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Freaky Friday Potpourri: Microsoft Gets Yahoo Serious


Will this proposed megamerger help the psychological metric?


Sometimes you feel like a nut. Sometimes you don't.

Trading is a funny game. There are times when you feel you're missing the boat and others when you see the seams on the ball. Yesterday, despite leaning relatively long, I grinded out marginal gains and, under the "know thyself" rule, pared overage exposure while adding some financial puts for balance.

One name I didn't touch was Yahoo (YHOO), a stock I've been playing from the long side for the last month. I've long believed that in a digital "input-output" world, the company's eyeballs were valuable assets. I said into this week's earnings-and again after I doubled down on the other side of the 10% haircut-it'll monetize its audience or someone else will.

It's better to be lucky than smart and I'm careful not to confuse the two. Indeed, this deal has been bandied about for a few years and got louder of late. And when we picked up the scent a few weeks ago, I shared with ye faithful that I believed Microsoft (MSFT) would pull the trigger.

If there is extra sweetener involved, it's the "worthless" February calls that were all but buried. Those, along with my March 20 calls, will be held for sale today. And consistent with our preferred modus operandi, we'll toss the ball back to the mound and jog to the dugout with a stoic look on our face.

There ain't no victory laps. Not in this tape. Not on my watch.

Random Thoughts

  • Hit me again Ike, and this time put some STANK on it! Do you really think it's a coincidence that Steve Ballmer lobbed this news into the marketplace the morning after Google (GOOG) earnings? The battle lines are drawn and the stakes have just been raised.

  • On my signal, unleash hell! Speaking of lines in the sand, guess where this pre-market M&A jig has taken us? Das right, near S&P 1405, which we've been eyeing for quite some time.

  • Sigh… that was, of course, until Beeks screwed up one of the easier fade opportunities in recent memory with this morning's payroll data.

  • While the latest lift saved the tape from it's worst start in history, it was still a tough year, er, month. That doesn't bode well for those who subscribe to the January effect.

  • Fed Fund Futures are pricing in a 57% chance of another 50 bip snip at the March 18th meeting. Big Ben has used more than half his bullets and we all know where the last one will point.

  • Into yesterday's bell, I scooped a snivlet of Citigroup (C) and Bear Stearns (BSC) puts, which were my first grabs on the back of the FGIC news. I was more of a hedge than a spec but I'll likely add to that side of my ledger given the pop into resistance.

  • I've said it before and I'll say it again. Lay off Britney. She's a sick woman and deserves more empathy than acrimony. As someone who has experience in the matter, I'll offer that mental illness is the most misunderstood ailment in society.

  • You can learn a lot just by watching. I continue to hold Elan (ELN) and Schering Plough (SGP) on the pharma side, having paired Merck (MRK) as part of my risk reduction program into yesterday's bell. I wanted to trim exposure and I simply wasn't digging how it was trading.

  • Please note that there's a massive binary event for Elan this summer and part of my play is a rally into that. I'm quite aware that this stock is about to fill a long-held gap so I'm factoring that into my process as well.

  • Is a rock a stone or is a stone a rock? Seriously?

  • Will this proposed megamerger help the psychological metric? Absolutely. Will it trump the structural metric? Not indefinitely. That's the thing with cumulative imbalances. They're cumulative.

  • Fare ye well and hit 'em hard, Minyans, we're almost there!



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Position in yhoo, c, bsc, eln, sgp
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