Goldman and Bailouts and Bears, Oh My!
Gauging the weather into a fresh five-session set.
The cloudburst shouldn't come as a shocker; certain nonsensical dynamics have been persistent through the years. There's our trusted contra-hour (counter-trend action between 2pm-3pm EST), the vaunted Sleep-O-Meter (such as not catching a wink the night before that fateful day) and of course, the Out-of-Office Indicator, where volatility gets jacked when I'm away from the fray.
Last week was no exception. While I was attending the Milken Global Institute Conference -- please chew through my overview if you haven't already -- the world was a flutter with game-changing news. Goldman Sachs (GS) was under the gun -- keep an eye on that $150 level we've spoken of for months -- Greece, Portugal and Spain were downgraded -- not a shocker for ye faithful -- and Shanghai, flagged technically a few weeks and 7% ago continues to be the bear in a China shop.
That's what was, of course, and Minyanville focuses our forward lens on what will be. With that in mind, and with respect to your time, some top line vibes as we ready for a fresh five-session set:
- S&P 1200, former support, is new-found resistance while S&P 1175 and S&P 1150 (which is also the uptrend from the March 2009 lows) is stair-step support. At the very least, that latter matter feels like a date with destiny.
- I've been trading around an S&P gamma position for a while; tight and defined and within my risk wheelhouse, setting stops on the other side of important technical toggles. I'm leaning short to have some skin in the game but the size is a Todd-lot, relatively speaking.
- While I've long mused that Spain is the American International Group (AIG) in our sovereign sequel, some of the smarter folks at The Milken Conference believe the U.K may play the role of Lehman Brothers. Marc Faber, for his part, is pointing to a China Crash within a year, joining Jimmy Chanos and Ken Rogoff in that camp.
- As you digest the mess surrounding Goldman and the MBS sold to sophisticated investors, remember that questions surround Goldman's role in a Greek currency swap. It happened years ago but try telling that to an angry mob in a tricky trifecta.
- In the summer of 2007, we openly asked "Is it really a coincidence that societal icons Donald Trump, Paris Hilton, Lindsay Lohan and Britney Spears all fell from grace...as market psychology seemingly shifted?" I would again pose that question, this time inserting icons such as Tiger Woods, Ben Roethlisberger, and Goldman Sachs into the equation.
- The granddaddy of all icons? Yep, Warren Buffett of Berkshire Hathaway (BRK.A). I've got mad respect for the man's track record, but nobody is beyond reproach in today's socioeconomic environment as you're a reflection of the company you keep. My experience with the man is nothing but net -- he signed the All-Star Guitar in 2003 to support The Ruby Peck Foundation -- but going to bat for Moody's (MCO) and Goldman puts his name squarely in the blame game. Yes, he owns both companies and would correctly argue that he's putting his money where his mouth is, but detractors will view this as him "talking his book." Something to keep on the radar as we together edge ahead.
- While Greece got its bailout -- and Greek sovereign spreads tightened 14% on the news -- attention should quickly turn to Portugal, Spain, Ireland and others (sovereign lifeguards saved corporate America, but who will save the sovereign lifeguards?). Meanwhile, overnight wideners were concentrated in Asia, with China (+9%), Korea (+7%), Malaysia (+6%), Philippines (+4%) and Indonesia (+3%).
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- Snaps to New York's finest for snuffing out the bomb in Times Square. When the lead stories on Monday are focused on financial issues, we should indeed consider ourselves lucky.
- I offered before I left for the left coast that volatility was the best bet on the board. The VXO popped 40%, trough to peak, in the three days I was away.
- According to Zacks, analysts have more buy ratings (relative to stocks covered) than at any time over the last five years. Meanwhile, assets in bull funds are at the highest levels since October 2007 -- 7.5 times that of bear funds, according to Alan Newman, as quoted in Barrons.
- This is going to be a FANTASTIC event for the Jazz Foundation of America at the famed Apollo Theater on Thursday, May 20th. Area Minyans with toe-tapping rhythm are most certainly encouraged to join us for this wonderful cause!
- We often wrestle with timing in the 'Ville in that we operate with a forward lens. That's how the "financial news you need to know before you know you need it" tag-line came to be. Sometimes, however, we're too early.
- A few cases in point? The 5-Step Guide to Contagion was originally posted on February 5th, mapping, well, what's happening now (two and a half months later). Since then, I've seen front page stories in esteemed news publications comparing Greece to Bear Stearns, along with other items we've long discussed. That story did pretty well when it posted, but it was a top performer when an updated version was re-posted last Tuesday.
- Ditto the article by Professor Mike Schuster, Why Blackberry Users Will Defect, which posted on March 16th, one and a half weeks before earnings. The day after Research in Motion (RIMM) reported -- with the stock 13% lower -- the story was picked up by a major player through a syndication channel (we weren't credited for the content, but that's beside the point).
- My question is this: how do you marry a Minyanville editorial mandate dedicated to discussing what will (or might) happen with a mainstream media landscape reporting what has happened while staying true to the viewer that simply wants to know -- and quickly -- what's happening now?
- Keep your eyes wide open, your right hand up and your thoughts positive. This coming stretch is what we've been training for.
- Good luck today!
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 firstname.lastname@example.org.
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