Morning Dew: The World Waffles and Russia Halts
Global markets struggle to plug springing leaks.
Editor's Note: The following content was posted in real-time on our premium Buzz & Banter and is being shared here for the benefit of the Minyanville community. See also Answers I Really Wanna Know: Should I Stay or Should I Go Now?
Yawn! SO, anything going on?
- Having slept about seven hours since Saturday, I've been focused on this seismic shift in the financial foundation. The destination of debt destruction is clear as day. The path that we take to get there boils down to one of two avenues.
- Russia halted? I remember in 1998, I turned to my boss when the Ruble cracked and yelled "Russia on the tape!!!" His reply? He gave me a verbal five finger Sally and screamed "Russia doesn't matter you dope!" That was, so you know, before global markets cascaded lower.
- You wanna know what an A.D.D. writer/trader does in a sensory overload environment? I wrote an important Buzz into yesterday's close that included "While Turnaround Tuesday is typically a counter-trend session, we've broken all sorts of support and significant risk looms. At the very least, we should have an opportunity to buy 'em lower tomorrow if that's what floats your boat. Please be careful Minyans--the ability not to trade is as important as trading ability."
- Alas, when I pulled up my Buzz admin this morning--after writing several longer form columns, the meat of which will post tomorrow--I realized I never hit the "post" button. Mea culpa on that front as you know we pride ourselves on being there when Minyans need us most.
- We've spoken about the leaks springing the the dike and only so many fingers available to plug them. Hank Paulson used two digits on Fannie (FNM) and Freddie (FRE)--presumably the middle one on each finger--and that left us with this jumpy stump.
- This isn't "just" about Lehman (LEH) or AIG (AIG)--it's a cumulative systemic issue, one that's been percolating since the back of the tech bubble.
- As painful as this process of debt destruction and price discovery is, it is both healthy and necessary for a legitimate foundation for economic expansion to take root.
- Indeed, after years of giving the market drugs with hopes of masking the symptoms, the only true medicine is time and price. To get through it, we must go through it and we're going through it now.
- It's not easy, I know, but this is what we've been preparing for and we must be strong. We must band together. We must persevere. This is where true character is shown. This is what defines us. This is why we're Minyans.
- In that vein--and with positive, productive, lucid energy--we prepare for Turnaround Tuesday.
- My sense is that we'll see a rally attempt but whether, how and if you play that is a function of your unique time horizon and risk profile. I would also offer that trades are made to be taken as further leaks likely await.
- If credit manifests as cancer, we'll see intermittent rallies. If it paves its way towards a car crash, we'll see price and risk appetites readjust in one fell swoop. Factor both into your approach, my friends, and see all sides.
- This isn't a time to be a hero--this is a time to survive--there will be better days and easier trades. Our task at hand is to get there.
- Good luck today.
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
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