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Random Thoughts: Welcome to the Grand Illusion


Yesterday's rally came as a surprise to many.

Editor's Note: The following was posted in real time on our premium Buzz & Banter. It's being shared here for the benefit of the Minyanville community. See also Where We Are and Where We're Going.

So how YOU doin'?

I take one day away from the fray to observe the holiday and what shot does Hoofy up and pull? Only one of the biggest one day rallies in recent memory. Man, you can't turn it off for a second, eh? As that was then and this is now, it's incumbent on us to keep fresh tabs on where we are and where we're going.

We mused on Friday -- in the midst of the hopeful bailout bid--that the path of maximum frustration could well include a straight down drop that trapped those looking to sell into the Monday run. That script, in my mind, included S&P 1080 and/or VXO 70. The tape ended the session at S&P 1108 and VXO 55.

If I were strapped into my turret for Turnaround Tuesday, I woulda thunk a probe lower might satisfy those targets but alas I wasn't and it didn't. Trick or treat--starve or eat!--as agendas played through into quarter-end.

With October upon us, there is a LOT competing for mindshare. So, without further adieu...

  • The obvious item on everyone's radar is Bailout Part Deux: Return of the Berries. I don't have an edge in handicapping that race although we have, as you know, chewed through the implications.

  • And yes, we mentioned General Electric (GE) in that assimilation. The stock, as it stands, is off 7% despite the fact that it's "off limits" to shorts.

  • As a free-market guy, I don't want to see a massive plan that passes the bar tab to the tax-payer and their children. I've long said that time and price are the only true solutions for what ails us and the sooner we go through this, the quicker we'll get through it.

  • As a derivative trader with 17 years experience, however, I understand the profound implications if no accord is reached. I only hope that it is transparent, equitable and accountable, holding those with culpability responsible for repaying their debts to society.

  • Perhaps it's a derivative of the Ireland Mandate? The Minyan professors pondered this yesterday with plenty of pros and cons to go around.

  • For my part, I'll offer that an effort that punishes those who have transgressed--from over-extended consumer to institutions responsible for financial engineering to policy makers complicit in allowing this to happen--while protecting (rewarding) the savers (savings deposits)... would be the fairest possible solution.

  • And yes, the FBI Investigation should explore the entire food chain, right up to the CEO of the USA.

  • The short sale ban is set to expire tomorrow. Yeah, pull this leg and it plays jingle bells!

  • What is "mark-to-market" and FASB and why does it matter to you? We spoke about this in November, offering a series of articles exploring the implications.

  • And yes, included in that package was the notion that if forced to move Level III assets back to their balance sheet, many brokerages would be technically insolvent. It was a pretty "far out" thought back then. Not so much anymore.

  • The AP is reporting that AT&T (T) couldn't sell any short-term debt (commercial paper) for any period longer than overnight. If the world's largest telecommunications company can't move credit, you know the market is frozen.

  • Societal acrimony continues to build. You can smell it in the air. You can hear it in the street. You can see it in the faces of those around you. As someone who prides himself on taking the high road, I find myself having increasingly often inner-dialogs to calm down and breathe deep. Now, more than ever, I will ask you to do the same.

  • Man, talk about fat fingers--whoever entered those erroneous orders in Google (GOOG) yesterday is gonna have alotta 'splaining to do.

  • While yesterday was all about observance, my Judaic Habeas Corpus was temporarily suspended for a 7:00 AM segment with my friend Alexis. In the midst of the crisis, I wanted to offer some clarity in the confusion. I'm unsure if I did but I'm sure I did my best.

  • And just like that, a fresh Bell has arrived. We'll chew through the dew in real-time, as always, and find our way together. Good luck Minyans.


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