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Free Association

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Good morning and welcome back to the Friday snack. It's been a tough stretch for the flickering ticks as the critters prepare to take their last licks. We started the week with the bulls in control but Boo found his stride as he hit Thursday's hole. "It's been a long time since we saw some supply," he said as he sped through the town of Red Dye, "with everyone jacked on the back of July, nobody thought Hoofy could be denied." Will the bear stare continue to knock the Minx down or can Beeks spark a snazzy stock turnaound? It's freaky, it's Friday, it's ready for the thrill so kick off your shoes as we romp through the 'Ville!

As we're all a tad tired, I'm gonna shake up the mojo as we ready for our requisite two-day respite:

  • Last night at Succofest, John and I discussed our long-held view that the finance-based, rate-dependent, historically stimulated stock market has morphed the collective psychology into believing that we're in a legitimate economic expansion.

  • As long as the screens are green, there is precious little motivation to focus on the ramifications of debt-induced demand.

  • Do payrolls "matter?" While there's been debate of late regarding how impactful Mr. Beeks is, an aggregate assimilation of the economy is the ultimate focus. In that regard, and as consumers are already up to their eyes in obligations, Hoofy needs to see further proof that income trends are improving.

  • As Minyan Sal Morreale noted yesterday, we're seeing a slew of supply via IPO's. The esteemed Trim Tabs has followed that flava by noting: "An Explosion of New Offerings Probably Triggered Yesterday's Sell-Off. $3.1 Billion in New Shares Sold on Wednesday and Thursday, and Another $3.3 Billion is Scheduled for Sale on Friday. Dealogic Says Another $6 Billion Currently Scheduled For Next Week."

  • Please keep the retailers on your radar as they'll serve as a proxy for the debt-laden consumer.

  • Denial, Migration and Panic remain the three phases of a trading move. As it stands, either the bulls are in denial or they've simply paused in the midst of a broader migration.

  • As you know, I slipped two legs into my bear costume on Tuesday (50% conviction on the short-side) after the initial morning lift. Yesterday, as I weighed the risk/reward of a potentially binary event, I chose to stay in the fur and maintain a tight stop above.

  • While ripe for a corrective roil, energy continues on its journey to become the top weighting in the S&P. That's been a constant vibe in my scribe, along with the view that energy and metals are the techs and financials of tomorrow.

  • Last but not least, we're starting to sharpen our focus on the upcoming Sundance of Finance. In 13 days, Minyans from around the world will migrate to the mountains for our annual Festivus. MVHQ will broadcast "Live from Ojai" starting August 15th and the content proposition will shift slightly from what you've come to expect. Rest assured, with the impressive collection of human capital nestled in that nook, we'll have some exciting vibes to share.

Good luck today!



R.P.

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