Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
The Federal Reserve is on tap and you know what that means; at 2:00
p.m. ET, we'll get the most important stock market catalyst in the
world-until the next most important stock market catalyst arrives.
As recently discussed,
consumer confidence is at the highest level since July 2007. The
chart highlighted in that column is an eye-popper, although we're
careful not to data-mine in these parts (data-mining is the
technical manifestation of the
12 Cognitive Biases That Endanger Investors
Be that as it may, it's another piece of our ever-changing forward
puzzle, so get ready to jigsaw.
Some Old-School Random Thoughts, in No Particular
- I heard a fund manager on TV push "covered calls" as an
investment strategy yesterday. What I didn't hear him say was
that this strategy has
the same exact risk profile as selling naked
- Back in the day-23 years ago
when I was a pup
) desk-I had an institutional client who sold tens of thousands
of puts at "eighths" and "teenies." He had incredible returns for
a few years, right up until the time his account was toe-tagged
how important a role FASB 157 played
in the first phase of the financial crisis? I can't help but
think that the accounting rules between the US Treasury and the
Federal Reserve will play an equally important role in the
- There are two sides to that debate, and we touched on both of
Mark Dow: The Fed Is Much Smarter Than You
The US Stock Market: Raging Bull or Suspended
See them both as we map the probability spectrum.
) continue to lag the rest of the financials, down 11% and 6%
this week, respectively. Yesterday,
an analyst at Bernstein offered
, "I don't understand what the urgency is for Barclays to do a
rights issue, sell CoCo's and deleverage all at the same time.
Either the regulator has turned really risk-averse on investment
banks or there's something in tomorrow's earnings that no one
knows about yet."
- I concur, although we're not yet at the
nose-scrunch levels of yesteryear
If this one-off dynamic becomes a trend, however, we would be
wise to take notice. Once upon a time a sneeze overseas would
cause (at the very least) a stateside hiccup, but bulls would
argue that this is more of a sniffle, given overseas bourses
maintain a green hue.
Respect-but don't defer to-the price action,
- We had the right thought in
buying a little Facebook
) at $19-the 50% retracement of the entire corporate price
cycle-but suffered from the dreaded premature evacuation. Looking
forward, supply should emerge in and around the IPO price of $38
as longer-term holders have the opportunity to scratch on their
- Don't get me wrong; I "like" Facebook; it's become the de
facto photo album for my family. There is, however, always a
difference between a good company or product and a good stock, as
we've seen over and over and over again (think
- If you feel like we've been here before, you would be
correct. In particular, the
(INDEXSP:.INX) traded at this level on July 15, 16, 17, 24, 25,
26, 29, and 30. There has been a
of motion (alpha bits) under the top-line movement, or lack
thereof, so where you stand is indeed a function of where you
- Until S&P 1670 fails, the bulls will continue to lift
without a sweat, per the chart below.
- I'm trading less but working more, if that makes sense. Many
moons ago, back in Y2K when I penned
The Long Hard Road
over at TheStreet.com, we spoke of the financial equation taking
three times the effort to make half the coin. I think we're
there, which is constructive as we have to go through it to get
through it. What remains to be seen is what the "other side"
looks like when the dust finally settles.
- Today will be a tale of two tapes with 2:00 p.m. ET as a
toggle. Remember, the first move after the "rate announcement" is
typically the fast move.
- To that end, and unlike many other Fed days, I haven't heard
the pomp and circumstance surrounding this announcement as we
have others. Maybe something, maybe nothing, maybe summer, but
it's worth noting as we continue to find our way.