Fully Hedged

As a result of today's MSFT sale, I am pretty much flat risky assets on a net basis. Long positions in Cisco (CSCO) and ag commodities (RJA) are offset by a short position in SPX (SH).

A fully hedged position feels good ahead of the Fed's special two day soiree which is setting up as a binary event.

If the Fed injects another round of drugs and markets trip higher, then I hope to unload some of my CSCO exposure. If the Fed takes the narcotics away and markets head into withdrawal, then I might trim my short book. Either way, chances are that my risk will be pretty manageable.

My sense is that the Fed may in fact do nothing--with the justification that it is already propping up Euro banks. Why nothing from a central bank that loves to meddle? It is becoming politically less palatable to engage in interventionary behavior. Plus, the marginal bang for each interventionary buck is approaching the zero bound.

If the Fed does indeed stand pat, then domestic markets will likely fall thru the floor.

position in CSCO, RJA, SH