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Random Thoughts

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The S&P is fifteen handles away from multi-year highs? This is either a massive disconnect between perception and reality or very telling in the context of "reaction to news being more important than the news itself."

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  • I walked into work this morning, jazzed for my snazzy new top-of-the line computer system. Tech issues? Pishaw, I've got a Dell, dude, and this thing is a rocket ship. That was five hours ago and I've had nothing but trouble since.

  • While the lower dollar is likely necessary for higher asset classes, it's no guarantor of such. Still, with the DXY ticklin' decade lows, keep your eyes peeled. The rest of the world (holders of dollar-denominated assets) surely is.

  • The ABX sub-prime index is at a new record low (fitty cents on the dollar). That's likely why the financials continue to trade fugly and the BKX is sitting on the top of the all-important previously mentioned support.

  • I knew a girl named Candy Mintz once. I wonder if there's a guy named Drew Blood somewhere.

  • "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing." Chuck Prince of Citigroup.

  • I feel like the picture that Tommy DeVito's mother painted. One dog's looking at the (now triple?) top in the S&P while the other dog is watching the lower band tag in the banks. Hey, whataya want from me?

  • Home Depot is buying back a ton of stock. Anyone wanna guess who's gonna sell into that bid? I'll give you a hint, it ain't Michael Vick.

  • All this sub-prime carnage and mark-to-market concerns and the S&P is fifteen handles away from multi-year highs? This is either a massive disconnect between perception and reality or very telling in the context of "reaction to news being more important than the news itself."

  • The S&P may cut ratings on $12 billion in sub-prime mortgages, citing expectations that losses will continue, and held a conference call today to chew through their thought process. That spurred the following email from Minyan Bill, who's a sharp cookie in the space:

    I couldn't get on the subprime conference call as it was over capacity. Bond investors are freaking. The 07-1 ABX BBB- hit a new low of 51. Spread widening is occurring across all asset classes including emerging markets and corporates, not to mention leveraged loans and commercial.

    The Home Depot (HD) news today didn't help either. The downgrades by S&P was the hammer the bears have been waiting for. CDO investors can't hide behind the "mark to model" anymore because many of their bonds are about to be downgraded, which will require additional reserves and mathematically generate a lower mark.

    The combination of redemptions from nervous investors (in open ended funds), SEC investigations in these now "regulated" structured finance hedge funds, the perception in the marketplace that the eight funds that are currently in liquidation mode just in the past couple weeks will turn into many more triggering a wave of selling and today's S&P bomb creates an environment over the next few months that will almost assuredly lead to a massive revaluation of the $1 trln global structured finance market. Dancing to the tune of musical chairs indeed.

  • Jeff Cooper wrote on today's Buzz that "Wynn Resorts (WYNN) sets up as a short, ditto Las Vegas Sands (LVS)." (He has a position in WYNN).

  • Having just come from home from Viva Las Pomboy, live from the Wynn, I will offer that three random thoughts on that venue.

    • Tryst, their hot-pants nightclub, is the most profitable club in all of Vegas.

    • They spend more money on irrigation than any other hotel or casino in Vegas.

    • They're a huge Asia play as they derive a chunk of their change from the Baccarat table.


      Toddo and MacroMaven Stephanie Pomboy at the Wynn Las Vegas for her Viva Las Pomboy birthday celebration.


R.P.

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No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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