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Trading in the FOMC Wake

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Fed talks hawkish, what do you do?

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It's times like this that I wish I had more hands. Or more fingers. Or more... something.

Top-line vibes on the heels of the FOMC:

  • What do you get when you cross a hawk and a dove? A freaky looking critter that can't catch worms and hates black magic hats.

  • The FOMC tried to commingle the two. One single question remains: How long will the market view this as "the best of both worlds" rather than "we're stuck in a tough spot."

  • The lead headline "downside growth risks have diminished somewhat" was hawkish on the margin. More hawkish than I would have thought.

  • Foreign fingerprints anyone?

  • I've aggressively sold the meat of my financials into today's lift. I'm still long some Wachovia (WB) and JP Morgan (JPM) but I've paired that against American Express (AXP).

  • Note the absence of Citigroup (C). I'm gonza in that name as it's seemingly the most toxic.

  • In a vacuum, the language is crude negative. Unfortunately, crude doesn't trade in a vacuum. Life would be much easier if it did.

  • Either way and anyway, I scooped some USO puts for schnitz and giggles before my eyes finished reading that initial headline.

  • First move, higher. First move, false move?

  • It's thinner than Kate Moss on Atkins out there. Size yourself accordingly.

  • Posh Spice? Quarter-end beckons, which adds a pinch of peppa to an already spicy tape. Factor that in at some level as unforeseen crosscurrents await.

  • Watch the dollar--the FX markets are less emotional than equities. My sense is that the language was dollar positive on the margin. Alas, that may not fully bake in until tomorrow as most Europeans are already bellying up at the pub. Cheers, Mate!


R.P.

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Positions in USO, WB, JPM, AXP
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