By Todd Harrison May 17, 2004 8:37 am
I never liked those girls!
Bobbie sue, whoa, whoa, she slipped away
Billy joe caught up to her the very next day
They got the money, hey you know they got away
They headed down south and they're still running today
(Steve Miller Band)
Good morning and welcome back to the crimson shack. Last week's action was a critter distraction that failed to offer prolonged satisfaction. When the dust settled down on our humble lil' town, it was Sammy the snake who was sportin' the crown. This morning, however, when we got out of bed, the equity markets were all draped in red. Can Snapper emerge and put a stop to this purge or will we slink down the brink and slowly submerge? It's a new week of freak so step over this spill and let's take a look at what's up in the 'Ville!
There's alotta moving parts this morning but I would like to begin with the Barron's cover story of our ol' pal Fannie Mae (FNM:NYSE). Fanny, as she's known in social circles, is Carrie's best friend and partner in crime (they're both Clueless American Princesses). The scathing article read as a deja vu to our bear Boo as he's been worried about the mortgage giant for quite some time. While there is a perverse logic that says "it's old news by the time it hits the front page," there were some takeaways that I wanted to reinforce.
I find it interesting that in a world of special interest groups and Washington lobbying, Dubya is making a point to distance himself from the very same company that spins itself as the enabler of the American dream. Ditto for the OFHEO, which has not only woken up but has evidently done so on the wrong side of bed. Toss a GAAP slap and a FASB loophole into the mix and, well, the pain from Raines may be a lot to explain. This is NOT offered as advice--we don't do that in Minyanville--but I fear that this will serve as a real-time educational lesson in the pitfalls of a domino bubble.
Away from that fray, we saw overnight margin selling in Asia and that has CARRIED over to the European bourses. The assassination of the interim Iraqi President, continued upward pressure on crude, a de-facto crash in the Indian market and explosions at UK banks in Turkey are all weighing on an already fragile global psyche (this information was available on the Buzz at 6:30 am) . Last Wednesday's lows--which were a backstop for alotta bulls--are now being tested by the pre-market futures and IF (big if) they fail, the Matador City crowd will have lost their nearest-term catalyst.
I'll circle back in a bit but I wanted to quickly remind you of the importance of identifying a time horizon before stepping onto the crowded field. For my part, I'm taking my trading cuts via shorter-term exposure (stick and move) while trying to augment my "core" positions as a function of price. For instance, I've been debating the merits of silver as I want to own it longer term (rather than the dollar) but fear the wrath of Carrie (on all stimulus inflated asset classes). Thus, I've accumulated about half of a "full" position (under $6) and will leave room should the metal swoon. Again, not advice--just sharing my process with hopes it adds to yours.
Again, there's lots going on this morning--including very frustrating systems problems--so lemme hop and slip through the slop. Pay attention to our levels, understand the perverse nature of the front page follies (FNM and crude, which was the lead story in the Sunday New York Times with a quote "tight supply won't ease soon"), define your risk whenever possible and above all else, Minyans, think positive--it all starts with you.
Good luck today.
position in fnm, silver
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