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Random Thoughts: The Path of Maximum Frustration

There are moments in life that make we stop and think.  Yesterday, we had one of them.

Minyanville’s Michael Comeau posted a Buzz yesterday that highlighted this talk with Michael Platt, owner of a $30 billion sidestep account BlueCrest Capital Management LLP. 

Among other luscious tidbits, Mr. Platt—who has positively killed it over a march of his career—offered that many banks in Europe are technically ruined (sound familiar?) and a conditions will worse in 2012 as a abroad debt predicament accelerates. 

His categorical account is radically in cash—safety plays such as U.S Treasuries and German bunds—given his concerns surrounding marketplace sensitivity and counterparty risk.  He is not shopping resources put adult for sale by banks that are perplexing to deleverage due to liquidity concerns. “I would not hold them with a boat pole,” he told Bloomberg, “the vital opportunities will come post-blowout.”

That perspective struck a chord as well, for apparent reasons. I’ve been of a view—and sojourn of a view—that we’ve got some tough sledding forward for a subsequent few years though a back-half of this decade will offer opportunities distinct any of us have ever seen in a lifetimes—the form of opportunities that we would be saying now if free-market capitalism was authorised to foreordain a healthy course.

So why, we ask, have we been some-more thinking than common given another explanation indicate that is unchanging with my possess suspicion routine (Paul Tudor Jones also offering one final month)? 

Simple—I want…no, we need to see a other side of a trade.  If this super-smart $30 billion chimpanzee is “all cash” and sidestep supports opposite a creation are in “risk off” mode after trailing a earnings of U.S Treasuries, what does that portend for a trail of limit frustration?

This is all food for thought, utterly obviously, though they are thoughts that need to take place.  The marketplace hasn’t been giveaway for a prolonged time and as we wrote in 2008, when Martial Law was declared, “the rising waves will lift all boats in front of a ideal charge that awaits.  It might have been pushed out on a setting though it’s there—and now it’s unequivocally mad.” 

I trust it’s still there and it’s still mad, though that’s a easy part; a worse trade is what happens between here and there.

Viewing a dew by a stair-step lens, a SP (potentially bullish) retreat conduct shoulders settlement stays in play above SP 1210 (the new lows) and will trigger, if and when, with a pierce by a 200-day relocating normal in and around SP 1260.  Should that occur, by a pristine technical lens, a fasten has room toward SP 1350.  It’s really many an if-then scenario, mind you, though again, it always pays to see both sides.

Random Thoughts:

• I entered currently with a tiny prolonged position in Research in Motion (RIMM), that messed a bed final night when they pushed out their pipeline, and a batch is removing crushed.  As a matter of (trading) course, we doubled down on my gamble and bought batch during $13.20, nonetheless this is a pristine trade and we will provide it accordingly.

• Tom Petty isn’t personification a East Coast during his 2012 World Tour?  That can usually meant one thing—ROAD TRIP!

• If we missed a Festivus recap, here it is!  If we missed a LOUIS XIII auction to advantage children’s financial education efforts—you didn’t, there are 4 some-more days, and here THAT is!

• Gun to head, we’ll trade aloft currently though conduct risk rather than follow reward, if we select to play that way.  We will, as always, refurbish a vibes in genuine time on a Buzz Banter (which has a dual week giveaway hearing for newbies).

• When a dirt settles on a commodity puke (forced offered by toe-tagged funds), we trust we’ll see a tributary in that space, with food and grains outperforming a metals (ex-palladium) and maybe energy.*

• The asterisk above is an critical one; unchanging with a wily trifecta we spoke of for years—societal acrimony, amicable disturbance and geopolitical conflict—the final proviso of that is clearly on lane to arrive.

• If and when that manifests, wanton has a massive opening risk higher, that is because I’m not betting on that until someone tells me that energetic “wins”: deflation or war.

• I’m told that a effects of a Japan trembler are really genuine and will have a 30-year half-life.

• China will continue their attempts to ease; they, along with each stateside policymaker, fear deflation some-more than inflation, though they will not let their banking appreciate.

• Brazil, while good during waxing, is differently unbalanced, with cronyism, crime and acceleration fighting for stick position.

• I’m told India is brief on spark and oil.

• The ECB and Germany can’t both win; let that one marinate for a while.

• I predict a “trimmer” European Union; it will be a unpleasant path, though a stronger, some-more one Europe will emerge.

• Has a Spanish housing marketplace been noted down yet?

• Mr. Sarkozy, suffer a holidays; they’ll prolly be your final while in office.

• Jeff Saut once told me–at MIM2 in Ojai–that H2O will be a many changed commodity.  we trust he’ll be scold with that view.

• Smile, friend; it could be a LOT worse and for many around a world, it already is.

• Enjoy a weekend, and we’ll see YOU on a other side of a claim respite!

R.P.

Twitter: @todd_harrison

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