Countdown to Greece: Pick Your Fights and Choose Your Battles
Signs surround us; we just need to pay attention.
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.
The reaction to news is always more important than the news itself. We've been saying it for years for a reason; it's one of those "little things" that make a big difference in how we map our forward path.
When the European bourses closed yesterday, we offered that thought as the dust settled:
UK FTSE: -0.1%
Germany DAX: + 0.2%
France CAC: -0.3%
Spain IBEX: -0.5%
Portugal's PSI: -0.3%
Italy's MIB Index: -2.8%
Greece FTSE/ASE 20: + 0.8%
If that was the reaction to a proposed $125 billion Spanish bank bailout, as written in real-time, I was leery of what was to come for the rest of this week. While the bloom had already faded from the stateside equity rose, the petals hit the metal in force as the afternoon rolled through. As shared before yesterday's market open, there were too many all-of-a-sudden bulls and not enough details to spur the herd higher -- particularly with the Greek five days away.
Despite widespread euphoria on Sunday night -- Twitter is a terrific social mood thermometer -- S&P 1340 whack-a-moled the futures right on cue (remember our stair-step levels) and BKX 44, our stealth trading tell, subsequently punked the bulls (the BKX opened at 44.24 only to close at 42.61). That, coupled with the price action in gold and the rest of the commodity complex, remain our near-term guidelines
While yesterday's action emboldened the bears, I strained to remain balanced in my approach. That's reflected in my current posture of long Apple (AAPL) calls (I nibbled too early; mea culpa, I should have waited until they sold the news) as an upside hedge against my Google (GOOG) puts, which were added when the stock was above $585. The rest of my trading powder remains ready to deploy when I perceive advantageous risk-reward.
Looking out and "through," I've committed a chunk of my long-term bucket to Long Island real estate. I've never owned a home -- in part because I was a professional bachelor, but more so because I refused to "pay up" into what I perceived to be a housing bubble -- so this is a sea change of sorts. With eight-year-old bonus twins and a beautiful one-year-old daughter, not to mention the love of my life, this investment will pay psychic dividends over a 20-year time horizon, God willing.
Where in the World Are We Going?
Big picture, I will again share that the smartest policy guy I speak with believes that the only viable overseas solution is to give the European Union lots of fiscal and monetary drugs and carefully unwind it before it unwinds us.
The problem with that, and we are in full agreement on this, is that policymakers will confuse a drug-induced stammer with a sustainable solution and revert back to the belief that the eurozone, in the current incarnation, could actually work -- which will again lead to A War on Capitalism.
There are two rubs to that misguided approach: First, no one -- and I mean NO ONE -- is bigger than the market, and second, the longer you mess with Mother Nature, the more upset she'll get.
We tossed around the word "cumulative" a lot as the conditional elements of a crash emerged into the 2008 crisis and a similar dynamic is taking shape in this sovereign sequel.
On the other side of a sustainable solution, after we take our medicine, once debt is destroyed or reorganized on a much broader scale, if that's ever allowed to happen, free-market capitalism and legitimate meritocracy will take center stage.
I cannot wait for the day when policymakers no longer dictate closing prices; I desperately want to embrace a Millennial-led legitimate recovery. I'm attempting to "look through" to the other side and in some cases I already have (Long Island real estate). In terms of stocks, however, I sense we've still got time and price to chew through as this will be a process rather than a point, not dissimilar to the 1930s, which was ripe with false hope and empty promises.
From here to there, we've got cloudy and convoluted crosscurrents that long ago morphed our once-noble profession into a den of inequity. All the while mainstream America despises all things Wall Street and paints the industry with a blame brush that's too big to fail.
That is unfair, in my view -- while there were culprits in this crisis, there are plenty of good folks with strong moral compasses attempting to effect positive change -- and we are charged with righting the ship and demonstrating value for all to see. If you're not in it to win it for the right reasons, you may want to lay down your sword and step aside. We have our work cut out for us.
This will take time, but the good news is that we had to go through it to get through it and we're going through it now. A wise man once said, "This too shall pass," and mark my words, it will. The goal, for us as people and professionals, is to get there together, one step at a time.
If I stayed home to help Jamie move yesterday, my P&L would have had a much stronger hue of green to it. True story, and there's a lesson in that.
Can we all agree that commodity volatility precedes equity movement?
We've always operated through the lens of trust, transparency, and accountability at Minyanville; when -- if ever -- will the masses on Twitter adopt that protocol? (I'm not holding my breath.)
Is anyone else excited for Festivus on Friday night, December 7?
Who outside of Miami will be rooting for the Heat? (Go Thunder.)
I wonder what European policymakers are thinking right about now -- other than Latvia?
Will you please join me in #OccupyDora as we champion for Swiper to have his own show?
As discussed above, BKX 44 is our stealth tell; on the individual equity realm, I'm watching JPMorgan (JPM), Deutsche Bank (DB), Goldman Sachs (GS), and Bank America (BAC) as well.
- That's about it from where I sit; I'll see YOU over on the Buzz (click here for a free two-week trial!).
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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 firstname.lastname@example.org.
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