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Random Thoughts: Straddling the Great Divide


Which banks will be around when all is said and done?


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 The Great Expression and Victim or the Crime?

Gate Sniffage! - 10:20 am

  • The standout handouts in the opening? Goldman (GS) (which was off 6%) and Morgan (MS) (8% out of the gate). Both have since begun a rally attempt (stay tuned) but the action was worthy of a nose scrunch nonetheless.

  • I bought some Goldman into that supply and promptly slapped a $1 trailing stop on it. It rallied a bit before my stop was elected and the position flattened. Hit it to quit it? Yeah, something like that.

  • It would be wonderful if we could say "well that's just Wall Street" but in a finance-based global economy tied together with hundreds of trillions of dollars in derivatives, those pebbles have profound implications for the pond.

  • I would venture to guess that we'll have to see a hard press lower at a point. Much like the big picture, the sooner we go through it, the quicker we'll get through it.

  • Sunday's are sacred. They can take away our freedom, but they'll never take our fooooooootbaaaaaaall!

  • I had an mental image--who me?--of the Fed, Treasury and Congress standing in a circle pointing at each other. Indeed, Senate Majority Leader Harry Reid said yesterday "no one knows what to do." Inspires confidence, eh?

  • What do you get when you put an A.D.D. moth in a light bulb factory? Moi.

  • I was brought in this business to believe that four primary metrics--structural, psychology, technical, fundamental--shaped markets. While I hope to one day return to that stylistic approach, what we have now is a giant game of chicken, with structural imbalances on one side and intervention on the other.

  • Red beans in the green seas? Amgen (AMGN), Visa (V), the homebuilders, storage (EMC Corp. (EMC), NetApp (NTAP)), Boeing (BA) and Continental (CAL) (doh!).

  • If I knew the way, I would take you home...

Bob Sinclair has nothing on this tape... - 11:08 am

  • World, Hold On!

  • I was early on the comeuppance and I'll be early on the recovery.

  • Be that as it may, a new world order will emerge like a phoenix from scorched earth and Minyanville will be the heartbeat of it. Either that, or they can pry this musket from my cold, dead fingers.

  • I have friends who work at brokerages and they're (understandably) staring at each and every tick of their company's stock. Some of them are taking exposure off the table, to which I'll say with genuine empathy "may your first sale be your worst sale."

  • Minyan Peter, in highlighting Warren Buffett's acquisition of Constellation Energy (CEG), hits on an incredibly important point. The greatest opportunities are born from the biggest obstacles and there will be many more instances like this as we edge forward through this process of price discovery.

  • An esteemed colleague of mine just pinged to say the market needs to hold here or it'll crash. I quickly offered the other side of the trade, that we need to see a pressy mess IF the market is to rally. See both sides, Minyans, even if both are murky.

  • We spoke yesterday about "the great divide" that is underway in the financial industry. While I don't know which side Citigroup (C) will land, I'm gaining confidence that Wells Fargo (WFC) will be a strong survivor. That doesn't mean it can't decline, it simply suggests it'll be standing when the dust settles.

  • As we sip from the fire hose of a coordinated global liquidity spigot, I will humbly remind ye faithful that commodities aren't a safe-haven in a deflationary environment. That certainly doesn't mean the won't work for a trade (see yesterday) but if all roads lead to deflation, it's something to file in the back of your crowded keppe.

  • As always, I hope this finds you well.


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