Wall Street Confidential
Bring it, but SEE it too!
I scribed two vibes yesterday. The first, Wall Street Unoccupied, spoke of the unintended consequences of the protests downtown -- and across the country for that matter, including the "call for violence" in LA.
It wasn't "pro-establishment" as much as "be careful for what you wish." While change is in the air (and I agree with many of the messages, as anyone who has read my column over the last decade can attest), the "other side" of this movement offers an entirely new set of challenges.
Of course, that didn't stop the "Ready, Fire, Aim" mentality, as evidenced by some of the printable responses:
"Sorry Todd, but you're wrong here. The shenanigans at Goldman Sachs (GS) with the packaging of sure-to-fail products and then shorting them for extra profits, or BP (BP) scrimping on their responsibilities in the Gulf and causing an environmental disaster, if not evil are certainly very very bad. Layoffs on Wall Street are unfortunate, but not caused by the OWS crowd. Change is unpleasant, but inevitable. Lets get out in front of this, propose some solutions, don't just whine and blame."
Whine and blame? I haven't done that since I was a professional bachelor in the city (those days -- and my therapy bills -- are long gone). Does this gentleman not understand the mission of Minyanville or that we've tirelessly (and many times, thanklessly) got in front of a multitude of historic issues before they were particularly popular?
That context is important to any conversation. We're not wet-behind-the-ears wannabes in this regard. My response was as follows:
"I'm not whining and blaming my friend. Remember please, we were well out in front of this mess long before it was on ANYONE'S radar.
My point is that "they" are not all bad and you can't sweep an entire industry of people under the rug and press reset. You need motivated individuals who understand how things work in order to unwind them. The easiest thing to do is condemn and the hardest thing to do is learn -- it won't be easy, but it's the lesser of two evils.
I was the most bearish guy in the room for many years. I'm trying to 'see through,' and I believe there is a solution set. It's not one vs. another or 'us' vs. 'them,' it must be a compromise at some level. There has to be a matter of trust and a leap of faith.
There was a lot of culpability to go around during the bubble. From consumers who extended to firms that engineered to policymakers complicit by acceptance to the CEO of the USA. Many people got caught up in the bigger better thing. I hear you man, I lived it. It's time to move on. I'll meet you there."
The second column, Morgan Stanley: The Other Side of Wall Street, was a derivative of the first column, although it wasn't intended as such.
As anyone who read my book will tell you, I didn't exactly leave Mother Morgan with all sorts of warm fuzzies. I don't "owe" them anything other than profound gratitude for the education they provided, which not only allowed me to attain a measure of success in my first career but the skill-sets I've openly shared since 2000 in an effort to effect positive change through financial understanding. I view Minyanville as part of the solution -- which doesn't mean we're always right -- rather than part of the percolating problem. Trust me, if I was all about the Benjamins, I would still be slinging merchandise with reckless abandon.
The primary point of that second column cannot be stressed enough. While there are those who violated the law -- one of whom will be sentenced today -- there are a lot of professionals in the financial services arena who aren't evil. I know this, because I know many of them.
I wrote in 2000 that by the time the schvitz really hit the fan, you wouldn't be able to mention that you work on Wall Street while at cocktail parties -- much like it was in the early 70's. If we're not there, we're close. You can't yell "capitalism" on a crowded street, and there's something fundamentally wrong with that.
We SAW this coming from a mile away and now that it's here, we're officially one mile closer to the better days and easier trades. I still sense a few more rough and tumble years, but as soon as we take our medicine -- and that also seems to be edging closer -- the "generational opportunity" we foresee in the back-half of this decade should manifest in a way that astounds even the most fervent bulls. Although, and this you know, those will be few and far between when the time to be "buy and hold" bullish actually arrives.
We've been sensing for over two weeks that there would be a sharp rally in the financials into -- or out of -- earnings. The group was universally hated, and everyone and their sister knew earnings were gonna suck.
Since that time and heading into today, Bank America (BAC) rallied 30%, JP Morgan (JPM) jumped 20%, Mother Morgan (MS) popped 40%, Goldman (GS) lifted 20%, and Citigroup (C) found 40% more upside. That was the easy trade, my friend, so factor that into your risk profile. The next 20% will be defined by what happens in Europe.
We offered late yesterday on the Buzz & Banter -- with the S&P at 1220 -- that "While S&P 1250 is THE level of lore, I would be careful in here. Too many people are expecting to retest that level, volume is extremely light, Apple (AAPL) has edged to the lows of the session, and the "easy" trade has already been paced by the financials."
Technical analysis tends to be the default metric of choice during confusing stretches in the market, and you can be sure that more than one portfolio manger is monitoring S&P 1250 -- and Gold $1700, for that matter -- for technical affirmation, which could provide a spark to the year-end performance anxiety trade, should one manifest.
And finally, this is your friendly Minyanville reminder to lock your spot for the Festivus Trot on Friday, December 2nd in NYC. This is our signature soiree to benefit The Ruby Peck Foundation for Children's Education and while it's a jungle out there, we can take solace -- and share smiles -- while paving the way for a better tomorrow. This is who we are and how we roll, and we look forward to sharing the journey with you!
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