Societal Acrimony Hits Home
Random thoughts on the stocks, bonds, and equitites.
It was supposed to be our "date" night. With mom called away for business, I had the pleasure of taking my seven-year-old (bonus) twins out for dinner. I raced home from work following a two-hour post-bell meeting and bounced into the apartment, smiling ear-to-ear, ready to hear the laughter of little kids.
They picked the venue (Cinema Cafe on 29th/3rd) and we settled on a table outside, about five spots from the corner. There, over a delicious meal, we enjoyed a heated game of "Truth or Dare." The kids were belly laughing after I stuffed my ample nose deep into the ketchup to fulfill a dare, and left it there for a good five minutes. Sometimes being silly is the quickest way to forget about a long day and a brutal tape.
In the blink of an eye, the first punch thrown. A rather large, muscular man cold-cocked a smaller (but not small) dude -- not once, not twice, but three times -- hard. He then put him in a headlock and continued to wail away until the smaller man fell to the ground. Then the kicking began; to the gut, to the face, in the teeth. There was ample blood, it was gruesome.
I had instinctively jumped out of my seat after the first punch and pulled the children behind me. I wanted to shield them from the carnage but more importantly, I strategically positioned myself between the brawl and the twins. I'm not much of a fighter -- I'm a tree-hugger, actually -- but I'm not a small man either. They would have to get through me before those kids were in danger and that wasn't going to happen.
The kids were shaken. By the time the police arrived, I had paid the bill and briskly walked them home hand-in-hand. They were clearly upset, as evidenced by the fact that they turned down ice cream for dessert -- a first, as far as I know.
I explained that some people are scared and weak and do things they shouldn't do, and that life is the sum total of our collective decisions -- and we all possess the ability to "walk away." I was reminded of an article I wrote in 2008, The Age of Austerity, when I offered that wearing a suit in NYC could soon be a liability. That's evidently evolved; now it's a liability to sit at an outdoor cafe at 7PM in the evening, enjoying some QT with the family.
Societal acrimony indeed. Our NYC apartment is listed for sale and we're already house hunting in Long Island. As far as I'm concerned, that move can't arrive fast enough.
- Turnaround Tuesday isn't just for equities, Mon Frere. Note the jig in gold and silver yesterday following the 20% and 40% drops this month, respectively.
- A few months ago, we reprised Will the Fed's Last Bullet be Pointed Inward? and I wanted to touch on that given the reaction to the Fed's Twist and Shout. And I quote:
"If we can agree that the last bullet in the Federal Reserve arsenal will be pointed inward, wouldn't that be triggered by a crisis of confidence -- and wouldn't that start with a negative market reaction to intentionally placed "positive" news?"
- Of course, the bigger issue is Europe and the promise of a Bazooka -- no, an atomic debt bomb that will wipe clean the obligations, at least until a future date. Please be prepared for increased market volatility as we toggle back and forth between "It'll get done!" and headlines from disgruntled voting members of the plan.
- Ironically, it may take something bad to get this passed, not unlike the politics behind TARP in various iterations. Hence the word "crisis;" if it were normalized, would be a healthy and natural business cycle rife with expansion and retraction. Remember when that used to happen?
- Red beans yesterday included Amazon (AMZN) and Netflix (NFLX), which were a precursor to more "S's over N's," as we've been flagging. I'll tell ya, if I traded more of these ideas instead of writing them, I would have more jingle in my jeans. As it stands, my first and foremost focus is providing completely compliant content to benefit our community. See the updated S&P vs. NDX chart below:
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- If you dig the 'Ville, come tell us -- while you're eating BBQ and dancing to The Police, Journey, and U2 -- in person at this year's Fesitvus on December 2nd! We've sold out the last five, so lock your spot and get excited; it's a stone cold groove!
- This recently released Gallup Poll might help explain why Germany may have a tough time leading Europe to better days.
- Is the current process of price discovery as simple as "watershed solution X the probability that it will pass?"
- History doesn't always repeat but it often rhymes?
- Do I think there will be "old school" winners in the financial sphere? (Yes)
- Do I believe that there are better risk-reward opportunities without the emotional "baggage?" (Yes)
- Is the new stair-step range for Gold $1530 (200-day) to $1700 (first stop)?
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- For the first time in my life, I find myself rooting against the Yankees. Be careful for what you wish, I know, but I would just as soon see the Red Sox sit out the playoffs.
- I've been trading for over 20 years (but don't hold that against me) and I'm not sure I've ever seen such headline driven, day-to-day haphazard volatility (2008 was the torch bearer, but this is another realm).
- With that said, taking a step back, we remain in -- dare I say -- a textbook "churn" under resistance that is presumably working off the oversold condition as a function of time rather than price. See the chart below as a picture speaks 1000 words.
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- Someone recently advised me to stop being "so negative" for risk of being branded a bear. I offered them two thoughts; first, is that such a bad brand coming out of the worst decade in financial market history? And deux, as I told him, I'm incrementally less bearish (more bullish) as we wade through this pooh. We've long said "In order to get through it, we needed to go through it and we're going through it now."
- It's been 17 months since I penned A Five-Step Guide to Contagion and the fact that this news is front page NYT and WSJ everyday is also on-the-margin constructive. The caveat, of course, is the "how" and "why" rather than "what" (bailout wise) and what that does to the forward needle. Stay tuned, as this script is unfolding in real-time and the last step could be a doozy.
- I will offer that I've advised suggested to those close to me that they rotate out of longer-dated maturity bonds. Why? You always want to leave the party while everyone is having a good time (and rates are at all-time lows). As we discovered in the metals last week, it's better to be a half-step ahead than a stride behind.
- Bottom line and water pistol to head, I'm a seller of rallies under S&P 1250 (and Gold $1700) until proven otherwise. That doesn't make it right, but it's an educated opinion in a market full of emotion.
- As always, I hope this finds you well and I'll see YOU over on our Buzz & Banter (two-week money back guarantee).
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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