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Tuesday Morning Quarterback: When Push Comes to Shove!


As social mood darkens, try and see the bright side of things.


"I put it to you, Greg! Isn't this an indictment of our entire American society? Well, you can do what you want to us, but we're not going to sit here and listen to you bad-mouth the United States of America! Gentlemen!" --Otter, Animal House

I've been writing almost ten years-and trading twice that-and I've seen a lot over that stretch. There were five bubbles (tech, housing, commodities, China, debt), corporate malfeasance, conspiracy theories proved true, terrorist attacks that hit close to home, powerful societal shifts and money made and lost.

Never, in my experience, have I felt anything close to what's currently occurring.

Social mood is darkening on a daily basis and it's weighing on all segments of society. From out-of-work friends to once powerful masters of the universe to those who spend their lives helping others, nobody is immune from the gloom. Indeed, if society is a sum of the parts, one could argue we've already entered depression.

It would be a mistake to dismiss the socioeconomic mindset. Social mood and risk appetites shape financial markets, not the other way around (the Crash of '29 didn't cause The Great Depression, it was quite the opposite). Indeed, we're a reflection of the company we keep and good company is increasingly harder to come by.

When we talk about being part of the solution, there are several adaptations of that dynamic. There's financial acumen, which we share daily and spread through the efforts of ye faithful. There's philanthropy for those fortunate enough to be in a position to give back. And there are individual actions and words, which have profound ripples in the pond of life.

I too feel the weight of the world but remind myself often that it could be worse. There isn't a day that passes that I don't take a moment of gratitude for something I'm thankful for. Some days it's a roof over my head, other times it's talking to an old friend and still others, it is as simple as the purr of a cat.

Maybe I'm on a tangent and you don't know what I'm talking about. Quite honestly, I hope so. But if my antennae have proved anything through the years, it's that they're often early but typically accurate. As the "prolonged period socioeconomic malaise" evolves, please remember to be good to others and better to yourself.

At the end of the day, our chances of thriving and surviving are greatly enhanced if we stick together as a community.

Some Random Thoughts:

  • In the interest of thought provocation-and consistent with the 'Ville's mission of being part of the solution-I share Minyan Bill's assessment of Bill Seidman's "brief nationalization" bank plan.

  • The continued sideways churn by mainstream markets (working off the oversold condition as a function of time rather than price) remains the single biggest negative (other than the global implosion of confidence, of course).

  • The widespread belief that nothing the government does will spark a sharp rally-as a function of the global implosion of confidence-is perhaps the single greatest positive.

  • S&P 800 looms large. If broken, should beeline the tape to Pep's S&P 783 target. From there, we'll see if that's a false breakdown (should S&P 800 be recaptured) or a precursor to our perceived 2009 nadir (S&P 600) as communicated in January.

  • Consistent with my stylistic approach of late, I pared my overnight risk Friday afternoon (as discussed in real-time on the Buzz & Banter). I enter today pounding my glove and looking for opportunities through the lens of "risk management over reward chasing."

  • Two small positions-Yahoo (YHOO) and the USO-continue to be placeholders on my pad.

  • Always early! In November, we offered that when General Motors (GM) and Ford (F) were finally fitted for toe tags, it might be time to buy the market for a trade. I bring this up as the "looming automaker bankruptcy" is front-page news in this morning's Wall Street Journal.

  • We've communicated chatter in the marketplace that continues to steadily accumulate gold. I continue to pick that up from sources I consider reliable.

  • "While debt is front and center as the issue at hand, credit of a different breed -- credibility -- has emerged as the issue at hand for markets at large. If and when investors begin to perceive that central banks are no longer larger than the markets - and this, in my opinion, is simply a matter of time - a crisis in confidence will ensue." --The Credit Card, August 22, 2007.

  • "It would be nice... if catalysts were driving trading activity in the markets. Unfortunately, there is only one catalyst these days, trust and its continued deterioration." --BTIG Strategist Mike O'Rourke, last week.

  • Lest you think this crisis hasn't gone global, Dubai is now experiencing its fair share of pain.

  • Remember when we first noodled moral hazard? That discussion is worth revisiting given those who did the right thing are being asked to bail out those that lost their way.

  • Mea culpa for not recognizing in real-time on Friday that the upside crude move was a mechanical function of "front month futures". The "curve" (out months) was largely unchanged and I should have spotted that before writing on it.

  • Thanks for the smile, Minyan Harvey. A little levity goes a long way!


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Positions in YHOO, USO
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