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Random Thoughts: The Henry Hill Market

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Every once in a while, everyone's gotta take a beating.

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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 Was That A Short-Term Low?, The Jedi Mind Trick and Fists and Docs!


The Fat Man Singeth!

  • Got to pay your dues if you wanna sing the blues and you know it don't come easy.

  • Who was it that said you're only as good as your last trade? Indeed.

  • The trick, quite naturally, is to have fail-safes in place such that no matter how bad your last trade is, it's not your last trade period. Ya dig?

  • I've gotta tell you, the fact that Ben Bernanke could posture towards inflation during the biggest deflationary spiral in our lifetimes is seriously undermining my confidence in, well, everything.

  • I mean--we're a humble community of like minded individuals and this has been our central theme all year long.

  • I understand his desire to avoid Japan like comparisons but the tape is entirely too fragile for denial. If wishes were knishes, I would weigh 300 lbs.

  • I wrote in my Facebook profile yesterday (into the heat of the meat) that I was warming up to the tape for a trade. Why am I now reminded of Planes, Trains and Automobiles?

  • Mother Morgan (MS) (-26%) remains front and center on our "Aw Jeez, what now?" list. Citigroup (C) (-20%) is a close second and Bank America (BAC) (Merrill (MER)) (-20%) is a close third (fourth?).

  • We're all confused, so what's to choose? You can call this tape, the United States Blues.

  • I wrote this morning that I've heard from friends and family that traditionally don't pay attention to the market warning of impending Armageddon. While I respect the potential for further slippage--you know I do given what's been written over the last six years--my sense continues to be that we're in the latter stages of the denial-migration-panic trifecta, if only for a trade.

  • Be that as it may, and respecting the process, I'll likely pare some risk should we break below yesterday's low. I'll keep some exposure, mind you, but it's imperative to exercise discipline over conviction as we find our way. The mechanics of the swing always trump the results of the at-bat.

  • As always, I hope this finds you swell. Pork chops and apple sauce. Swell.


Chatter Box - 2:38 pm

While we don't "do" rumors in the 'Ville, we can share with confidence that a weight around the neck of the financials earlier today was chatter that Mitsubishi UFJ was getting cold feet with regard to the $9 billion Morgan Stanley (MS) deal.

That's why we shared the fare that a Morgan spokesmodel--not Vanna White--came out to quell feels by saying the deal is "on track."

There's more than one fly in that sector, I know but that statement coincided with that 20 handle pop in the Spooz.


The Mess Around! - 3:13 pm


What do the markets need to hear at this point?

  • The markets need confidence, not haphazard trillion dollar decisions.

  • Ben Bernanke posturing against higher inflation during the biggest deflationary spiral of our lifetime doesn't instill confidence.

  • Psychology in the system and faith in our leaders is key.

  • I remain of the view that we'll see a coordinated global rate cut. The reaction to that effort remains an open question.


Pension plans have lost as much as $2 trillion in the past 15 months-Will Americans be looking for a 401K bailout next?

  • That's the other side of moral hazard, right? Where do you draw the line?

  • All roads lead to debt destruction. The single best thing the government could do is back deposits, reward savers and let the free market do what the free market is going to do anyway.

  • The nationalization of the banking system seems all but inevitable. It really is a matter of semantics at this point.

  • And it's a solvency issue, not a liquidity issue.

  • I'm a free market guy but we've seemingly (and unfortunately) passed the point of no return.


Stems & Seeds

  • Yesterday's low in the S&P remains an important level, both through a technical and psychological lens.

  • My sense is that yesterday was a panic high at VXO 70. Until proven otherwise, of course.

  • The question remains whether Citigroup (C) needed the Wachovia (WB) deal. This stock will remain a key tell in the days ahead.

  • Wasn't it Henry Hill that said "Every once in a while, everyone's gotta take a beating?"

  • Positioning aside, back-to-back Snappers seem hopeful at best.

  • That being said, the specter of yet another globally coordinated effort could conceivably lend a bid into the close.

  • In the "it could be worse" department, I'll be attending the Project ALS benefit tonight to support a most worthy cause. While we don't, won't and can't rationalize the tape, we'll always maintain perspective as we together find our way. It could be worse Minyans and, for many people, it already is.

  • Fare ye well into the bell and may peace be with you.


R.P.

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