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"Freaky Friday Potpourri: Fried Green Toddo"
Todd Harrison
Oct 17, 2008 10:44 am

" Not quite bullish on credit, but not exactly bearish, either.





The final fifth of our freaky week has arrived and the song the swan sings with echo with laughter into the weekend. This particular five session set has been a wild ride, with an 1800 point DJIA spike stuffed into Turnaround Tuesday, triggering a 1600 point decline into yesterday’s low before an 800 point upside reversal into the close.

Pause for effect. Think about those moves. These are bigger swings than a Hedonism Vacation!


For my part, yesterday summed up the stressful mess. After giving a series of interviews on Yahoo TV—touching on topics such as market volatility, hedge fund woes, the 2008 trading low and the role of the economy in the upcoming election—I stepped into my turret, faded (bought) into the abyss, did a Fox spot on my attraction to energy, made some sales (against my earlier purchases), rode out the closing hour on the small screen, jumped across town for an important meld, met President Fish and Grandpa Mangano for a quick schnitzel, capped off the night with a business dinner before face planting into my Tempur-Pedic pillow.

I don’t share the details of my day as a function of narcissism—it’s actually entirely more selfish than that. I am spent and spenter after yet another wild week and there is a slew of content—written and video—nestled above that sums up my current stance. I would expand upon it but it remains essentially the same:

Buying dips to sell rips, with the sense we’ve seen the 2008 trading low but respectful that the cancer is bigger than the patient (and will lead to a long hangover).

I’ve shaped my risk accordingly and enter today’s fray with tired eyes and profound humility. Nobody is smarter than the market and we’re all just pawns in her game. That’s worth keeping in mind, particularly given that Mother Nature is in a mood after being messed with.





A few items of note on the all-important credit backbone.

Professor Bennet Sedacca offered this nugget on the real-time Buzz & Banter yesterday afternoon. For purposes of perspective, market levels were S&P 895, DJIA 8485 and NDX 1238.

Is the credit thaw starting?



Corporate deals are starting to get done.


Municipal deals are starting to get done.


Citigroup (C) is admitting to correct marks of its nuclear waste.


LIBOR starting to behave.


Mortgages starting to tighten.


How much more unwinding can there be?


While not bullish on credit, I wanted to make it known that I am significantly less bearish on credit.

This is a large change for me, for what it’s worth.
On the LIBOR front, the three-month cost of borrowing dollars in London fell overnight, establishing the first weekly low since July while the overnight rate slip 27 basis points to 1.67%, the lowest level since September 2004.


SO, keep it in perspective—it’s an improvement on the margin but we’ve got a ways to go for seeds to sow.


Remember how bullish everyone was near crude $150? We're now seeing the mirror image of that scrimmage.


That's where the lion's share of the indiscriminate (hedge fund) selling is and while I hate trading invisible catalysts, there are babies in that bathwater.


I continue to have concerns that "something" could happen in the Middle East prior to the election, which would put a bid to Texas Tea (I hope I'm wrong on that last point but hope (or a lack thereof) isn't a viable investment vehicle).


Vehicles include BHP Billiton, Weatherford and, as In-N-Out vehicles, Transocean (RIG), OIH and OSX (bought dips to sell rips).

Some Random Thoughts:



Howard Jones never got the snaps he deserved.


Other trading vehicles include the EEM and QLD.


If I told you last year that you could buy FXI (China I-shares) at a 65% discount a year out, “would that might be something that would be of interest to you.” I’m thinking of buying a starter position with the understanding that I could potentially buy it much lower in the future.


Everyone and their sister (hand raised) thought we would see a global coordinated rate cut into expiration. The longer we go without one, the sloppier the futures are getting. Not saying they should snip bips, just saying many believed they would.


The buyers are higher and the sellers are lower.


The reaction to news—such as Google (GOOG) and Schlumberger (SLB)—is more important than the news itself.


Levels of lore in the S&P include 840 (Friday’s intraday low), 900 (the closing low) and 910 (the higher low). Any of those levels can be used as sell-stops, depending on your risk appetite and time horizon.


The first “hold” was the easy “hold” (with so many people watching it). The ability to put some distance between us and them will bode well for the “peeking around the corner performance anxiety trade,” if and when.


The Federal Reserve Balance Sheet is up 103% year over year.


It still rubs my craw that the media trots out the same people who never saw this coming to ask them when it’ll end.


T-18 until the election and I, for one, will breath much easier if and when it occurs without a hitch.



Have a great day, Minyans, and let’s end this week with some jingle in our jeans and a smile on our puss."

(in www.minyanville.com)