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We Have a Tolstoy Derivative
Posted at 1:40 p.m. EST on Friday, Aug. 8, 2014
Don't bother me, I am building a thesis, a new thesis to try to order a senseless world where barbarians are storming Iraq and Vladimir Putin seems determined not to bow to the West's demands.
Why is a new thesis necessary? Consider today. I got up at 3:30 a.m. to check out the overnights and the futures were down big, the equivalent of probably about 120 Dow points, but then we got a monster and shockingly positive reversal.
That turn got me thinking? What's going on here? How can we get that turn and how do we turn it into a game plan? First, we have to accept that we are now in a world of Friday rumor. You have to go back to 1990 after Iraq invaded Kuwait to find a pattern similar to the one we are getting ever since the game-changing downing of MH-17. Back then, after that invasion, we heard many times that then Secretary of State James Baker was always back-channeling with Saddam Hussein about a peaceful resolution to that invasion. Every Friday we would get a rally as short sellers, who were minting money, feared that a deal could be arrived at that weekend. Then, when there was none, the market fell hard on Monday. We've got a Tolstoy derivative going here, War and Peace Friday, except this time at least it is not a U.S. showdown, even as we seem to have adopted it as our own.