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Random Thoughts: Save and a Rate Cut


It seems the Fed is running out of bullets.


Editor's Note: The following was posted in real time on our premium Buzz & Banter. It's being shared here for the benefit of the Minyanville community. See also The Road Less Traveled.

So thar ya have it, the global coordinated rate cut. I was admittedly looking for 100 bips to shock the monkey but I suppose there's logic in keeping a snivlet of gun powder dry. After all, we know what happens when the Fed gets down to their last bullet.

When I awoke this morning at 5:00 AM, the world was dancing with a banana in their pants (what a beating!). It felt like the end of the world as we know it (again) and I got the sense something big was coming down the pike. I was underwhelmed by the fitty point snip (Fed Fund Futes were pricing in 75 bips and continue to price in another 25) but we'll see how this latest ad hoc treatment manifests. My sense, so it's said, is that they'll eventually have to pull that other fitty from the cupboard, leaving it bare.

A coupla quick thoughts. First, I'm amazed at how the media is trotting out the "guns and butter" crowd after the global meltdown. Minyans know we've long been in the camp of "capital preservation, debt reduction and financial intelligence" and yes, I foresee a long hard road ahead. For those who have proactively prepared, however, there are opportunities to take the other side of emotional disconnects.

I flipped my lid into Monday's 800 point mess and caught a nice lift off the lows before getting swept up in yesterday's Crimson Tide. I was wrong--or early, depending on how this plays out--but I won't post-rationalize my missteps. If the only difference between a mistake and a lesson is the ability to learn from it, I share my fare for our collective benefit.

If there wasn't risk, it would be called winning--not trading.

To be sure, we're not out of the woods. There are no silver bullets or magic potions for what ails the market, only debt destruction as an ultimate destination. What I'm attempting to do is not for everyone, dancing between the elephants and trying to make money along the path. I spoke about that this morning so I won't waste your precious time on the Buzz.

What I will offer isn't a particularly popular topic but it's a necessary conversation. Minyan Peter and I have had numerous discussions behind the scenes about the nationalization of the banking system. It's not what one would "want"--nor is it something that is guaranteed to work--but it's a matter of semantics at this point. The only way to regain global credibility is for culpability to satiate the system. I'm a free market guy, as you know, but all bets were off when they imposed Martial Law a few weeks ago.

One step at a time, Minyans, as we tune into the world's wackiest reality show. Some Random Thoughts:

  • You make choices in life and your experience is a sum total of those decisions.

  • When did this mess start? On the back of the tech bubble. That's why it's so nosty--you can't mess with Mother Nature (or business cycles).

  • "I keep reading how the governments want to "make a return" on their investments. They still don't get it. At this point it's not about making a return. It's about saving economic growth. Last time I checked firefighters didn't ask for a bonus every time they go into a burning building." --Minyan Peter

  • Oh no, it's back.

  • Trading is like a diet. You can slip, but you mustn't fall.

  • IF (big if) they can hold in and around S&P 1000, the "successful retest" chorus will get loud. That seems a bit "pat" but I remember having the same thought at S&P 775 way back when.

  • Again, not picking bottoms, just picking spots. Carefully.

  • The first thing I thought of when the pre-market futes were (were) screaming on the rate cut (other than "I wish I could fade this")? Oil was flat and that screamed "sellers" to me. Sure nuff, it's now off a deuce.

  • Radar Love? Watch Citigroup (C) (as the government 'circle' may have been erased), Bank (BAC) (the secondary was priced at $22--watch that level), Apple (AAPL) (psychological tech proxy, with resistance $26 higher), energy (Weatherford (WFT) and Transocean (RIG) are my plays and I plan to add lower), and your mood. Please watch your mood.

  • "The human race has one really effective weapon, and that is laughter." --Mark Twain.

  • Indeed it is. History doesn't always repeat but it often rhymes.

  • Finally, two housekeeping items.

    • Festivus looms large and space is starting to tighten. Last year was awesome and this year promises to be just what the doctor ordered. Please lock your spot for the charity trot if you're so inclined.

    • I've got an important midday out-of-office meld today (you know it's important if I'm going in this environment). The 'Ville is about to take one giant step forward and I need to have my fingerprints on this one.

  • Good luck Minyans--be the ball!


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