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Keith and I were meeting with a major potential client yesterday in Greenwich yesterday and after a quick stop at MacDonald’s (where we did a channel check for restaurant guru Howard Penney – Howard, the coffee still sucks) made it back to the office for the Fed’s announcement. As were anticipating, the Fed cut rates by 50 bps, which benefitted our short U.S. dollar position.

Even more interesting was, as Keith called it, the “projectile sell off” into the close yesterday, which we’ve outlined in the chart below. In our opinion, this type of capitulation selling is clearly a bullish indicator as hedge funds are forced to sell stocks to raise cash into month end. It was clearly a “I need liquidity!” type move and on the margin a bullish indicator in our notebooks.

While we would expect to see more action like this in the coming months, they are, obviously, more indicative of bottom than a top.

Daryl G. Jones
Managing Director