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Monday Morning Point Guard: Bulls Run and Gun


Bovines were victorious last week, will bears now take a stand?


Good morning and welcome back to the full court attack. Following a weekend when Memphis and Kansas rose to the occasion and earned a spot in tonight's epic battle, Hoofy's Heroes are trying to do the same in today's game. With last week's winning streak in their back pocket, they most certainly have the momentum as we fire up for a fresh five-session set.

The ursine defense is predicated on the biggest non-farm payroll decline in five years. Further to that, the size of the rise in the unemployment rate, from 4.8% to 5.1%, never occurred in post-war history without the economy being in the throws of a recession. That was the press on Friday and to be fair to the bovine, they handled it with the grit of a veteran squad.

In a normalized marketplace, the combination of massive fiscal and monetary stimuli-not to mention monstrous Federal intervention-would be more than enough to shift the benefit of the doubt from "A" bottom to "THE" bottom. The trillion-dollar question, quite naturally and most literally, is whether or not we're living in normal times.

The bulls will correctly argue that stocks rally when recessions are at their midpoint. The bears are quick to note that the S&P has declined 32% during the ten post-war recessions and our latest lethargy measured 19% from the October highs to the March sighs. They'll further caution that given the magnitude of debt and the underpinnings of derivatives, assuming we're only in a recession may be a large leap of faith.

I remain of the view that this is the most significant period in the history of financial markets and by the time our grandkids study our actions, they will do so with a sense of nostalgia. It's up to us to decide the particulars of that perspective and, through our actions, the relative standing of our lineage in the grand scheme of tomorrow's dreams.

Random Thoughts

  • On Friday's late day Buzz, I sniffed out some smoke in Washington Mutual (WM). Whether or not that was gonna be a fire is inconsequential as the bank secured $5 billion in financing over the weekend.

  • It's worth noting that this deal-much like Lehman's (LEH) offering last week-while necessary and positively received, is dilutive and deflationary. It's a process, not a point, so let it register as the new paradigm slowly forms.

  • Be that as it may, the Monday Merger Mania is shaping sentiment this morning with WaMu's Killer Sale, Yahoo (YHOO) (saying it's not opposed to a higher Microsoft (MSFT) offer) and Novartis (NVS) buying a 25% stake in Nestle's Alcon (ACL) eye-care unit for $11 billion.

  • Remember Minyans, we still have room to run until 1) massive resistance at S&P 1405 and DJIA 12,800 and 2) within the context of a well established series of lower highs across virtually every major index and sector.

  • Friday night, while celebrating Television's JeffMacke's birthday (which is today, by the way), we were enjoying a post dinner drink when Red Red Wine came on. "UB40?" I asked as we bellied up to the bar. "No, dude, I'm 39!" he answered, somewhat surly.

  • I did a series of interviews last week on the banks, tech, the role of government in big business, commodities and the next few months for Yahoo Finance. Click here if you've got an interest in checking 'em out!

  • Yowzers and Wowzers! While we were sleeping over the weekend, Minyanland-our kid's gaming community focused on teaching children earning, spending, saving and giving-blew past 50,000 registrations.

  • The rally (into resistance and on the heels of the Bear Scare) was, with the benefit of hindsight, the easy trade. With earnings season looming-and pre-announcements likely-the reaction to news will speak volumes regarding the next leg of our journey.

  • Keep your eyes open, your right hand up and thoughts positive as we get ready for another tip-off. Run and gun, baby, run and gun.


No positions in stocks mentioned.
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