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Monday Morning Luau


If we've learned anything throughout our time with the tape, it's that news is always best at the top and worst at the bottom.


"Get busy living or get busy dying"
--Andy Dufresne

Good morning and welcome back from the aloha pack. It's been a full week since I've scribed my vibe as I took a much needed respite to refresh and recharge. The travels took this Minyan to Maui to soak in some sun, connect with my pops and reflect on one of the most interesting junctures in financial history.

While vacations are the very definition of 'working to live,' I couldn't help keeping some attention veered towards the real world. Between the markets and the mergers, this is indeed a unique time to be in business. Yes, there's a slew of stuff to chew through as we edge back on track and, with that, I'll hop right in.

The markets are in the midst of a massive run that conjures up images of periods past. What started as an unlikely bounce in the face of formidable foes picked up in pace when our levels were mounted and gained steam as earnings trumped largely reduced expectations.

We can muse about the DNA of this rally (cost cutting, currency skews or financing operations gains on the fundamental front or dollar devaluation on the structural side) but the bottom line is, well, the bottom line. The action has since fed on itself and manifested with performance anxiety from macro funds to mom and pop and seemingly everyone in between.

When S&P 1450 was taken out last month, we noted that S&P 1530-1550 was the first tangible resistance. That remains in play although, as with any technical level, we understand that it's but one of our four primary metrics. In other words, it's purely contextual, a framework if you will, a backdrop with which to craft and shape a risk profile.

As I've been out of pocket for a week, it'll likely take me a few days to shake the jet lag and recalibrate my feel. With that in mind, I offer these somewhat random thoughts as we ready for a fresh week of flickering ticks.

  • From a tactical standpoint, the News Corp bid for Dow Jones makes tremendous sense. With Fox Business getting ready to take flight, this marriage would immediately catapult it into the pole position, both online and on the tube (yes, those mediums will soon be one and the same). This isn't a judgment on price or the potential for editorial spin-it's a nod to the synergies and strategy inherent therein.

  • Both the Thomson-Reuters and Microsoft-Yahoo discussions were equally intriguing as heretofore powerhouses eye massive economies of scale (the former in the realm of the sophisticated financial content and the latter within digital media space). Both make sense from where I sit and both as the race to capture the ever-changing consumer continues.

  • While these mega-deals bode well for further boom, anecdotal evidence isn't as supportive of continued jig. In particular, I'm seeing alotta things that historically occur closer to a top than a bottom. Yes, the markets can stay irrational longer than Boo can stay solvent but when stocks jump 10% after mere media mentions, it would serve us in good stead to remember lessons learned the last time that happened.

To be sure, grindy lifts and sector rotation (as opposed to outright migration) are hallmarks of a healthy tape. And the headlines aren't hurting, as the Oracle of Omaha himself is said to be pulling out his mega-shopping list. For my part, as I edge back towards a feel, I continue to watch the dollar as the "valve" (the greenback must slink lower if the asset class dance is to continue) and define my risk on both sides of my ride.

For if we've learned anything throughout our time with the tape, it's that news is always best at the top and worst at the bottom.

Good luck today.

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