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Randoms: D-Day on the Beltway


How will tape react to Treasury Secretary's statement?


Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community. See also An Allusion to Depression?

Morning Dew - 9:31 am

So you wanted to be a trader, eh? There is a ton of news coming down the pipe today, highlighted of course by Tim Geithner's 11:00 press conference. While we "know" certain elements of the plan, all ears and eyes will be on the treasury secretary for nooks and crannies that would be considered a surprise.

Again, I'm looking through a pure trading lens here--as a free market guy, I don't believe more debt is a solution to a debt bubble--so we'll take our journey one step at a time as we together find our way.

In other news, in no particular order:

  • President Obama warned last night that the economy would lose "about a trillion dollars worth of demand this year and a trillion dollars of demand next year given the contraction in the economy?"

  • Given the current GDP, wouldn't that be awfully close to back-to-back 10% economic declines? And isn't that the most common definition of a "textbook" depression?"

  • I continue to keep half an eye peeled towards Russia after their banks asked the government to moderate talks with foreign creditors on $400 billion of loans. This has obvious implications for our financial protectionism discussions.

  • While I've been trading from the long side, I flattened my short-term risk yesterday and enter today's session pounding my glove like Graig Nettles circa '77.

  • There are no easy solutions to wait ails us, only the medicine of time and price. The trick, of course, is allowing the market to go where the market will go anyway without social unrest unraveling society.

  • Take a deep breath, Minyans, and remember that news is always best at the top and worst at the bottom. That would be an easier set-up for today's binary event if we didn't just witness a massive rally in the financials but hey, is anything easy these days? You really gotta want it. I do. You do. We do. Let's do it.

  • Good luck today.

Gate Sniffage! - 9:56 am

  • Much like an FOMC day, today's trade should be a tale of two tapes with 11:00 serving as the toggle.

  • Early eyes include a dry opening for Research in Motion (RIMM) (note the upside gap between $77 and $95) and an underlying bid for the banks. Commodity stocks also trade well despite the (slightly) higher dollar.

  • The one thing I'm sure of? The buyers are higher and the sellers are lower.

  • Pop Quiz: What's more prevalent, the fear of missing or the fear of losing?

  • No, I don't have a man crush on Jack Bauer. I just like the show is all.

  • The longer stochastics "twist" on either side of the ride, the more vicious the move tends to be in the other direction. I offer that as I almost bought Morgan Stanley (MS) and RIMM for a quick trade on the opening (but opted to hand sit and practice my right to be patient).

  • The last, lost decade isn't what concerns me (we sorta saw it coming). It's the next ten years that keep me up at night. That's not a trading call as much as a quality of life concern, if not for me than for our next generation.

  • I'll be bank, er, back. Hit 'em hard!

The First Move is The False Move? - 10:15 am

Reuters is reporting that the bank rescue plan will set $50 bln for foreclosure mitigation, $100 bln for "bad bank" public-private partnership, $100 bln to expand the Fed's TALF program and $100 bln for bank capital injections, according to a source.

Gun to head, my best guess is that the first move will be lower on that news, offering more attractive entry points for those looking for a rally.

Quick Sniff! - 10:57 am

With TSTG (Treasury Secretary Tim Geithner) tick tocking towards us, I'm doing my best to juggle the struggle that is my typical Tuesday. How would you like to write a syndicated column (due at 4:00 EST) that won't post till tomorrow about the state of this tape? I would rather stick my arm (PG-version) in a blender and call it a day!

Some quickies as we ready for yet another financial milestone:

  • When I scribed my last vibe, I nibbled an a Todd-lot of Goldman (GS) puts for an uber-quick shnitz. I sold 25% into this dip and plan to sell the rest on the perceived "sell the news" first blush reaction to the announcement. Maybe right, maybe wrong but always honest as I share my process with hopes it adds to yours.

  • Speaking of odd-lots, someone bought 50,000 S&P March 1000 calls last week for $1.20 and sold 'em this morning for $2.60. That's a smooth $7mln, not bad for one week's worth of work.

  • I'm loving the way Research in Motion (RIMM) acts but hey, I've loved the way RIMM acted at $40, $45, $50 and $55. Momentum trading has never been my strong suit (again, always honest) and that's cost me a fair amount of coin through the years.

  • I'll tell ya, the margin for error in this environment is thinner than Kate Moss on Atkins. And yes, I'm looking at Bank America (BAC) as I scribe that vibe. Better lucky than smart. Check that, better disciplined than either of those.

  • Tick Tock Tiny Tim. Here we go...

Alphabet Soup! - 11:15 am

  • The magnitude of these numbers being tossed around is bizarre. We're talking trillions with a "T," the type of size that would make Dr. Evil blush.

  • The near-term short side risk may have nothing to do with these headlines. What you won't read is that the Working Group on Financial Markets is standing at the ready with Bill Buchanan and Tony Almeda waiting for the order to attack.

  • The most unfortunate aspect of current social mood? People are hoarding kindness and taking care of their own rather than binding together as a society. I'm not saying I blame them, mind you, as that would, by definition, be a form of societal acrimony in and of itself.

  • As per my previous Buzz, I'm peeling out of my Goldman Sachs (GS) puts as a function of price (50% gone, as I type). Pure trade, and trades are made to be taken. Just keeping it real, yo.

  • Note the downside reversal in crude. Having pared my risk yesterday (as discussed), I was smarting from premature evacuation this morning. At a point, I'll prolly redip that wick with an eye towards the specter of geopolitical unrest.

  • Lemme hop, friends. As always, I hope this finds you well.


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