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Randoms: Gotta Pay to Play

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Transaction tax edging closer to reality.

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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 The Future of Wall Street.


If you twist and turn away. If you tear yourself in two again... - 9:36 am


The Toddo Sleep-O-Meter continues to punish the right side of the tachometer as we edge through this freaky week. This admittedly nonsensical proxy has been a strong precursor that "something big" is afoot and while the directional bias is typically lower, it's not always the case (such as the night before Martial Law Was Declared for the Market).

Last night--or, more accurately, this morning around 1:00 AM--I was watching Bloomberg Television and the content was abysmal. China exports were off 17.5% in January while their exports plunged 43%. Russia is under the gun as they've lost the leverage of high oil prices. European fundamentals are in meltdown mode and U.S. institutions are, well, you know that story.

While I've been--and remain--firmly in the camp that the "prolonged socioeconomic malaise that's entirely more depression than a recession" is upon us, I've been viewing the market through the lens of the journey rather than the destination. I'm also well aware that while the bottom may be a ways away, news is always worst at a bottom (and best near a top). I can't recall a time when the headlines were as nosty as they currently are.

I traded the financials from the long side the last few weeks and flattened my pad Monday, took a small short shot in Goldman into Geithner yesterday, covered that and got long some inventory (when the Spooz were down 33 yesterday) for a bounce.

Exercising discipline over conviction, I got lighter and tighter into the close, carrying home some financials but punting my tertiary vehicles, such as Research in Motion (RIMM), which is off 12% this morning on punky guidance. Hey, I wanted to look at this stock near $50 and well, it's there now.

Pep has consistently whispered S&P 783 on the Buzz and that's a level I'm watching when we get this morning's probe. Again, I carried home some financial crack (FAS) and, with a respectful nod that we've churned out the oversold condition (following the autumn swoon, which is bearish), I plan to look at the banks from the long-side for yet another counter-trend bounce.

I'll read the tea leaves, as always, and communicate in real-time, as we do in the 'Ville.

Good luck Minyans.


"How can I trust you Jack?" With due respect, Madame President, Ask Around! - 10:08 am

  • Following a big move in the markets, you typically see a probe in the same direction the following morning. As it stands, I wanna buy that probe, with discipline and defined risk of course.

  • "Mark-to-Market" chatter continues to make the rounds. If they pull that rabbit out of the hat, we'll see a sharp gap higher. That's a different conversation than "I agree with this as a fundamental fix" but so it's said, I think Timmy has this in his back pocket.

  • I initiating starter "in between" positions in Bank America (BAC) and Research in Motion (RIMM) (into the red mess) this morning. I wanna buy 'em cheaper (on the probe) but nibbled as a function of price on both. The former was through common and the latter is with defined risk March paper.

  • File this under "anecdotal at best" but a few Minyans told me that the Yahoo message boards were ablaze with "Nice call on the banks" acrimony yesterday. My first thought was "Jeez, they're still higher than they were last Wednesday. My second thought was "People are confused and scared, let it be and have empathy." My third thought was "I don't have enough exposure."

  • So... if the market rallied yesterday, it would have been a good plan?

  • The ability to add capacity into this downturn will define the leaders in the new world order.

  • On a housekeeping note, I've got a slew of meeting sprinkled throughout the rest of this week, including an all-afternoon off-site tomorrow. Just keeping it real and keeping y'all in the loop as we continue to build upon the vision of the 'Ville.


Here comes the probe, di di di di... - 10:57 am

The downside try is upon us as we weigh the fray and find our way. Here's what I'm vibing, in no particular order:

  • I often tell people that Minyanville saved my life as I stepped through the looking glass following that fateful day in 2001. It's been a labor of love ever since but my 2009 resolution is to find balance for the persona non-Toddo.

  • You say potato? I say mash! As mark-to-market chatta continues to vibe, I'm hearing low level talk that the transaction tax is edging closer to reality (Wanna trade? Gotta pay!). That throws an interesting twist into the mix, eh?

  • While I'm stabbing around on the long side for schnitz and giggles, the "churn" continues to keep most of my powder dry. I added further Bank of America (BAC) ($5.85) and Research in Motion (RIMM) calls ($46 and change, buying dips to sell blips) but it's smallish, which is fine in this environment.

  • I know, it's a long way from when I used to scoop Smith Barney on 20,000 Cisco (CSCO) calls or hit Merrill on 1,000,000 SPY at $150. Hey, times change!

  • What's that look like? We can see it in the S&P but truth be told, it's the same for any of the mainstay indices. The oversold condition has been worked off as a function of time rather than price.

  • Yes, I've publicly stated to avoid ultra-ETF's and the hypocrite I am, I own some FAS. I don't plan on keeping this as a core, it was simply a trade. As a day by day vehicle--not a month to month product--it serves a purpose, but trade 'em at your own risk.

  • The most bullish thing on my screen? I'll give you a hint. They rhyme with "thanks" and are shadows of their former selves.

  • The most bearish thing on my screen? RIMM (reaction to news) and the semis.

  • The funniest thing on my screen? It's still Hoofy and Boo's take on "What Would John Thain Do?" although they've got another bun in the oven.

  • I've got more meetings than Match.com today so lemme hop. As always, I hope this finds you well.


R.P.


Position in FAS, BAC, RIMM

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 todd@minyanville.com.

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