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Randoms: Sniffing out the Hump Day Script


Making trades into the back end of the week.

  • The first thought I had this morning-other than "what the heck is that wet, hairy thing on my nose?"-was that we could see a hard downside press followed by a sharp upside move.

  • Alotta bulls were "stopped out" on the trade below S&P 800 and that was a necessary evil (through the lens of maximum frustration) if Hoofy is to get his groove on.

  • Oh, and that "thing" was my cat Phoebe's tongue, letting me know she was hungry as she does each morning at 6:00 AM. Dirty birdy, what did you think it was?

  • The new phone books are here, the new phone books are here! Well, they're not really phone books... they're the individually inscribed Emmy Awards that we won in December. I know it's not that big of a deal but it does offer a sense of validation given the path we've together traveled.

  • Hey now, you're an all-star, get your game on, probe now! Following an outsized move, the tape typically tests the same direction the following morning. We saw that out of the gate and as strange as it sounds, it's an incremental positive (getting it out of the way).

  • What did I do? You mean, after I wiped my nose? I sold half of my Target (TGT) calls into the opening pop, nibbled on some Dryships (DRYS) with a $3-handle (hey, it's a call option), bought some SSO calls (into the S&P 783 level we've been watching) and nibbled ever-so-slightly on some more Mother Morgan (MS) ($20 must be recaptured).

  • Net/net? I sold the opening and bought the dip for a trade. Sometimes right, sometimes wrong, always honest and, now more than ever, operating through the lens of "risk management over reward chasing" lest I'm wrong in my assessment.

  • Keep Eastern Europe on your radar, as per Minyan Peter's and Professor Zucchi's excellent insights this morning.

  • It's nice to see Hoofy and Boo make a cameo in the Chinese rags.

  • I'm officially addicted to Arrested Development.

  • Alan Greenspan, in an interview with the FT, offered that the US government may need to nationalize some banks on a temporary basis to fix the financial system. Old School Minyans know we were very, uh, suspect of Elmer, er, Alan when he was the chef that was brewing this mix. His new stance is ironic is a sad, full circle sorta way.

  • As long as we're talking banks, why not toss General Motors (GM), Ford (F), Chrysler, General Electric (GE) and the airlines in the mix? I mean, if we're gonna socialize, you might as well cut to the core, right? Hit the tilt button, start over and begin to build a stable foundation on a solid footing.

  • Is it piggy to wait for Research in Motion (RIMM) $40?

  • Sitting with some Minyan Professors last night, we used the imagery that the current financial crisis is akin to a tornado. I suppose the perceived upside window that I've been vibing (and wrong/early on) is akin to the eye but make no mistake, the other side of the storm awaits.

  • Remember when we had that debate with television types trying to convince them that lower crude wouldn't be equity positive but rather endemic of slowing global growth? Is it safe to say that we can now put that discussion to rest?

    Click to enlarge

  • Come on ride the train! We're taking applications for the Minyanville Underground Railroad, a global grid of Minyans who wanna affect positive change and wear that badge with honor. If you have an interest in being a Minyan Ambassador--being the Minyan "point" in your region--please let us know!

Minyan Mailbag


Given the approach of the November highs in the USD (referencing the CME index), I've managed to confuse myself into the dynamics driving the surge. I've fully subscribed to your "asset class deflation vs. dollar devaluation" thesis over the past few years. But is the dollar surge more a function of increased risk aversion via "margin calls" and increases in time preferences, or risk aversion via expectations for relative performance of US assets and abilities when compared to the other global offerings?

In other words, is the rise in the dollar a function of international participants retiring USD-denominated debt (meaning they have to buy USD) as they unwind leveraged positions, or participants simply taking a view on the relative strength of the economy in this global storm?

Much thanks in advance,

Minyan Mitchell


A lower dollar is no guarantor of an asset class lift but it is likely a necessary precursor of one.

There are several reasons assigned for the upside greenback rhyme-best house in a bad (global) neighborhood, retirement of debt, hoarding of cash-but, despite spending a lot of brain juice on this, have yet to figure out which side of the "asset class deflation vs. dollar devaluation" is the catalyst and which is a reaction to the catalyst.

I continue to believe that one day, we'll walk in to find a seismic shift in the currency markets where the dollar is down, say, 30% and asset classes gap demonstrably higher. The trick to this trade, as with most other things, is timing. In other words, does that happen at S&P 800? S&P 600? S&P 500? I'm not smart enough to know and, as such, have yet to "defensively" positioned my cash in asset classes.

Intuitively, it "fits" with the path of maximum frustration as it will punish savers and those who finally capitulated from the stock market after taking their lumps. I've toyed with the notion of moving assets overseas but if push came to shove, there's no guarantee I would be able to access those funds.

Not being 'dire,' just trying to peer around the corner and see all sides. This too shall pass. Our goal, as Minyans, is to be there when it does.

Hope this helps,


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Positions in TGT, SSO, MS, DRYS
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