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The War of the Roses


What goes around, comes around!


Speeding arrow, sharp and narrow
What a lot of fleeting matters you have spurned
Several seasons with their treasons
Wrap the babe in scarlet covers call it your own

(Grateful Dead)

Good morning and welcome back to the cryptic shack. Hump Day is here as we shake off the jitters and ready ourselves in the city of critters. We're armed with new earnings and plenty of grist to help us make sense of the muck in our midst. "Boo and his crew had left us for dead," said Hoofy the bull as he hung by a thread, "but things seemed to firm once we heard from the Fed and beautiful sunset they promised ahead" Can the Matador crowd beat their chest loud and proud, or have they enjoyed all the green that's allowed? We'll know soon enough as we brush off our skills and ready ourselves for our jaunt through the 'Ville!

We've spent the better part of the last few weeks in a steady slippage towards the '04 trap door. The "matter of fact" slack was taken in stride for the most part and viewed universally as a necessary evil. With volatility levels near decade lows and credit spreads tighter than a drum, there seems to be a lot of smoke but no cause for alarm. "Please take your seats," Elmer seemed to be saying yesterday, "I've been jugglin' bubbles for 15 years and the current environment is par for the course."

It's one thing to roll one financial dilemma into another, continually changing the face of the race to safety. Mexico, Russia, Argentina, Brazil, Orange County, LTCM, Thai Bat,, housing...all of these "situations" have a common denominator and he wears glasses and sits on a hill. Folks rarely ask questions when the screens are green and that, as much as anything, has enabled our fabled Fed to pull the puppet strings. But what will happen when we pull back the curtain and find a scared man in shivering shoes?

I've been trading for 14 years and consider myself well versed in the language of Wall Street. When I have trouble following the circular logic of our economic chieftains, I have to believe that mainstream America is downright confused. As a result, they're left to judge policy by performance which is inherently at odds with making proactive and mindful financial decisions. That's the dilemma facing our country and why financial literacy (or, at the very least, a basic understanding of risk) will define the quality of life for generations to come.

Professor Reamer wrote a splendid column yesterday that served as a Fedability primer. I read it a few times on my way home and found myself shaking my head at what Elmer actually said. At some point over the last few years, the FOMC has adopted the Minx as a pampered pet and showered her with loving words and acts of kindness. You can rent affection, I suppose, but any longstanding relationship is based on trust. And when the bloom is off this particular rose, investors will be left with a fist full of thorns.

Good luck today.

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