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Red-Eye Randoms: Yesterday's Fed and What's Happening Now


Was this the "all clear" for year-end cheer?


So, what did I miss? After a short stretch away from the fray, which included a sunset San Diego wedding and a slew of SoCal Minyan melds, I return to my turret to find green screens and Matador scenes.

We know the raison d'être-the 50 bip clip by the FOMC mother ship yesterday-and now the only answer we really wanna know is:

Was this the "all clear" for year-end cheer?

As I'm shaking off an all night flight (with a travel snafu to boot), I'm chewing through a slew of information, charts, emails, inputs and insights as I attempt to tie it all together. As such, and with literary license in tow, I offer the following Random Thoughts:

  • Late last week, I scribed a vibe regarding the cracks in the dollar and what it might mean. The takeaway was that it could continue to be "asset class positive" (as it has since 2002) until foreigners finally balk at the decaying paper that denominates their holdings.

  • One of the reasons I covered up into "risk reduction mode" (aside from the fact that blind risk is a pet peeve) was the multiple data points I picked up last Wednesday that alotta hedges (protection) were being slapped on in size.

  • As I chew through my morning ritual, my better sell-side guys tell me that they saw "panic unwinds" of those hedges into yesterday's close ($12 billion in S&P futes traded in the first three minutes after the FOMC announcement). While one data point does not a market make, I view this as an incremental negative.

  • What's the most defined risk for a banged up Boo looking pa nub? I would say BKX 111.50, which is coming up quick as a level of shtick. See it Minyans, for as goes the piggies, so goes the tape.

  • The chatter I'm picking up early this morning smacks of performance anxiety (and yes, I'm talking market-I slept on the plane!). Sell hope and buy despair? Would anyone be that surprised if August expiration put in the near-term low and September expiration tagged the year-end high?

  • Stagflation is a word we often use in the 'Ville to describe inflation in things we need (to feed, educate and power the world) and deflation in things we want (plasmas, cell phones, lap tops). I believe yesterday's but will serve to solidify this dynamic, albeit slowly, in the mindset of the masses.

  • It's better to be lucky (disciplined?) than smart as, after selling my October puts, I wanted to leg into year-end downside paper. My overarching game plan remains the same, however, and I'll likely use this morning's pop to edge into that strategic positioning.

  • Particularly with volatility getting crushed. I believe this is a fantastic opportunity to rebuild some gamma into year-end. I may be wrong-this is one man's humble opinion-but it's how I'm gonna approach my risk.

  • Yesterday, Lehman "made" its numbers and this morning, Morgan Stanley missed 'em (the first such time under John Mack). Having traded these names for 17 years, I will again offer that they'll trade on what will be rather than what was. Keep that in mind, particularly as we await Granddaddy Goldman tomorrow.

  • Is anyone else very excited for the upcoming MV Kids initiative? That was one of our "all day off-sites" on the left coast and I'm as excited for this launch as I've ever been for anything Minyan!

  • The definition of frustration? Less than two hours after the FOMC cut, R.H. Donnelley Corp. announced plans to sell $650 million in junk bonds to refinance older debt and raise new funds.

  • Hey Marley, remember us? Don't forget that the Redemption Songs remain in play through the end of this month. They're not on many radars anymore (screens are green) but they're most certainly circulating among select managers.

  • And last but not least! Please circle Friday, December 7th in NYC for the Minyanville "Circle of Trust" Holiday Festivus to benefit the Ruby Peck Foundation for Children's Education. Consistent with MV Events, this soiree is gonna be a humdinga!

Good luck Minyans---let's hit 'em hard today!


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