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Sunny Bono


The Fed, not being sure which side of the box would crumple first, wants the latitude to act when tangible validation manifests.


Is it getting better?
Or do you feel the same?
Will it make it easier on you now?
You got someone to blame?

So there we have it, the great market debate, circa 2007. We've long discussed the tug-o-war in the marketplace, with Hoofy on one side, pulling towards inflation (foreign holders of US debt cheering him on) and Boo on the other, tugging towards deflation (and his lone fan, the US dollar, looking for redemption). In the middle, we've got Ben Bernanke pulled like a rubber band, trying to balance both camps with a performance that would make Nadia Comaneci blush with pride.

I opined on yesterday's Buzz, heading into the announcement, that a hawkish (higher rate) tone would be sold and dovish vernacular would lead to an initial pop. As such, I leaned a little short into the announcement, lest the former didn't afford me the opportunity to sneak in some cheap puts. Naturally, the highlighted headline was the removal of the tightening bias, which led to one of the sharper pops in recent memory.

I counted to 100 and, conscious that the first move (post FOMC) is typically the false move, I nibbled anew on downside paper with the S&P up 14. In hindsight, it makes intuitive sense that the Fed would wanna be balanced between the two camps. On the one hand, we've got inflation in things we need (energy, healthcare, education) and foreigners that are growing increasingly impatient with the melty US dollar. On the other, we've got structural (sub-prime) issues and slowing global growth. Both are risks, both are real and both are readily apparent.

The Fed, not being sure which side of the box would crumple first, wants the latitude to act when tangible validation manifests.

Unfortunately for moi, the timing of my trades cost me some snazzy out-performance in a handful of longs, including SunMicro and Goldenstar. It happens to the best of us and while I could rationalize or justify, that would be of little benefit to any of us. We often say in this space that good traders know how to make money and great traders know how to take a loss. While I don't claim to be the latter, I've learned that discipline will always trump conviction when it comes to the land of flickering ticks.

I enter today's session with a two-sided book, still leaning a tad short but less so than I was in the meat of my Rocky Horror Rally Show. With the VXO having filled the aforementioned gap (-13% yesterday), I don't mind owning downside paper in my portfolio. I'll trade around that bias for the time being, following my tells and adjusting my pad based on what I'm seeing. We'll pick up this discussion over on the Buzz as thy opening bell prepares to toll.

Good luck Minyans-let's hit this Thursday hard!

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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

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