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A Minyan Tale: The Perfect Storm Into Expiration


Earnings, expiration and economic headwinds converge to form the perfect storm.


"The other night he threw away his baseball cards because he said Mickey Mantle wouldn't pay our rent." --Lorenzo Anello, A Bronx Tale

Good morning and welcome back to the flickering pack. It's an incredibly nutty strut this morning as earnings, expiration and economic headwinds converge to form the perfect storm. As such, and with respect for your time, I'm gonna invoke my literary license and share fare as it goes and flows:

  • Nestled within Merrill's (MER) earnings is a statement by CEO John Thain that sums up the risk reduction mindset that is the drag on the market. "We're actively looking to reduce our balance sheet," he said, adding that he's committed to "flattening out."

  • Is it all over but the shouting? Remember, Merrill (and Citi (C) and Blackstone (BX) and Bear (BSC)...) are all off 50%--50%!--since the summer and rallies are to be expected. As scary as it sounds, the straight shot decline was likely the easy trade and, in a true bear market, nobody makes coin.

  • Minyan Peter swung by MVHQ yesterday and noted that in the fourth quarter alone, Citigroup reduced its balance sheet by roughly the total assets ($176 billion) of SunTrust. Poof! Imagine that?

  • I saw A Bronx Tale on Broadway last night and spent some time with Chazz Palminteri after the show. Talk about an old school class act. Did you know that the movie is an autobiographical look at his life? When I asked him how much of it was true, he smiled and said "About 80%."

  • Gimme my Greenback! Note that the dollar was higher in the face of what would ostensibly be a dilutive stimulus package. When I started in this business, someone told me that "markets don't lie, people do" and I've found this to be true.

  • The other thing I was discussing with Mr. Practical the other night? That if the buck trucks higher, we'll likely see a house of pain across the board in asset classes (this is a big picture, as opposed to a day-to-day, thought).

  • Remember on Monday when we noted that the drillers broken their uptrend? Sometimes a picture is worth 1000 words.

  • PSWIP! A little off the knee cap! The Hang Seng index, which some watch as a barometer for the global growth story, is down 24% over the past two and a half months.

  • Jamie Dimon, who is best in Wall Street breed, said yesterday that he is very open to acquisitions. I have no edge here, but a JP Morgan (JPM) takeout of Mother Morgan (MS) would produce a dream management one-two punch with John Mack.

Minyan Exchange

Mr. Practical,

Wouldn't the proposed $150 billion stimulus package be perceived as negative for the dollar (government bailing out)? And, if so, doesn't the fact that the dollar is higher today suggest that the market is more worried about deflation.

Upping loan limits on Fannie (FNM) and Freddie (FRE), as is rumored, is an attempt to introduce velocity of money back into marketplace. It seems like we've seen this movie before.



Yes on all. The real market understands that government stimulus will do nothing to the real economy. This is credit crunch and new debt can't get in. That is deflation, while a stimulus package is just bad for dollar. So you get both... when it happens!

Mr. P

Answers I Really Wanna Know…

  • Do you have two minutes and ten bucks to help our friends at Little Kid's Rock?

  • My Lord, HSBC (HBC) was down another deuce yesterday despite the broad based bank bounce?

  • Are you still trading Intel (INTC) for pennies (on either side of the $20 in front of Friday) instead of looking pa nub elsewhere?

  • A pimple at 38? Really?

  • The Bolts are talking trash?

  • Why am I so hooked on The Family Guy?

  • Given how thin it is out there, are you trading smaller size?

  • Have you made the distinction between the economy and the stock market yet (in terms of time horizon)?

  • What are the odds that I'll find that elusive balance anytime in the near future?



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