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Freaky Friday Potpourri: The Calm Before the Storm


Second Quarter Earnings Get Ready to Rock

"Ticking away the moments that make up a dull day. Fritter and waste the hours in an off hand way." - Pink Floyd

It's summertime on the island of Manhattan. The sun is shining, tank tops are in vogue and city slickers are coming out of the woodwork (making their way to job interviews).

It's almost enough to make you sit back and enjoy the journey. That's precisely what we should be doing but this pesky mess continues to serve as grains of sand in our collective mechanism.

That's the thing about what we've seen. This no longer a financial crisis and it's more than an economic one. It's now airborne…and social. Everywhere you look and most everyone you speak with have money on the brain.

Old habits die hard, I suppose, as do old debts.

As we edge into the final fifth of this freaky week and prepare for the avalanche of earnings on the other side of our requisite respite, the following vibes are top of mind:

  • California IOU's are gonna be regulated as a form of municipal debt?

  • Why can't I shake that scene from Dumb and Dumber?

  • Not to be master of the obvious but if Goldman Sachs (GS) warned that their computer code could "manipulate the market in unfair ways," what does that imply about Goldman's usage of the code in the first place?

  • I know, I know, that's sorta like bad mouthing the United States of America but please remember, it's not only our right to question the establishment, it's our responsibility.

  • Goldman (and the other banks) will likely post massive earnings next week. If they jack 'em higher in response to the report, I'll look to fade (read: make sales) as 1) earnings are rear-view and balance sheets are forward looking and 2) vols will shrink faster than George Costanza after a dip in a cold pool.

  • There is a bull case for the banks-it involves easy money, government guarantees and "old tricks" (seriously, have we learned nothing?)-so see both sides, define your risk and operate through the lens of discipline over conviction.

  • Note that when the dollar dropped to session lows yesterday, the tape legged higher. Coincidence? I think not...

  • S&P 875-955. Mr. Valentine has set the price.

  • All else (the dollar) being equal, I sense we'll see a southbound break. I would note, however, that given where we are, what I'm seeing and how I'm operating (opportunistically with a scalpel not a sword), I'm currently more bearish than short (always honest).

  • Da Vinci? Seeing both sides (have we mentioned that's important?), Minyan Mark Eckelberry notes that the DJIA held at 8808, the all-important 61.8% Fibonacci retracement.

  • East End Minyans who wanna support an awesome cause and log some vibe time with Minyan Dougie Kass and I are invited to join us on August 22nd.

  • Crank Alert! Starting next week, I'll begin my 6:00 AM kickboxing for the first time since last year's knee surgery. So if I shall I say, edgy...around 1:00 PM on Tuesday's and Thursday's, you'll know why.

  • Minyans far and wide are chiming in with anecdotal input regarding the "tuition squeeze."

  • Inflation in what we "need" indeed, not to mention little things like healthcare.

  • And then there's this...

  • Following up on the upcoming bank earnings, our peeps on the street tell us that they're not seeing shorts in the group. There's been some long selling, they say, but a minimal short base (following the 100% rally off the March lows). If traders are looking to short strength on the heels of what is widely perceived to be stellar earnings...

  • Is there anything wrong with a Summer Hummer on a slow day?

  • While big beta, by and large, traded with a bid yesterday, Apple (AAPL) was noticeably lagging. Should the bears twitch and flip the switch, Newton's law of gravity will likely kick in rather quickly. The 50-day rests below at $134ish but Boo is quick to note 1) it already broke the uptrend from the March lows and 2) the 200-day is all the way at $107.

  • More food for thought regarding the true unemployment rate hovering around 20%.

  • Some tunage. Just 'cause we care.

  • Enjoy the weekend, Minyans, for you've most certainly earned it!


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