In his typically anti-prosaic manner UBS' Art Cashin draws the parallels between Caesar's political alliances & apolitical dalliances and the refreshing honesty of Dallas Fed's Fisher with the hope of a new spirit of cooperation blossoming among European leaders and how we lost some belief yesterday afternoon.
From UBS' Art Cashin
On this day (+2) in 48 B.C., one of ancient Rome's most brilliant generals, a certain Pompey the Great landed on the shores of Egypt. (Mr. Cashin! Yes Sister? Please try to remember the general's name is pronounced Pom-pea; Pom-pay was the name of the city buried by the eruption of Vesuvius in 79 A.D. If you don't pay more attention, you'll never remember enough history to get out of the 6th grade, let alone enough to ever help you in business! Do you understand?? Yes Sister!!)
Anyway, flashbacks aside, Pompey landed in Egypt - kind of "on the run." As you may recall from earlier episodes (or from the 6th grade), Rome was going through a parliamentary crisis.
A popular reformer named Julius Caesar was busy dividing Gaul into three parts and sending reform suggestions to Rome. The Roman Parliament (pronounced "Senate") sent a nasty note (on parchment) to said Caesar - saying he had a lot of Gaul and ordering him to come home for a spanking and to please leave his army behind.
Said Caesar headed home and took the army with him (across the Rubicon don't-cha know!). Since that was considered bad form (pronounced formus stunkus), the Roman Senate called upon a former war hero for protection. The guy picked was Pompey the Great (page 6 in your program) - victor over Spanish Rebels (76 B.C.), over a certain "Spartacus" (72 B.C.) and over that early Hitler, King Mithridates (63 B.C.).
Despite this veteran's record, said Caesar made salad out of Pompey at the Battle of Pharsalus (beating him badly with an army half the size of Pompey's).
This led Pompey to flee to his last known ally, Ptolemy XIII (pronounced Friday the 13th), King of Egypt and the Nile Delta. Ptolemy XIII (age XV) was at war with his pudgy sister. So, with Ptolemy XIII needing no new enemies (i.e. said Caesar), Ptolemy had his old ally assassinated (i.e. Pompey, who was stabbed as he got off the boat).
Said Caesar sensed that such habits did not make Ptolemy XIII (age XV) a great candidate for new best friend. So, said Caesar threw in with the pudgy sister named Cleopatra. What happened next...I forget! (Sorry Sister!!) The markets grappled with political alliances again yesterday. Again they seemed hopeful that a new spirit of cooperation might be blossoming.
Early Celebration Runs Into A Little Afternoon Rain - Tuesday, U.S. stocks roared out of the box continuing the rally that began with Monday’s rumors that a European bailout deal was in the works. The rally was so good that it prompted my pal, Carl Quintanilla, to note (with a hint from his producer) that we might see the first back to back 200 point rallies since December 2008. (Hard to believe given all this whipsaw volatility.)
There was more than a little hint of short squeeze in the action (leadership, etc.). By mid-afternoon, the Dow was up over 325 points and bubbling. Then, around 2:30, the FT ran a headline suggesting that Germany wanted Greek bondholders to take a haircut steeper than 21%. That was enough to spook the buyers and bids began to disappear. By 3:40, they looked like they might keep going into negative territory. Just then a new wave of electronic buying showed up allowing them to close up about 146. Quite a ride indeed.
Well Said In Any Language - Dallas Fed President Richard Fisher is, in our opinion, not only one of the most outspoken Fed presidents, he is certainly one of the most enlightening.
As I have said before, his speech, “Connecting the Dots ……” (August 17, 2011) should be required reading, not just for those of us trying to follow the Fed, but also for every member of Congress and the Administration. He describes in simple, fully understandable and non-partisan language how government efforts have been ineffective and even counterproductive in aiding business and the economy. Pull it up and read it again.
Yesterday, Fisher stepped to the podium again. Here, his purpose was to explain and clarify why he dissented on Operation Twist. Unfortunately, he is hampered a bit by respecting the yet to be disclosed minutes of the meeting. Perhaps he will re-visit the topic more fully after the minutes are released.
He did begin yesterday’s speech with a really terrific analogy. As he started, a large photo was shown of a sign outside the Jan Mayen Arctic Weather Station. As the picture loomed above, Fisher explained as follows:
- Jan Mayen is a desolate volcanic island located about 600 miles west of Norway’s North Cape. It is the home of a meteorological and communications station manned in the harshest of winters by 17 hearty members of the Norwegian Armed Forces. If you read Tom Clancy’s Hunt for Red October, you would know it as “Loran-C,” a NATO tracking and transmissions station. In the video game Tomb Raider: Underworld, Lara Croft visits Jan Mayen in search of Thor’s Hammer, considered the most awesome of weapons in Norse mythology, capable of leveling mountains and performing the most heroic feats.
- My brother Mike recently visited this station on Jan Mayen. This is the sign that greeted him.
- In norsk, it reads as follows:
- “Theory is when you understand everything, but nothing works.”
- “Practice is when everything works, but nobody understands why.”
- “At this station, theory and practice are united, so nothing works and nobody understands why.”
- My wry brother implied that this about summed it up for monetary policy. Drawing on theory and practice, the 17 members of the Federal Open Market Committee (FOMC) have been working in the harshest economic environment to harness monetary theory and lessons learned from practice to revive the economy and job creation without forsaking our commitment to maintaining price stability. But the committee’s policy has yet to show evidence of working and nobody seems to quite understand why.
Let’s repeat that last sentence one more time for emphasis. “But the committee’s policy has yet to show evidence of working and nobody seems to quite understand why.”
That makes the frustration in the FOMC (and elsewhere in the government) fully palpable. It suggests that “we’re doing what the book says to do” but not getting the results the book suggested. The speech, like all Fisher speeches is worth a full read. But, like Mr. Fisher himself, you may come away with a few more questions than answers.
Cocktail Napkin Charting - There was no exogenous "event" yesterday (at least as far as we could see). The star-gazer division says the "event" folks may be off by 24 or 48 hours as some astronomical cycles shift today. The napkins see resistance in the S&P around 1183/1187, then 1194/1198 and 1204/1208. Support looks like 1162/1166 then 1148/1153 and 1139/1143. If the rally fails here, could set up a rounding top formation (hat tip - Jim Brown).
Rosh Hashanah - About 50 plus years ago, when I was starting out in Wall Street, I was lucky enough to be hired by a small, bright, aggressive firm where I learned unique things from some wonderful people. I thought they had hired me because I was sharp, inquisitive and hard working. The older salesman, however, used to joke that I was the "Shabbes Goy" - the only non-Jewish employee who could man the phones on religious holidays. It was a joke (I think) but it gave an altar boy from Jersey City a chance to learn a little Yiddish and a touch of cultural traditions.
The way I learned it, you sell on Rosh Hashanah and buy back on Yom Kippur. The thesis, I was told, was that you wished to be free (as much as possible) of the distraction of worldly goods during a period of reflection and self-appraisal.
Later as I studied market cycles and economic cycles, I was struck that the oft-repeated September/October weakness (crop cycle/money float) often corresponded to the Rosh Hashanah tradition. Is it cultural coincidence or cultural overlap? Who knows!
One last note on Rosh Hashanah. My late, lamented Irish mom, tended to see everything in a Celtic perspective - even Jewish New Years. She would say - "You better get up to the deli fast 'cause the Jewish people will be leaving early for ‘Rose of Shannon’." Anyway, if it is your holiday, "Leshona Toyva Tikoseyvu!"
Consensus - It’s all about Europe and "deal or no deal". Remain seated with your belt on until the ride comes to a complete stop. Stay very, very nimble.
Answer - The seven letter word was "Nowhere" which became "Now Here."
Today’s Question - The George S. Booksey retirement party ran past its allotted hour. President Bob agreed to keep the club open for a cash bar. At the end, the cash bar produced $3,895. If the late patrons numbered between 50 and 99, and they each paid the same amount in round dollars - how many were there and how much did each pay?