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Monday Morning Quarterback


Just tradin', and doing so with discipline on my mind and alotta dry powder in my pocket.


The Macro Set-up

Beeks released lower than expected job growth on Friday, which seems to support a rate hike pause in our "data dependent" world. Bonds cheered, stocks sneered and the dollar jeered as fed fund futes effectively set a 40% probability that Boom Boom will zoom for the seventeenth straight time. While alotta folks are looking for the light at the end of the tunnel, I opined on Friday's Buzz that the enticing light tick may indeed be an oncoming train. Inflation in things we need? Deflation in things we want? A finance based economy held hostage by the foreign holders of our debt? We may be soon screaming in Uncle Sam!

The two sides of the upcoming trade have gotten a bit louder of late. Over in Matador City, Hoofy & Co. are pointing a similar set-up in 1995, when the end of the rate hike cycle triggered a 30% run through the roses. As Minyan Michael Santoli noted in this week's Barron's, which is a must-read for any market maven, it helps to recall that during that span ten years ago, "10-year yields collapsed from 8% to 5.5% as the Fed turned tail and began easing." Different tape, different set-up and a much different mindset. Indeed, with debt levels where they are and multitudes of credit stretched consumers dependent on home equity, the margin for error is thinner than Kate Moss on Atkins.

My take is relatively consistent as the script plays out. We will see one of three scenarios unfold: a lower dollar and higher asset classes, a higher greenback and lower asset classes or lower currency and lower asset classes. So, from my perch, 66% of the scenarios include lower prices, although this could take years to unfold. And yes, I believe that the powers that be would like to see the dollar devalue, the stealth bear that it is, but others around the world aren't equally sanguine. As the world's reserve currency, can you really blame them? That, as much as anything, is why I believe that the debasement game is in the early innings.

This Minyan's Set-up

Into the blink-and-ya missed it pop early Friday, I made a round of sales as we approached NDX 1635 and S&P 1300. I didn't go nuts, mind you, I simply repositioned some risk around my core thesis that energy and metals are relative winners vs. tech and financials. In that vein, I entered today's fray with a spate of the former (Weatherford, Golden Star, Goldcorp, Pan American)--which I'll pare into liftage--and nibbled anew on some IBM puts (is that dandruff in Big Blue?) along with some further autumn paper in the piggy complex. Just tradin', and doing so with discipline on my mind and alotta dry powder in my pocket.

Si Saws and Metal laws

Speaking of the metal complex, the Peruvians have spoken and Alan Garcia has been elected as the new Prez down south. That's a sigh of relief for the Nationalization crowd although, as Adam Michael recently noted, some black lung might still linger, pop. Be that as it may, he was clearly the lesser of two hoarding evils and we may see some reactive traction in the XAU today. That, along with (all-star guitar signee) Jim Roger's rosy assessment in Barron's that the commodity boom has another eight to 14 years of life, will surely put some jitter in the bug's early step.

Housekeeping, Minyan Style

  • In the most revisionist history since the Florida recount, I have chosen to veto the Minyan poll on Billy Meehan's nickname. In lieu of Bud, which has all the personality of a tin can, young Bill's Delta Tau Chi Minyan name shall hereto forth be Curly.

  • Only two months remain until Minyans in the Mountains III hits the hills of Vail, Colorado. Many an Ojai reveler has already relocked their spot for the mountain trot as they know we put our heart and soul into this fantastic fete. A handful of rooms remain but they'll likely get tight as we hit the road and make our way through the Midwest. If you're on the fence--and I know alotta you are--please take the time to chew this through. We want to take care of "our own" before we sell out ala 2005.

  • The new phonebooks may be coming but the New & Improved Buzz is all the talk at MVHQ. Buzz 2.0 is gonna put our current puppy to shame as we've dutifully listened to ye faithful and incorporated many a snazzy function. I'm not allowed to discuss when it'll hit the Street but it's very soon and I'm equally excited. Thank you all for your continued support of Minyanville and let's put some jingle in our jeans to start the week!


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position in wft, gss, gg, paas, ibm, financials
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