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Random Thoughts: A Tale of Two Tapes


2:15 EST will serve as the toggle of this two-sided tape so position risk accordingly.

  • FOMC days are notoriously a tale of two tapes with 2:15 EST serving as the toggle so position risk accordingly.

  • What will they do? Fed Fund Futures are predicting a 72.9% probability of 25 bips, 16.6% probability of no change and 10.5% odds on a fitty bip snip. SO... we're not going out on a limb offering that 25 bips is conventional wisdom. More or less could spook the tape.

  • Why is this juncture so darn important? Look at the double top, followed by the lower high in the S&P. That's called "defined risk and a discernable catalyst" in Red Dye and they're banking on that backstop into year-end.

  • Meanwhile, Hoofy continues to charge ahead! We've long offered that the elasticity of debt and the velocity of money are the key cogs in a finance-based economy. And it keeps going and going and going…

  • Yesterday, crude was off 4% and the S&P was down. Today, crude is up 3% and the S&P is up. I know, old hat---but when we talk about "asset class deflation vs. dollar devaluation," along with the potential caveats of a grabby greenback, you can see why.

  • Why is self-loathing a common characteristic of the class over-achiever?

  • Deutsche Bank (DB) is trading higher on the heels of earnings. A sniff under the lid finds that tax credits and asset sales increased earnings by 31%, masking over €2,160,000,000 in write-downs and trading losses.

  • Lotsa Minyans are getting jacked for the December 7th Festivus and I can't blame 'em. Seeing old friends is always good for the soul!

  • When Morgan Stanley sent me to UCLA and North Carolina to recruit, I met with the brightest of the bright. My first question was always the same: "What weighs more, a ton of feathers or a ton of bricks." If the young bucks began to rationalize through the lens of quantum physics, I sorta figured they weren't for us. Book brains are good. Street smarts are great. Personality? Gravy, especially if you're gonna sit with them for 15 hours at a clip.

  • You can observe a lot just by watching. Keep half an eye peeled to the semicaps as they're pink in the face of green seas. Lotsa chatter in trading circles about capex cuts (reduction in capital expenditures) from Taiwan Semi (TSM) and United Micro (UMC).

  • You wanna hear the definition of "out of shape?" I got my butt kicked by my kick-boxing trainer this morning... and he wasn't fighting back.

  • Do you think the FOMC is looking at inflation (in things we need such as energy, education and food)? Maybe, but it's likely a passing glance. Their stated task at hand is the easing of unforeseen credit pressures and they're motivated, be it fiscal or monetary policy.

  • And if that doesn't work? Superfunds, invisible hands and voo-doo seem to be viable alternatives.

  • There's a big story on Citigroup (C) and the "SIV" in the C-section of today's Wall Street Journal discussing whether the participants should account for the funds on their balance sheet. Minyan Peter, Professor Succo, Pep and others have been ALL OVER this dynamic step-by-step, discussing the implications of "showing" these securities at face value.

  • So, will this process be "above board" or will they stealthly slide under the radar? We only need to look at Fannie Mae (FNM), which still hasn't stated earnings (crazy, right?), to find the answer to that question.

  • Too big to fail? Uh, yeah... you can say that again.

  • Too big to fail? (Sorry)

  • Fare ye well into the dwell.


Holiday Festivus is here! Come join us and support the Ruby Peck Foundation For Children's Education at an old-fashioned Southern-style hoe-down in the heart of New York City on December 7th. Click the image below to learn more!

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