Freaky Friday Potpourri
Money has a way of making people do things they wouldn't otherwise do, particularly when they're getting paid to play.
You can hide `neath your covers and study your pain
Make crosses from your lovers throw roses in the rain
Waste your summer praying in vain
For a savior to rise from these streets
Good morning and welcome back to the quarter-end track. There's a lot going on so let's dive right in as traders get set for the final June spin.
There are three crosscurrents battling for mindshare this morning--one past, one present and one future.
Yesterday, the FOMC stepped on stage and, as expected, did little to offer clarity. They seemingly want to lower rates to spur growth and keep the easy money balls in the air, particularly given the steady stream of structural smoke. But alas they can't, as foreign holders of US debt would be none too pleased.
So we sit. And wait. And hope.
Speaking of which, today is the last day of the second quarter-our annual Hump, if you will-and alotta fund managers are nervously watching the clock. At the heart of the matter is the question of perspective, particularly as it pertains to the marking of securities. Get us through today, many of them are invariably thinking, and we'll have another three months to quietly unwind.
Looking forward, the obvious question is where do we go from here? It's been my opinion-and continues to be my vibe-that we'll see more shoes drop, with periods of relative calm in between. That's the inevitable progression of the multi-year compression. Risk is cumulative and while it can hide, it likely won't be wished away.
"In a credit-fueled boom, the worst punishment is tighter lending standards and less money in motion." Pepe Depew in yesterday's always excellent "5 Things ."
The financials continue to be the key read and the piggies are still poking at the first of many resistance levels.
Speaking of which, lest you think the US has gotta monopoly on double tops, take a peak at China, which has quietly slipped 7% this month.
Inflation in things we need. Deflation in things we want.
O-Dog! See this chart of the homies, circa 2002-present. A picture speaks 1000 words.
By "caliber," of course, I refer to both the size of their gun barrels and the low quality of their sub-prime holdings. Two meanings… caliber... it's a homonym. Forget it.
Be wary of gamesmanship today and be careful not to get caught (either way). Money has a way of making people do things they wouldn't otherwise do, particularly when they're getting paid to play.
Good luck today and just remember- you're a Melon!
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