I trimmed a bit off my 2 major infrastructure names as well McDermott (MDR) and Foster Wheeler (FWLT) as they have bounced very strong from last week's lows when I rebuilt my positions, but again I plan to keep these as major positions as areas of growth are going to be far fewer as we move forward and the domestic economy slows (and I contend global) begins to slow. So companies with backlog visibility and pricing power will be even more valuable - hence the huge moves you see in large cap tech stocks of late.
I continue to look for places to cut to get the cash position closer to 10%, and so I can rebuild short ETF levels to more protective levels.
I'm trimming as we go into Fed Trick or Treat time - I just don't know what the next catalyst is going to be. 25 basis cut is now 'expected' - the Fed "now gets it" (which was an issue of doubt before the last cut) - and if they go 50 basis points people really need to start asking if everything is so happy go lucky why we had to cut 100 basis points 6 weeks. I remain cautious and hence I am taking profits as they are offered. Are we really going to go to record highs when 20% of the S&P500 (financials) are hitting new lows almost daily? These dogs will probably rally on the Fed anticipation which will be a great time to add to the UltraShort position against them. As I have been saying for months, more cockroaches await us in the future - now we will begin talking about "next quarter's write offs" and just how big they will be. I can't wait to hear the rejoicing when there is "only" a $2.5 billion write off from one of these banks. What are write offs anyway? Do overs? They don't count? Why can't I write off my mistakes....? Make them go poof and wash my hands of it all like our financial institutions appear to get away with. Blah.
And maybe it is just me, but the bears literally seem afraid of Uncle Ben. Fearing another 50 basis points crammed down their throats, and the bulls romping. They don't want to get burned yet again (once on the surprise 50 basis discount cut, then the double whammy 50/50 fed funds/discount cut 5 weeks ago) So if they are all positioned NOT to be burnt this time, what will fuel the 'expected' rise post Fed cut this time? Won't be nearly as many shorts to cover in panic this time since they are all so shell shocked from Uncle Ben's helicopter barrage of the past. Hence, why *this* time it might be a sell the news reaction. Another reason to be cautious. But that doesn't mean we cannot rally into the expectation.
Long Mosiac, McDermott, Foster Wheeler in fund; long Mosaic in personal account
