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Bullets Over Broadway: Dollar Holders Saying "Uncle Sam!"


...foreigners who are lugging deteriorating dollar-denominated assets are clearly reaching an "Uncle Sam!" point.


When push came to shove, the ECB held steady on interest rates as it looks to "gather additional information and examine new data." On the one hand, it's got the U.S housing (cough) slump and the rising Euro. On the other, it's still worried about inflation and is "ready to counter upside risks to price stability."

That sounds a lot like the dilemma Bennie & the Feds were in over the summer before they sang "If you can't win with the rules you have, baby, change the rules your with (change the rules you with)." Again, no salt or sour grapes here-we're just pawns in their game-but as the coordinated agenda pulled hedge funds into the Central Bank Country Club, you gotta wonder if everyone's playing on an even field.

Vietnam is planning to cut its purchases of U.S. Treasuries and other dollar denominated U.S. bonds while Qatar said it will cut dollar holdings of its $50 bln sovereign wealth fund. Vietnam? Qatar? Yeah, and? The reason we bring this up is the reason the dollar remains one of our five fourth quarter themes. We may not care (or, should I say, we may not understand why we should care) but foreigners who are lugging deteriorating dollar-denominated assets are clearly reaching an "Uncle Sam!" point.

Random Thoughts

  • The caveats of going to the gym at the crack of dawn? When you're boxing with your trainer and he tells you "right, left, right, duck, right, kick" and, as your mind drifts to the marketplace, you forget to duck. I've now got a noice black and blue on the side of my neck that three people already assumed is a hickey. Dude-I don't "do" hickey's - that's so 1980's!

  • Research in Motion (RIMM) reports tonight and the implied volatilities are pricing in a $15 move in either direction. To fat for me, said Todd, but there are some names out there with relatively cheap option vols. They include DNA, AMD, ABT, WMT, BAX, AMR, CMCSA, NBR, HUM and CAT.

  • Other fat vols? KBH, BSC, NEM, RYL, CTX, EXPE, BZH, PHM, BVF, WFC and Tennessee Jed. (Thank you Minyan Darol for the winkage on these).

  • Did you know that 85% of Intel (INTC) sales now come from overseas?

  • Hong Kong was down a deuce (2%) on the heaviest volume ever. Want a little perspective on the Hang Seng? This slop can drop another 26% before it even tickles its 200-day. That's the thing with parabolic frolics-once they're in the atmosphere, technical levels fades as contextual framework.

  • While we don't "do" rumors in the 'Ville, Barclays' (BCS) is trading 3% higher on chatter that Bank America (BAC) is gonna make a bid. MBNA… Countrywide (CFC)… Barclay's? I have no insight whether there's truth to this but if there is, BofA will become a one-stop shop as a credit/mortgage/derivative play!

  • Good luck Minyans-think positive as it begins within!


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