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At The Crux of the Crossroads

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What is clear is that central banks around the world will use all means necessary to stave off recession.

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Look at that! No, that! Did you see that? Hey, what about that?!

That sorta sums up my morning as I juggle positions, content, emails, IMs and efforts (Minyanland and The Exchange are coming up quick!).

On top of that, the Fed has up and changed the rules again! I'll tell ya, between the coordinated agendas, discount window collateral changes, invisible hands, superfund conduits, sub-prime bailout plans and now, the biggest act of international economic cooperation since the 9/11 terrorist attacks, you can't help but wonder what the heck it sees that the markets, 5% off their highs, have yet to price in?

That debate will continue to rage but, for the Magellans in our midst, we're left to navigate this funky fray. What is clear is that central banks around the world will use all means necessary to stave off recession, which is weird considering that I paid good money to learn that the business cycle is a natural and healthy evolution. Again, a conversation for another day.

As for the here and now, I'm spying 2:1 positive internals, strong "stuff," a curiously firm dollar and several high profile flies, including Bank America (BAC), Citigroup (C), Fannie (FNM), Freddie (FRE), Wal-Mart (WMT) and Boeing (BA). I would also draw your attention to the VXO, which is off 5% at 23, and note that "long volatility" is probability the best bet in the house right now.

Hoofy deserves the benefit of the doubt, I suppose, if for no other reason than if he loses his footing, the wheels will quickly wobble off the year-end wagon. It's sad to say but I'll wager a hefty sum that there are a handful of folks sitting on the Beltway with fingers lingering above a button, conscious of the exact same thing.

Still, and so it's said, I sold my "I can't believe I took those home" S&P calls on the opening and nibbled on a snivlet of puts in financials that had defined risk set-ups (like HBC). I'm not trading as aggressively as I otherwise might because, well, I'm quite honestly having a hard time keeping up.

Hey, it could be worse, right?

R.P.

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Position in HBC.
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