What Does Sudden Shift in Headline Risk Tell Us?

It's dark and wet as we kick off our five-session set and the rain has sprouted some seeds of optimism.

Hewlett-Packard (HPQ) lobbed in a $1.6 billion bid for 3Par (PAR) -- a 33% premium above the Dell (DELL) offer -- as it brushes off the recent scandal.

Across the pond, HSBC (HBC) is talking about taking a controlling stake in Old Mutual PLc's Needbank Group Ltd. in a deal would be valued at about $7 billion, according to Bloomberg.

And of course, the BHP (BHP)-Potash (POT) saga continues after the Potash board urged their peeps to chill in front of what they say are "a number of third interested parties.”

That's all well and good for shareholders of the target companies and by extension, the market at large. M&A on the aggregate suggests that insiders perceive values in the marketplace relative to cash on hand.

We spoke of this long ago -- it's A) one of the tertiary benefits after corporate America pushed out their credit obligations on the time horizon and B) a by-product of their ability to borrow at record low yields -- but it's not, in and of itself, an all-clear signal. While this activity is on-the-margin positive, one only needs to dial back to the Time Warner (TWX)-AOL (AOL) marriage that top-ticked the tape of yore.

Those are the headlines this morning but I wanna circle back to social mood. The front page of yesterday's New York Times -- the front page, not business page -- featured the headline, In Striking Shift, Investors Flee Stock Market (Wary of Another Fall). This morning, in the same spot of the same paper, a similar story ran, Your Home as Sure Nest Egg? That Era is Over, Analysts Say. Not to be outdone, the business section ran a piece, Stock Swing Still Baffles, Ominously, in reference to the 1000-point plunge.

There are two ways to interpret this rush of "news". The first, perhaps most intuitive, is as a contrary indicator. The stock market is a forward-looking discounting mechanism and newspapers and magazines, no matter how acclaimed, are often matter-of-factly-after-the-fact when it comes to financial happenings. We've seen this time and time again -- on Time and others -- and it self-perpetuates, to a degree.

The other lens is that of financial fatigue. We touched on this recently and shortly thereafter, icons such as Stan Druckenmiller and Paolo Pellegrini hung up their cleats. Old school Minyans will correctly note that social mood and risk appetites shape financial markets. Given that ever-expanding backdrop, we must respect that this dynamic -- and the point of recognition -- is cumulative. If enough people tell you that you’re drunk, as the saying goes, perhaps it’s best to go lay down.

I'm not smart enough to catch historic cusps but I'm seasoned enough to respect their evolution. Whether it's Red States vs. Blue States, The War on Capitalism, Have's vs. Have Not’s, or To Play or Not to Play, The Great Divide is upon us.

There are a few things we know with certainty; we have to go through this to get through it, the leaders coming out won't be the same as the leaders who entered, the ability to add capacity (or persevere) will define those leaders, and this too shall pass. Other than that, it's one step at a time, viewing the big picture as a series of little pictures, with heavy doses of humility throughout.

We paint that posture each day on Minyanville’s Buzz & Banter and for the less active types, color by number on MV Proper. Different strokes for different folks and where you stand is a function of where you sit.

Enough aphorisms? I agree; without further adieu, some Random Thoughts:
 

• I'm a Yankee fan and rooted for the Rocket when he pitched. With that said, if he perjured himself, he should assume the position. It's one thing to make a mistake and man up; it's another to dig into a tangled web of lies and suffer from a God complex.
  
  
• Australia’s election failed to deliver a majority government for the first time in 70 years, fueling speculation a proposed mining tax will be scrapped or diluted, according to Bloomberg. Keep that in mind as you watch that complex trade today.
  
  
• I'm not sure why but this has always been one of my favorite Hoofy & Boo episodes.
  
  
• Does General Electric (GE) $15 still matter? I 'think' so; I'm not trading it but I'm surely watching it.
  
  
• I'm KRS-1, I'm still kinda young... I don't wear Adidas 'cause my name ain't Run.
  
  
• Aw Jeez, just when we thought it was safe to... do anything... it comes to my attention that Mercury Retrograde officially began on Friday. For three weeks or so, travel and communication snafus are almost a given -- which is awesome considering my West Coast swing is smack dab in the midst of this!
  
  
• To that end, I'm heading west the week of Labor Day, holing up for a few days to work on my book before speaking at conferences on Saturday, September 11th in San Francisco and Tuesday, September 14th in San Diego (we’ll be hosting small Minyanfests the day prior to each conference). If you're a West Coast Flava Minyan and would like to attend either gig -- they're both FREE -- please phone home.
  
  
• Hit ‘em hard this week, Minyans; it’s time to shine.

R.P.