.

Now before we run to Gunsandbutterville, there are a few questions we need to answer. The powers that be clearly see what is happening and they've proven quite wily in their ability to burn the fur. But intervention is a Band-Aid on a broken bone and markets will eventually find efficiency. Thus the path of the plight will dictate our fight and if we proactively identify our course, we'll be able to navigate ourselves through this most minxy muck. It's not gonna be easy, my friends, but it won't be impossible either.

We power up this funky pup to find melty overseas bourses, a Nikkei that got swiped for a finski (5%), smelty metals, a stronger greenback (prospect of higher rates) and flighty futes. I was talking tape over the weekend with a friend of mine who is a big macher in the business. He sensed that we would whoosh to Dow 10k and then bounce into a handful of "better" tech earnings. I can "see" that--pure trade--but cautioned him (and you) that the structural metric is riding roughshod over fundamentals. In other words, there's a LOT going on in this market and pinning your profitability on a single (or a few) earnings reports is dangerous at best and potentially disastrous at worst.

Good luck today.

R.P.

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