Tuesday, February 16, 2010

Cashin’s Comments AN ENCORE PRESENTATION 02.16.10

Cashin’s Comments

On this day (-1) in 1922, a 28 year old kid named Sam Hammett resigned from the
Pinkerton Detective Agency. The Pinkerton's were the most famous detective agency
in the world. Begun over 60 years earlier,
Alan Pinkerton's firm was the model for the
U.S. Secret Service. And, when Pinkerton took his tactics private, he chose as his logo
an open and possibly all-seeing eye. Thus the Public adopted the image of a nonpolice
detective as a "private eye."

Sam Hammett resigned from what he thought had become a bureaucratic form of
investigation. He liked free style - lone wolf. So he left the firm, dropped his first
name and began to write about the private eye he always dreamed he'd be.
So Sam Hammett became the writer Dashiel Hammett and invented Sam Spade (The
Maltese Falcon) as well as Nick Charles (The Thin Man) and set the tone of hard
boiled, hard drinking shamuses that would captivate Americans for half a century.

To celebrate, tell Vilma to park the gum, and tell the skirt on the phone that a partner
is a partner not a prom date. And if a messenger arrives with a newspaper-wrapped
dingus - send it, along with most of whatever else you have, to the I.R.S.

Traders could have used a detective to tell them what was going on yesterday last
week. The markets puzzled about what was the solution to the Greek question and
what was going on in China. That puzzling led to some volatile trading.

Following The Bouncing Buck Continues But Causes Confusion – Stocks began
Friday’s session deep in the hole. Pundits noted another move to tighten by China.
Of nearly equal importance was the noticeable lack of detail on the presumed Greek
“rescue package”. Traders began to wonder if there really was a plan.

Those two developments gave a boost to the dollar. That, in turn, sent gold and oil
sharply lower, matching the opening stock selloff.

Around 10:00, the greenback rally paused. Less threatened, stocks, gold and oil
responded by churning sideways. As noon approached, the dollar index came off the
highs and, in yet one more Pavlovian reaction, stocks, oil and gold cut their losses in

Then, around 1:00, the Dollar Index (DXY
) began to move up toward the morning
highs. As if a bell had rung – stocks, oil, and gold headed back down. Shortly after
2:00, the process was reversed again. In the final 45 minutes, they staged a minor
reversal of the previous reversal.

The dominance of the dollar was so evident that I was stunned from time to time to
see brokers getting calls from trading desks inquiring “what turned the market?”
Talk about not seeing the forest for the trees.

The Dow closed two-thirds off the lows. That allowed the first up week in the last
five. Not quite a resounding victory for the bulls, but a welcome respite at least.
The Week Ahead – Based upon published data, the watercooler wizards are
guessing that this week’s calendar may look something like this:
In the abbreviated week, it is likely that initial claims and housing data will get much
attention. If the FOMC minutes are
not too heavily laundered, they might tell us if Hoenig is a lone hawk.
Cocktail Napkin Charting –
In Friday’s Comments, we wrote that the napkins suggested support in the S&P was “way
down around 1058/1063”. The sharp opening selloff took the S&P to an intra-day low of 1062.97 before they circled the
wagons. For today, we’ll stick with the 1058/1063 support. Resistance looks like 1083/1088 and then 1093/1097.
China Watch – Over the weekend, there was some speculation that China is so concerned about a lending bubble and
potential inflation that they might allow (cause) their currency to appreciate. If so, authorities must be really concerned.

On another note, Andy Lees passed along a warning from China’s Agriculture University. They claim the over-use of nitrogen fertilizers has so poisoned the soil in South China that nothing will grow in it. The year of food shortages?

Greece And The Euro – The Euro is firming this morning helping gold, oil and stock futures.

The European ministers are meeting amid a growing sense that failure is not an option. Additionally, polls show that a majority of the Greek populace believe austerity measures are necessary and, likely, overdue. That offers some hope of reform without street backlash.

Sunspots Before My Eyes – Sunspot activity perked up markedly last week. In fact, the numbers returned to almost
normal levels. The sunspot numbers for February 4th through the 10th were: 11, 22, 30, 51, 71, 63 and 55. We haven’t
seen a number as large as 71 since spring of 2006.
To keep things in perspective, lets again review the average daily sunspot numbers in prior years. For the period from 1999
through 2009, the average daily sunspot numbers were 136.3; 173; 170.3; 176.6; 109.2; 68.6; 48.9; 26.1; 12.8; 4.7 and 5.
Let’s not put away that sweater just yet.

Consensus – It’s still all about the dollar (DXY). The above noted hopes for some resolution to the Greek crisis have gold, oil and stock futures all doing better. In 17 of the last 20 weeks, we’ve begun with a rally. Follow the bouncing buck.

Stay very, very nimble.

Trivia Corner
Answer - The only letter not used in spelling the names of all 50 states is "Q".
Today’s Question – Two term presidencies are not as common as you think. We’ve only had three back to back two termers once in our history. Who were they?
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1 comment:

  1. The Chinese tragedy is really much much worse and like the Fed there's no way they can get a grip on the credit bubble after their banks sit on over 40% bad loans. they can either collapse now or hyperinflate and collapse later.