Macro Players Getting Cut

What happened today? Take a step back and let's look at the big picture:

1) macro players have generally been short the dollar - long the euro - long commodities - long commodity stocks.

2) for the past week and a half, those macro players have been getting cut, including today.

The reasons: a) concerns about lower growth in the U.S. (which started with the weaker than expected Q1 GDP number that came out April 28) and China, b) a ton of uncertainty coming out of Europe, and c) higher margin requirements in some commodities. After a week and a half of cuts, the wounds are getting deeper and many are clearly unwinding their positions, or at the very least lightening up.

If this continues for another day or so, you can expect the usual rumors to surface that a commodity trading firm is blowing up.

3) the currency volatility is spilling into commodities and stocks.

4) commodities and commodity stocks are becoming out of favor; there is some sector rotation into healthcare and consumer goods.

More of my two cents on the Rajaratnam case:

I have heard many comments about the lack of aggressive activity from the SEC on the Rajaratnam case on our air today.

It's easy to take a swipe at the SEC, but I'm afraid the argument that they did not do enough to get Rajaratnam is just plain wrong. I can prove it: it's right in the Memorandum Opinion that District Judge Richard J. Howell issued on the Rajaratnam case on November 24, 2010, on page 2: "the SEC had been conducting its own insider trading investigation of Rajaratnam upon which the government's criminal investigation substantially relied."

Simply put: it was the SEC that uncovered Mr. Rajaratnam's crimes. Judge Howell goes on to say that the full extent of the wrongdoing would never have been found without wiretaps, since crimes took place by telephone. The SEC cannot wiretap people, which is why they brought in the criminal authorities.

Read the Opinion here.

Let's give the SEC some credit, at least on this case.

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