Farrell: Hey Man, You're Making Me Nervous

The movie was "Man on Fire".

Made in 2004, starring Denzel Washington, playing Creasy, as a suicidal ex-assassin hired to bodyguard Dakota Fanning, Mark Anthony and Rahda Mitchell's daughter. Rahda Mitchell is very underrated as an actress and Marko just got the boot from J-Lo. I read People Magazine so I know these things. One of the greatest character actors ever, Christopher Walken, adds a lot of color as Denzel's friend.

The movie is violent but compelling.

To avenge what he thinks is Dakota's death in a kidnapping gone wrong, Creasy starts to hunt for the bad guys. He goes to a 'rave' dance club (I think I have that right) and blows away the first guy. The second bad dude is tied up with a gun to his head and he says "Hey man, you're making me nervous." I love the line. It doesn't help as he gets blown away also.

"Man on Fire"
Source: 20th Century Fox & Regency Enterprises
"Man on Fire"

Getting blown away was epidemic on Wall Street this week.

Actually, on every street. We spent a lot of time trying to figure where support and resistance levels for the market might be, so we don't need to repeat all of it. Except to say since we bounced off 1120 on the S&P two times, that level might be support near term. If the rally were to continue (it's Friday AM and who knows what evil lurks in the minds of traders as the afternoon approaches), I would be a seller. Testing 1120 is the best outcome for the next few weeks. A fall to a full 50% correction of the advance since March, 2009, or to 1020, is certainly possible.

It's a relief to turn to some fundamental issues for a moment. Rumors abounded about France losing its AAA rating and some French banks having trouble with funding. Last year, France's deficit to GDP was 7%. That is about the Euro average and nearly the same as Germany. France had budgeted a drop to 5.7% this year but with Q2 GDP being reported today as flat - 0% - that goal is unlikely to be met. But, as I mentioned, last years number was manageable, and the US has a 9%+ deficit to GDP.

Unreal to me is that public spending in France is 56% of GDP. But that is not new and the three rating agencies have reaffirmed their AAA opinions. French banks were rumored to be hitting a wall, but that seems to be more rumor than fact.

French banks have a large exposure to Europe's periphery, especially Greece, and they have relatively weak levels of capital compared to other European banks. They have started to write down the value of their bond holdings and are not nearly exposed as a year ago. Capital will have to be conserved/raised but if there were to be funding shortfalls, the ECB has unlimited lines open to the banks. And the Fed has dollar credit lines open to the ECB. Troubles, yes. Disaster, only if we self inflict it.

There was some conflicting news in the US Friday.

The University of Minnesota consumer confidence index tanked to 54.9 from 63.7 last month. The drop was most probably caused by the emotional reaction to the stock market. 54.9 is lower than the post-Lehman recession level of 55.3, and is the lowest mark since May, 1980. The survey captured the credit downgrade and the stock market decline, but not the recent rally. It could well be the point off which the survey will recover.

Retail sales rose .5%, which would indicate a more sanguine consumer. If you factor out gas sales, auto sales and building product sales, which the econ braniacs do, sales rose .3%. Not great but, if stable, would probably give us a 2% third quarter GDP. We have two months to go, but an ok start.

It would be incorrect to forecast a recession in the US - yet.

The Iowa straw poll is tomorrow. 60% of likely voters are either self-described evangelicals or bornagain Christians. I do not say this with any judgment at all. Just factually, the results may not mirror the overall electorate. If your candidate wins, you'll make a big deal of it. If he/she loses, it's irrelevant. In any event, I watched a news clip earlier of what I think was the state fair. They were deep frying Oreos! Get out while you can ! Who the heck ever thought of deep frying an Oreo?

I will be out Monday and Tuesday. Son Chris is taking me to Cooperstown to the baseball Hall of Fame. This is after I go to the Yankee game Saturday with son Vin. Son Joseph is trying to figure a way for us the go to Little Big Horn to see Custer National Park. It doesn't get better than that.

Vincent Farrell, Jr. is chief investment officer at Ticonderoga Securities and a regular contributor to CNBC.