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What's Happening?

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Why the long face?

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There's something happening here
What it is ain't exactly clear
There's a man with a gun over there
Telling me I got to beware

(Buffalo Springfield)



For what it's worth, it's not you. The dichotomy between risk and reward is pretty acute, particularly given the thin August ranks. So that tension you feel--that vibe--isn't a function of anything other than antennas that indeed work.

Minyan Brooks pinged to ask me what I thought. "Not much," I thought to my inner self as I dwelled on my P&L, before offering a more salient stream of consciousness.

Earlier this week, I told him as I shook my head that it was only two days ago, we offered that the biggest flaw in Boo's paw was that the downside disconnect may have been a tad too obvious. That, with the credit mess splashed across the mainstream media, the watched pot may be ready to boil.

In that regard, this rally may be more bearish than bullish. Why? It shook out alotta late-to-the-game bears and sets the stage if Imelda (more shoes) or Marley (redemptions) comes to bear. Fear has been let out the back door, as measured by the 46% pullback from the highs in the VXO, and folks seem to be banking that the FOMC will ride a white horse.

To be sure, there is nothing more dangerous than a cornered and scared animal. And to be fair, the latest actions by the Fed could indeed carry forward. They have made watershed shifts in their stance, such as accepting riskier collateral in returns for liquidity, and all but said that they'll defend the tape by hook or by crook.

I will continue to offer that, with the mainstay averages up for the year--and now spittin' distance from all-time highs--we should be asking why the global central banks are circling their wagons as they are. And I will remind Minyans till I'm blue in the face that the first cut can lead to the deepest rut. I might be wrong--this could be the ultimate wall of worry--but I would prefer you to see both sides of the trade before making that bet.

With that, I'm gonna flip lids and juggle struggles into the closing bell. It's been a long week (aren't they all?) but it's just another chapter in the most interesting book in the history of financial markets. Plus, I've got a foursome with Macke, Kass and Petty tomorrow night which, in 20 years, I'll undoubtedly remember more than today's performance. So I've got that going for me.

Fare ye well, have a mindful weekend and remember that the purpose of the journey is the journey itself.

R.P.

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