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Tongue Twisters


The Fed is absolutely certain that they're uncertain. That's certainly comforting!

"'I slit the sheet, the sheet I slit, and on the slitted sheet I sit.' There. I've never been relaxed enough around anyone to say that."
--Navin R. Johnson, The Jerk

Alright, let's cut to the chase. Yesterday afternoon's FOMC minutes, which is a peek behind the Federal Reserve curtain, suggested that U.S. central bankers are, well, confused. But not just confused. They went so far as to say that there was increased uncertainty behind their decision to drop the tightening bias at their last meeting. And then-and this is the kicker-they offered that further policy firming might be necessary.

OK, we understand it's a tough nut to crack. Heck, we've been watching this Box Trot for a few years in the 'Ville. We've got inflation in things we need to power, educate and feed the world and deflation in things we want, such as plasmas, cell phones and laptops. Juxtapose that against a two-class society of "haves" and "have nots" and it's easy to understand why there is such a wide yawn between disparate points of view.

To add spice to the mix, the steady devaluation of the greenback (-30% since 2002) has been the catalyst behind the global asset class dance. That's a serious bummer to foreigners (they've made NO money holding dollar denominated assets) and it's likely the reason the Fed is attempting to placate those players. It's an intricate game of chess and the Queen is on the run.

I was having dinner last night with the lovely and talented Stephanie Pomboy from MacroMavens and offered that one of the first things I learned on the Street was to sell uncertainty. That, when in doubt, we're taught to wait it out until clarity emerges. She responded, tongue in cheek, that the uncertainty of the certainty is certainly certain. So, in that regard, we can take solace. The Fed is absolutely certain that they're uncertain. That's certainly comforting!

Marie Kimble Johnson once said that she didn't care about losing all the money, she just cared about losing all the stuff. I told her that she would be wise to carefully watch the market as we edge through earnings and towards expiration. We've been monitoring four levels of late-S&P 1450, GS 210, BKX 113.50 and HGX 118. The first two failed at resistance, the latter matters broke support (their 200-days). That's not technically healthy, nor is it particularly comforting during uncertain times when charts seem to self-fulfill.

What am I watching today? The banks and homies, again, along with breadth, the IYR (real-estate) dandruff, the retailers (reaction to same store sales), the dollar (slippy), emerging markets (they've been en fuego) and signs of rotation station (as opposed to outright migration). I do believe that there is gonna be some whippy trading in front of expiration and, as a slew of my S&P puts expire next week, I'll likely roll some of those out and remove the proverbial gun from my head.

Good luck today, Minyans, and stay away from those cans!
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