Random Thoughts: The Here is Now
This too shall pass.
Editor's Note: The following was posted in real time on our premium Buzz & Banter. It's being shared here for the benefit of the Minyanville community. See also The Critters Turn Six!
Gate Sniffage! - 10:14 am
- It's not about a salary, it's all about reality! It's Thursday and despite my best efforts, NWA's Gansta Gangsta continues to reverberate in my crowded keppe.
- As per Bill Ackman of Pershing Square, perception is reality in the marketplace.
The standout action this morning? Are you serious? There's a lot, to be sure. In no particular order:
The dollar, which is up 1.5%. Conventional wisdom is that this is related to the (non-) decision by the ECB this morning, one where Jean-Claude Van Da, er, Trichet said policy makers discussed cutting interest rates as economic growth slows. My gut is that the dollar is screaming that the bailout package won't pass or, worse, it will and won't work.
- Drugs, not hugs. The pharma sector is green with envy as societal acrimony continues to build. This is a traditional sector of safety but fair warning, you can't spend relative performance.
- The disconnect between credit and equity markets remains front and center. LIBOR-the cost of borrowing in dollars in London for three months-rose for the fourth day in a row. In other words, banks continue to hoard, deal or no deal.
- We didn't get no play from the ladies. With six Minyans in the car are you crazy?
- Remember yesterday when we offered that General Electric (GE) offered both a structural and psychological tell on the back of Mr. Buffett? Snip, 10%.
- What does the death of capitalism look like? A little levity goes a long way!
- Finally, for all ye faithful, I'll be steppin' out before noon to shoot to NYU for some hand holdage. While some would question "Why now?," I would offer "If not now, when? If not us, who?"
- Fare ye well as we drip and dwell.
Dominoes Laced With Dynamite - 10:38 am
- Is it "All Greek to You?"
- This is precisely the problem with derivatives and why we've been trying to teach Minyans about them from day one.
- Pepe suggested Minyans familiarize themselves with Herstatt Risk. I concur, sir.
- It's been building for some time, that's for sure.
- How will it play out? One of three ways, still.
- Flipping the lens towards potential opportunities, I've started eyeing the drillers, which are getting beaten with an ugly stick. Weatherford (WFT), for instance, is off 60% since July and, at a point, Hoofy will eye the upside. We have dry powder for a reason, right?
- Not saying right here and right now, mind you, but you always wanna see both sides of every trade. That's what makes free markets, or at least it used to.
- As always, I hope this finds you well.
Timing is Everything! - 11:12 am
- Critters With Attitude?
- Watch the VXO--it's +12% and north of 50. My gut continues to vibe VXO 70 (and S&P 1080), as a first stop, anyway, but I thought that would come after the bailout was passed.
- A smart man once told that you can pick a direction or pick a time but you'll rarely nail both.
- I did, so you know, dip a pinkie toe into Weatherford (WFT). How big, Sgt. Hulka? Put it this way, if my (in-the-money, as a function of high premium) call options expire worthless, I'll still be able to feed Phoebe.
- The greatest opportunities are bred as a function of obstacles. Few folks are in a position to add capacity into this downturn but those that can will be richly rewarded. Remember, Disney (DIS), Hewlett-Packard (HPQ), Tyson Foods (TSN) and Continental Airlines (CAL) all planted powerful roots during the Great Depression.
- Six years, you say? Second inning, I'll offer.
- Wowzers, is it time to leave already? I'll tell ya, if it wasn't for that "All you have is your name and your word" thing...
- Fare ye well, Minyans, this too shall pass.
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