Random Thoughts Into the FOMC Meeting
Observations on a tale of two tapes.
Ben Bernanke and his policy brethren are the focus today as they'll provide hints surrounding their oft-discussed taper plans. Conventional wisdom dictates they'll announce a token taper-or the plans for a token taper-while wrapping their message in accommodative data-dependent language.
If the past is a prologue, the vernacular will attempt to communicate a "heads we win, tails they lose" mentality or similar semantics, consistent with the bullish bent that a backstop is in place until the economy improves, and once it does, it will post-rationalize and future-justify higher prices still.
Today will be a tale of two tapes with 2 p.m. ET (when the news hits) as the toggle. As such, below are some Random Thoughts surrounding the financial landscape and the world at large, in no particular order:
S&P (INDEXSP:.INX) 1709 is the near-term technical toggle, with the bulls hoping to push through the zone and morph resistance into year-end support.
Jeff Saut is fond of saying, "When the president is in trouble, the market is in trouble." While O may have bartered Syria for Obamacare (votes-wise, on the Hill), that's conjecture. It remains to be seen if that political battleground -- not to mention the upcoming debt-ceiling debate -- proves more worrisome than the entirely more obvious taper-tantrum.
To that end, Walgreens (NYSE:WAG), Sears Holdings (NASDAQ:SHLD), and Darden Restaurants (NYSE:DRI) are already trying to get out in front of the tax implications of the proposed policy.
I can't help but wonder where we are on the denial-migration-panic continuum given the lopsided sentiment as a function of price.
What if nobody wants to accept the Fed chairmanship?
- Gold, meanwhile, continues to slip lower, widening the chasm that we flagged last week and update below.
- The VXO (INDEXCBOE:VXO) has quietly slipped back toward Bar Mitzvah levels, albeit well off historical support at VXO 10.
As goes Goldman (NYSE:GS), so goes the tape?
Buy Twitter, short Facebook (NASDAQ:FB) on a dollar-neutral pair?
Isn't less tapering, no matter the amount, a de facto tightening at this point?
And will that ripple through the markets given the leverage in the system?
Or is that too easy?
Have the most fervent bears resigned themselves to looking for a "healthy correction," if that?
- Yes, reported bank leverage is lower -- but where oh where are all the off-balance-sheet toxic assets that they're lugging?
The Ruby Peck Foundation board has made the executive decision to shake up our events calendar, opting to forgo this year's Festivus in favor of an interactive event for the kids in the spring. While we love a good shindig as much as the next guy, the prevailing wisdom is that an "eye-to-eye, hand-in-hand" event would be mission-consistent as we do our part to impact positive change for the leaders, healers, and dreamers of tomorrow. More details to follow, but I wanted to give ye faithful the heads-up.
- Good luck today, and remember that profitability begins within.
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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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