Tell me about it, stud!
Good morning and welcome back to the summer slack. The Hump has arrived for another quick fling as MVHQ gets ready to sing. Our business is tough and quite stressful at times but the Minyanville crew is ready to rhyme. When the bulls and the bears stop pushin' and shovin', our humble young crew will sing Summer Lovin'! It's tradition of sorts, with a smile or two, as we balance ourselves with Hoofy and Boo.
The 'Ville is a community predicated on fiscal literacy and financial acumen but that doesn't mean we can't enjoy the ride. Just as NFL rookies are "asked" to sing their college fight song in the mess hall during training camp, everyone new to Team Minyan must put on a little show. Thus, after today's close, our inner circle will step to the stage and attempt to put Danny and Sandy to shame.
The cast includes:
- Pledge "Far" as Danny Zuko
- Mountain Girl as Sandy
- Kevin "Pepe" Depew as Kenickie
- Anisha the Quiet Storm as Rizzo
- The lovely and talented Vanessa as Frenchy.
We'll keep you updated as we edge through the Hump but-as we enjoy the journey-we've gotta lotta stuff to chew through first. The tape has been the definition of "fluxy" the last few weeks as we've slithered along a soft summer swatch. Option players are quick to note that 10-day realized volatility in the S&P is "4-ish" which is akin to Tim Duncan getting shut out for the entire second half of a game. It happens-rarely-but you can't help but think that the gentle giant will soon awake.
What's interesting, from a risk-management standpoint, is how quickly traders are embracing the notion of a "nothing summer." We've been conditioned to believe in a few things in recent years, including an ever-present bid and a very helpful hand (thanks Elmer!). It certainly could continue-bubbles, by definition, tend to exhibit elasticity-but nothing comes for free. I will simply remind ye faithful that the time to focus on risk is when the market is up and the time to focus on reward is when the tape is down. Somewhere along the line, as a function of human psychology, that process inverted.
Today's business? It's doubtful with quarter-end bearing down on us. You've read a few horror stories in hedge fund land and rest assured that there's more to come. The press for performance is on and a lack of sell-side motivation could flip the switch the other way. As (and if) the tape lifts, mutual fund managers will face their fiercest enemy (underperformance) which could conceivably create the dreaded "long squeeze." I've always hated invisible catalysts but, as psychology is one of our four primary horsemen, we must treat it with respect.
From a broader perspective, the incessant effort by our central bankers is akin to sucking the marrow out of the financial skeletal structure. An outsider looking in might opine that the patient is healthy but an internal probe offers ample cause for pause. The domestic imbalances are reason enough to fret but when you factor in the stealth isolationism, class morass, mixed signals on the global rate front and massive compression, my right hand starts drifting to my chin.
On a housekeeping note, I wanted to share the summer schedule with hopes that our paths can soon cross. The critters and I will be taking a left coast swing on July 1st and begin the spin with Jeff Macke in San Francisco. We'll be hosting a Metro Minyanfest at Perry's on Tuesday July 5th and would love to meet ye Bay Area faithful (I will buy all Raider fans their first drink). From there, I'm southbound for some lunch with Minyan Sal and the Cantor faithful in Los Angeles and a hug and a handshake with Professor Fari Hamzei. And finally, as I edge over the fortnight Hump, I'll be chuggin' to Ojai for visualization purposes in front of our upcoming Minyans in the Mountains retreat. We'll be posting a finalized agenda in the coming days and you'll soon see why I'm so very excited for the "Sundance of Finance" to finally arrive!
Good luck today Minyans and please enjoy your journey!
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