Monday Morning Quarterback: Sin City!
If we woke up one morning to find the dollar up eight percent, there would be a bottleneck on the other side of this carry trade that would trigger (at least one) limit down in the S&P futures.
Greetings from New York City after returning home following a few days at the Trader's Expo in Las Vegas. It's awesome to spend time with our corporate partners and spread the passion and purpose of the 'Ville. There's something special about what we do and how we do it and it's evident in the hugs and handshakes that seem to greet us wherever we go.
As our badges came off, the dice were dusted and the cards were dealt. I couldn't help think of my grandfather Ruby, who taught me how to roll the bones at a young age. This might seem strange for some but Ruby was old school and Bronx bred; I relished our time together, be them old army adages, stories from the street or the perils of betting the hard eight (which I continue to do, almost like an allergic reaction).
Long story short -- and trust me, I could write for hours on end -- is that A) Las Vegas was mission accomplished as we spent quality time with established business partners and forged newfound Minyan alliances, B) one of my greatest blessings in life is working with my best friend Fish, whose held that title for almost 25 years and C) following a tenuous, forehead-rubbing stretch, I ended the weekend in the green, which is icing on the cake in the City of Sin.
Above and beyond that stuff, I had a slew of thoughts about the current world, the markets at large and the landscape we're together navigating. With year-end upon us -- I have a penchant for being somewhat nostalgic -- I'm gonna invoke my literary license and spew some dew as it flows through my fingers.
A worthy Minyan walked up to me at the Trader's Expo and said, "I love your stuff-it's awesome-but you don't seem to be writing as much as you used to?" My response was as followed,
"My brother, I've written every day, all day for almost ten years-predicting dot.com implosions, cumulative corporate, political and government imbalances, sharing the pain of being early, proactively interpreting writings on the wall, decoding warnings of what's to come, anticipating shifting social moods, China bubbles, housing bubbles, debt bubbles, derivative bubbles, sharing Trading Commandments, eying the end of capitalism -- before most others knew it -- digesting the shock & awe of it all, wondering whether Wall Street would survive, offering play-by-play on more mountain mingles than you can shake a stick at, expressing the humility of winning an Emmy Award, falling pray to the false idolatry of money, seeing the seams on the ball for insane stretches and staying humble as it popped me in the snooter, time and time again.
Take all that, double it and you'll get a handle on how long I've been trading this tape; I'm talking the days of Quotron, writing up positions by hand, the infancy of over-the-counter derivatives and making salads to survive. Twenty years; President Fish used to ask, "How do you do it?" and I shrugged and winked, almost to say "Ain't no thang, my brother." If the definition of professional nirvana is to do what you love with people you respect while serving the greater good, I consider myself a lucky man indeed.
Truth is, after the last twelve months, dating back to when Hank went deep on Fannie (FNM) and Freddie (FRE), Lehman got toe-tagged, American International Group (AIG) almost brought down the entire global financial system, Goldman (GS) was curiously made whole on their counter-party risk and Merrill, Bank of America (BAC), Citigroup (C) and Wachovia (WB) were at the mercy of the same policymakers who allowed them to find themselves in that position in the first place -- not to mention the reverse-upside unwind of more than $500 trillion in derivatives that created one of the largest rallies in history, we now find ourselves edging into the next phase of the crisis, one that will likely manifest through the socioeconomic realm with currencies potential serving as a release valve.
So, to that kind gentleman at the Trader's Expo who expressed that he loved my writing but missed it a bit, I will simply say 1) please forgive me for being a bit burnt, particularly since my last vacation was a "break" of another kind, 2) We're rolling out a snazzy video initiative that has taken up a fair amount of time (despite my insistence that I've got a face for radio), as well as a number of "game-changing" behind-the-scenes Minyan initiatives and 3) I'm raring to go into 2010 with fire and fury, albeit after year-end respite that will involve a beach, a book and the complete absence of flickering ticks.
Until then, some Random Thoughts:
- I'm hosting a Town Hall Chat at NYU today, which will require me to sneak from the 'Ville around 10:30 AM. Fair warning, if I inadvertently yell out, "Pressure on that hard eight, two-ways for the lady with the stick," please chalk it up to a quick and passing flashback.
- Before I left, we spoke about S&P 1100-1120 serving as the battle line for the year-end leg. Fail, and we've got a double top with everyone looking for a melt-up. Push through, and you've got yourself a self-fulfilling prophecy. That remains in play, Mon Frere.
- Societal Acrimony? What societal acrimony?
- If you missed this amazingly candid interview with Morgan Stanley (MS) CEO John Mack, please give it a look. For what it's worth-and please, hold the spoiled cabbage and rotten tomatoes-I've always found my former boss to be a straight shooter and a man of integrity. I call it like I see it, as you know.
- Could Sovereign Debt be the new sub-prime?
- If the Financial Accounting Standards Board can single-handedly sink an entire global finance-based economy, how stable is the entire global finance-based economy?
- If you're looking for specific trading or investing ideas, be sure to take a free trial to one (or more) of our subscription products -- see which fits your style best.
- Between the City Center (capacity) and the Fountain Bleu (billions invested, now up to the highest bidder starting at $50 million), it's clear that Las Vegas has a long road to recovery. Construction workers have migrated from the city in droves!
- Our annual Festivus to benefit The Ruby Peck Foundation for Children's Education is eleven days away and the remaining spots are filling fast. I'm not sellin', I'm just tellin'-this is an awesome time for a tremendous cause. This is last year's event; this is how you lock your spot for this year's event! Trust me!
- My grandfather wisely taught me to never speak poorly of your competitors and I've always taken that to heart, even when I exposed TheStreet.com for what it was way back when. They continue to play dirty pool and I continue to hold my tongue. I'll simply say this; you're a reflection of the company you keep and I've long ago distanced myself from that company.
- As the sagacious Bespoke Investment Group writes, "Since 1941, the Dow has averaged a gain of 0.50% in the week before Thanksgiving." That said, we would not like to see the S&P 500 break below 1083. And speaking of breaking down, the Japanese stock market is breaking down and we are close to "uncle points" on those recommendations." Jeff "I'll see YOU next wee for Festivus" Saut in his morning notes.
- I'm always early, as old school Minyans can attest from 2006 and 2007 or February of this year (there was also a comment from my girlfriend I self-edited as this is a family site). With that said, I am tremendously concerned about the next phase of this crisis; I simply haven't determined if it's 2010, 2011 or 2012, coinciding with the next cycle of corporate debt. It is very consistent with this crisis not disappearing, just simply changing shape.
- Everyone seems to think that the "curious dollar spike" Friday morning (+8%) was a simple case of a "fat finger:" and that's prolly true. What I will say is that IF we woke up one morning to find the dollar up eight percent, there would be a bottleneck on the other side of this carry trade that would trigger (at least one) limit down in the S&P futures.
- There is a 10-15% chance that gold zooms to multiple thousands of dollars an ounce. There is also a fair to middling shot that it dips to $600-ish first as a function of deflation. Binary? In a matter of speaking, yes. A vehicle for you? That depends entirely on your risk profile and time horizon. For my part, after being bulled up since 2003, I moved to the sidelines at the end of 2007. Sometimes right, sometimes wrong, always honest.
- Société Générale is telling clients how to prepare for a potential "global collapse." That's either the most bullish thing I've ever seen or a very honest warning for what's to come. My take? We could see higher prices in the interim but the magnitude of this mess-debt, derivatives, you name it, and we're digging a bigger whole rather than taking the medicine of debt destruction-is many times larger than the global economy. That doesn't mean there will be a problem; it simply means that if there is, it will be entirely more severe than most folks fathom. Prepare-and think-accordingly, which includes enjoying the journey as we together find our way.
- May peace be with you.
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