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Freaky Friday Potpourri: Two Invisible Catalysts?


Mark-to-market suspension and the wiping of CDS contracts deserve your attention.


"This desperation, dislocation, separation, condemnation, revelation, in temptation, isolation, desolation, let it go." --U2

Following a stretch that felt stranger than it was-the Sleep-O-Meter has been pounding the right side of the tachometer-we power up for the final fifth of our freaky week.

I was at an off-site yesterday afternoon and returned to my turret to find intraday Snappers littering my eight screens. While the rally coincided with the plan to help homeowners, my initial instinct was that someone pushed the button on the Beltway.

I used to be called a conspiracy theorist when I wrote that. Now, it's a central policy tool. Scary sign of the times, eh?

The big picture dynamic remains decidedly daunting as we've got textbook negative churns across the mainstay indices and a marked deterioration in social mood and risk appetites.

On the flip side-there's always two sides-the sheer magnitude of stimuli will eventually lend itself to a bear market rally. Additionally, there are two potential "game changing" catalysts lurking in the midst.

The first is the suspension of mark-to-market accounting and the second is wiping out CDS contracts that aren't hedges against underlying instruments.

Neither are solutions--they're simply drugs that mask the symptoms of the disease--but we must respect that a corner and caged animal will do anything in a fight for survival.

Risk management over reward chasing as we find our way.

Random Thoughts:

  • Heartfelt gratitude to the amazing Minyanville Board of Advisors-Bill, Chris, Tom, Roger, Larry, Wenda, Len, Succ, Tom, Fish and Charlie-for the awesome effort and excellent smiles this week.

  • Community won't be defined by red states, blues states, borders or religion as much as human capital, a common belief system and inner strength.

  • S&P 800 is a level of lore and one we've been watching for some time. Should it break-remember, levels weaken with each subsequent retest-it paves the way to Pep's long-offered level S&P 783 vibe.

  • I entered Thursday with a placeholder USO call position (defined risk) and added into yesterday's oil slick. I also nibbled on a snivlet of Yahoo (YHOO), where I'm "trading around" a small core.

  • Back scratch anyone?

  • I've been buying dips to sell blips in the banks these last few weeks but entered yesterday flat to the share. Before I stepped out for an afternoon meld, I bought some financial crack (FAS) in the abyss and slapped on a $1 trailing stop. Given the end of session lift, I carry that risk into this morning's glory.

  • To be clear-and this is important-I'm not a fan of ultra-ETF's. I only use them for intraday or-at most-a few days at a time. It's the definition of playing with fire and the concerns of the Minyanville professors are well documented.

  • Take some time to chew through the Emmy Award Winning Hoofy and Boo episodes. A little levity goes a long way, now more than ever.

  • Keep BKX 25 on your radar as a level of multiple lows.

  • N's over S's yesterday as evidenced by Google (GOOG), Research in Motion (RIMM), Apple (AAPL) and the semis on one side and General Electric (GE) and the rest of the cyclicals on the other.

  • Just Because.

Some Practical Productivity!

"I have written that what makes an economy and wealth grow is productivity. Don't think of wealth as more money, as the government wants you too (because they can always just create more of that); think of it as standard of living. I have illustrated how productivity makes standard of living/wealth rise.

But notice the government's plan of fiscal stimulus directly opposes productivity. Its objective is to create as many jobs as possible. But the definition of productivity is to do as little work as possible for the most output. So the objective of creating a lot of jobs is by definition unproductive

Everyone wants jobs and it is unfortunate that the is in this state. But we are here because we have borrowed future standard of living, living beyond our means. We now have to pay it back. Creating unproductive jobs will merely forestall that process." --
Mr. Practical on Yesterday's Buzz & Banter

Answers I Really Wanna Know...

Good luck, Minyans, and let's end this week with a smile on our puss and some jingle in our jeans.


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