Buzz Bits: Dow, Nasdaq Settle in the Green
Your daily Buzz & Banter highlights.
Engine Room, More Scream! - Todd Harrison - 3:30 PM
Does anyone else envision the masters of the universe furiously pushing the "Buy it Now!" button? I do, and while the day is far from over, that war is far from won. The glaring tell, all session, has been the financials, which have struggled from the opening gun. Interestingly, these are the names that would seemingly benefit the most from the invisible liquidity.
I'll be honest--as cautious as I am--as aware as I am of the structural imbalances--I didn't think they would let the tape reverse. This is one battle, I understand, but given the fragile psychology, this very well be the most important close of 2007. And it's one that likely won't go down without a fight.
I've been quick, on the way in and on the way out (my ex called me a bad lover--I asked her how she could tell in thirty seconds?). That included selling calls on the opening and it also means paring shorts into this. Discipline over conviction, now more than ever, and there's no shame in going home flat.
Indeed, given how "right" being short seemed on yesterday's close, how wrong it was this morning, and how right it's been since...sticking and moving is an M.O I don't mind employing as we find our way through the murky fray.
Jugglin' struggles here... lemme hop. As always, I hope this finds you well.
CRB All-Time High - Lance Lewis - 2:56 PM
Note that the equal-weighted CRB (CCI) is making another new all-time high today. But don't worry. There's no inflation. Per yesterday's FOMC statement, the Fed is on the job and "will continue to monitor inflation developments carefully" while it eases.
Click here to enlarge.
So the Fed has now told us for three straight meetings that it is watching inflation closely and yet at the same time the Fed has cut Fed Funds by 100 bps even as commodity prices continue to make new all-time highs? Hello? This is almost becoming a joke.
Today's special liquidity measures from the Fed (that had nothing to do with yesterday's negative response in the stock market according to the Fed... wink, wink...) should again make it beyond obvious where all of this is headed: We're on an express elevator to the stagflation basement. Spewing more confetti into the system won't solve the financial or economic problems that we have, but it will create more inflation and further weaken the dollar, which is exactly what we continue to see since the Fed began to rush to the rescue back in August. Got gold?
Position in Gold, Gold Shares
Crude Oil Going Strong - Adam Michael - 2:20 PM
Another strong close on crude today. Looks like my call for a false breakdown last week is coming to fruition. Another trader pinged me yesterday asking what I though of Boone Pickens comments yesterday that oil will reach $100 in the next 6 months...my response was that we may see it by New Years.
Each rally in crude seems to be a little steeper, so don't be surprised if we go vertical. I wrote a column on Monday that outlines some of the longer term secular themes that are bullish for crude oil and will repeat the most important takeaway: we must see an worldwide economic contraction for demand to go down, flat economic growth won't do it. BPZ Resources (BZP) and TXCO Resources (TXCO) are still my favorite energy plays levered to oil.
Position in TXCO, BZP
Bizarro Land - Fil Zucchi - 10:36 AM
To suggest I have a clear idea of what the Fed is doing would presume that the Fed itself knows exactly what it's doing. I was pinging with Prof. Michael last night about the big picture and I offered that it feels like the Fed is trying to "trade" the economy as if it were a stock. That's an hyperbole perhaps... but perhaps not by much. This morning's "action" (the quotes are because I am not sure that is the right word) pretty much confirms my view. On to more tradable matters:
- Another day another 15% plunge for Force Protection (FRPT): I bought my last piece and I'd be lying if I said that the thought of being wrong on this one has not entered my mind.
- I have not seen the full Cowen note on Akamai (AKAM), but based on what I read I rather rely on what I know of the company, and I am adding trading inventory at a rather aggressive clip. I have long date out of the money puts to backstop me.
- If post-Fed yesterday you wished you owned some more broad downside protection, it's once again available for not much more than what it was yesterday before the Fed announcement.
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