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Random Thoughts: Bubble? What Bubble?

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China ordered banks to set aside more money for reserves to cool speculation in stocks and, on cue, Shanghai and Hong Kong rallied...

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  • The action in the financials will be the key determinent in the "Whew, I'm Saved" vs. "Ugh, That's Moral Hazard" debate.

  • While I would expect the former sentiment to win the short-term war, the latter matter has multi-generational consequences.

  • Those very same piggies--along with the high beta quartet (Google (GOOG), Research in Motion (RIMM), Apple (AAPL) and Baidu.com (BIDU)) are the out-of-the-gate loss leaders while the "other side of the dollar" plays (commodity plays, including energy and metals) are the winners du jour.

  • While higher crude should further strain the consumer, a serious spill in the space will likely be more ominous for equity investors (asset class deflation vs. dollar devaluation).

  • BIDU $300 remains a psychological proxy, if and when (expiration pin anyone?)

  • For quite some time (since 2002 through a broader lens, August for those with A.D.D.), the Fed has engineered financial ascent (at the expense of the dollar). It sorta makes you wonder whether the bears that "saw it" are silly for not playing it.

  • We can't help posit whether they'll again feel silly for not playing the udder way.

  • When will that tide turn? When sentiment shifts and the chasm between perception and reality closes. Few, if any, will capture that cusp but it behooves us all to understand that it's there. Somewhere, out there…

  • S&P 1555ish is the near-term technical toggle into this week's expiration. Hoofy is using it as a bovine backstop while Boo is looking to press the mess below.

  • China ordered banks to set aside more money for reserves (the 8th time this year) to cool speculation in stocks and, on cue, Shanghai jumped a deuce (2%) and Hong Kong rallied 4%.

  • Bubble? What bubble?

  • PetroChina (PTR) is over-taking General Electric's (GE) market cap while China Life Insurance (LFC) is worth $100 billion more than American International Group (AIG). No, really.

  • Remember, the last leg of a mania is always the most vicious. It's also the biggest "DOH!" with the benefit of hindsight.

  • I saw Michael Clayton yesterday--the movie, not the man--and thought it was the best movie I've seen in some time.

  • "Good article from Bloomberg on the heels of my wondering out-loud on Friday about the Other Side of the Dollar Slide. We find ourselves a little more interesting than we may be in U.S. anymore, and I was simply sharing that the weakening dollar has a sister story – the currencies soaring against it, and the implications. My firm is working on trades accordingly." Professor Ryan Krueger on today's Buzz.

  • Remember, expiration influences will exacerbate volatility in the sessions prior to the actual paper funerals. It's that whole "negative gamma" thang.

  • BKX 111.50 has worked like a Red Dye charm. Please "see" that the piggies just poked below their 50-day as well.

  • Answers I Really Wanna Know...


    • What does it say that Taiwan isn't lifting in the face of the proposed "peace agreement" with China?

    • Do you see the smack dabbage in the homies?

    • Was a rally to HGX 185 "too easy" to fade?

    • If there is, in fact, a "bail out," doesn't it make sense that "they" will defend the psychology surrounding the introduction of it?

    • Free Markets?

    • Free Willy?

    • Do you see the semis trying to turn the upside corner in the context of "N's over S's"?

    • October Expiration, already?

    • Have Wildcats Billy Meehan and Pepe Depew come back to earth following Kentucky's massive upset of top-seeded LSU?

    • Has anyone seen Scout and Hoofy in the same room at the same time?

    • Don't you just love the Mondays?


R.P.

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