100 Snoring Elephants

Fed fund futures indicate only a 42% probability of a 50-bp cut and a 58% chance of 25-bp. The quarter point is favored, but there is no clear indication here; something unusual this close to the announcement.

Either way, I'm expecting additionally to see a half-point cut in the discount rate. And given Bernanke's strong language from his last public appearance, coincident with the Fed recently and finally getting on the same page/agenda, the corresponding statement today should clearly indicate further accommodative posture going forward.

Then the market will react how the market wants to react. Amazing, huh?

I'm lying under a coconut tree, figuring only a real shake-up is going to wake me. Sleeping dogs are better left alone and sleeping under a coconut tree is only dangerous when things sway aggressively - so I figure I've got several hours to basically check-out, forget the daily stresses of fighting tape for a living, dream a little dream, etc.

First though, I'll go out on a coconut limb and tell it like I (expect to) see it: nothing is developing now in this market, in and of itself, to kill the generally favorable trend for stocks. Even if that trend is not going to last into 2008, a set-back here will be short-lived as far as this calendar-month goes.

The Fed follows the market and that interest rate market has long indicated rates well below current levels of the Fed. The market had the opportunity to break in November, it couldn't do more than bend and then we put in a bottom. This remains the 3rd and best year (historically) in the presidential cycle and the month remains December. We can entertain more provocative ideas in '08, but for now it is just a matter of when to press the issue on the long-side.

I'm long, but very light compared to recent days. I don't expect a serious sell-off, but a pullback stemming from this juncture is not at all out of the question; we'll see.

Also, I don't really care - I'm a fair weather fan. Perhaps this is the greatest short-side entry of the ages. I'm willing to be wrong.