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Random Thoughts: European Drugs and Stateside Shrugs


Investors jockey risk into the weekend.

Do you know which story jumped out and bit me on the ankle this morning? The bear hunt has survived legal challenges!

I'm not talking about the coordinated War on Capitalism, I'm talking about an actual bear hunt in New Jersey that will continue as planned despite protests from environmental groups. Hey, as a card-carrying tree hugger, I'm with them-if you want to call it a sport, give the bears a Glock!

The real news today is that Europe is planning to channel central bank loans through the IMF and deliver up to €200 billion ($270 billion) to fight the debt crisis. That's a pimple on an elephant's arse relative to the enormity of the European debt debacle but it is a step-much like Wednesday's kumbaya was a step-and that's what investors wanted to see. Now, performance anxiety is good and thick, and the tape trades that way.

There is a LOT going on-much of which was chewed through when I co-hosted Bloomberg with Matt Miller Wednesday night, available here-but the short and sweet is that the bulls retain the benefit of the doubt into year-end (most likely N's over S's) while real structural issues loom large for the foreseeable future. Between then and now, the onus is on us to capture the disconnect between perception and reality as that's where profits will be found.

Watch the first press lower for clues (financials, beta, breadth, dollar) and keep an eye on the intraday action in real-time on our Buzz & Banter (with a free trial!).

We've got our Festivus tonight to benefit The Ruby Peck Foundation for Children's Education (we've got a few spots left!) and a slew of Professors will be popping through the 'Ville all day, so we'll try to channel some of their vibes as we can. For those attending our signature soiree tonight, plan on coming hungry and staying late. For those who can't make it, any love for the kids is appreciated and no donation is too small (only if you can).

Random Thoughts:
  • I'm watching the dollar as my principal tell; while asset classes and the greenback can slack in sync, I don't foresee an environment where the dollar rallies with asset classes. In other words, if you see the greenback get its groove back, all bets are off.
  • Regarding Europe, the most likely progression, in my view, is a slimmed down version of the EU, absent Greece and a few others. I know that's not presently "legal" but that hasn't stopped policymakers before. The rules of the game have become dynamic-like playing blackjack with Nicky Santoro.
  • I offered on yesterday's Buzz that the longer we hung tight, the more likely an upside resolution became (and yes, I was aware that the S&P was already up huge this week). View this market through the lens of a portfolio manager trailing his benchmark; if you under-perform, you're out of a job and you won't be able to afford the GI Joe with the Kung-Fu grip. It's nonsensical, but perception is reality in the stock market.
  • It's a tough tape but it's not impossible. Just take care of the minutes and the hours will take care of themselves.

Tick-tock, and I hope this finds you well


Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.

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