Risk On Monday Morning Briefing

Someone must have dug up some real dirt on Larry Summers as the sudden withdrawal from consideration as Fed chairman this weekend strikes me as a rather suspect. In a letter to President Obama, Mr Summers said any confirmation process for him was likely to be “acrimonious”. Just like yours evil truly Larry Summers has the means to afford five Dollar words but let’s think this one through for a second.

We should assume that his nomination had been in the works for months, if not years. He’s very close to Obama (like it or not) and pertinent discussions must have taken place on a regular basis. And now suddenly, out of the blue, he takes himself out of the race? Or rather – did Obama find himself cornered into a position to ask Summers to hand him his resignation? Actually I wouldn’t be surprised if Obama would have had this very letter in his possession from the get-go – that’s how the game is being played in Washington and Obama surely is no spring chicken.

So the real question to ask today is not why Larry pulled out of the ‘race’ (not that there were many in the running in the first place) – it all boils down to ‘cui bono’ – who benefits? I have little doubt that Summers wanted the job and Obama very much wanted to give to him. We’ll probably never know what really happened, but given Summer’s track record I am probably not going to shed much a tear. Unfortunately I cannot take credit for this one but big props to whoever is responsible – I owe you a case of bubbly. Now give me a second while I wipe that silly smirk off my face 😉

So futures are up in giddy anticipation of a more dovish chair(wo)man – as we all know the market loves easy money, no matter the long term consequences. I personally don’t care either way as my retirement plans do not involve cheap paper except the one I am going to be wiping my crusty behind with (but it just may have presidents printed on it). To stick with the theme – from a trading perspective we find ourselves up an unpopular creek without a paddle right now.

The volume abyss above 1694.5 has been filled with new participation but it’s not really giving us much to work with as we’re going to open the cash on a huge gap higher. The short term chart is almost useless so let’s look at the daily and the weekly for at least some context:

And unfortunately I’m completely striking out this morning – that 100-day BB is not exactly a brick wall and hasn’t been sufficiently tested yet. The weekly NLBL (relative to the new Z13 contract) on the spoos has been shredded and I expect the cash to follow suit. Nothing exciting on the FX front I would want to touch and ditto on the futures.

So my advise this morning is to sit back and just watch the tape for now. Some folks love playing high volatility reversals and we may get one early in the session. But IMO that’s playing Russian Roulette and technically we simply don’t have much to hang our hats on.

Quick update on gold for my intrepid subs:

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Cheers,