• Run, don't walk, to watch my video with Deborah Borchardt on the Twitter IPO. 

"One last thing."

-- Lt. Columbo

Here is a video I did with Deborah Borchardt from TheStreet on the Twitter IPO today.

• Thanks for reading my diary and enjoy your evening.

I have to duck out early to meet with an investor.

Thanks for reading my diary and enjoy your evening.

We have a lot to talk about tomorrow!

• Here are his thoughts.

The Lindsey Group's Peter Boockvar on the Fed decision:

As expected, the FOMC was a non event. They continue to refer to the economy as growing at a moderate pace and specifically took out references in the September statement about higher mortgage rates  and "the tightening of financial conditions observed in recent months." They seem to think a 2.5% 10 yr yield is tolerable vs the 2.75-3% that we saw just prior to the September meeting. The Fed seemed to be more concerned with the rapidity of the interest rate increase during the summer more so that the level and is likely breathing a big sigh of relief today even though rates are still well above the May lows. The only comment on inflation was "apart from fluctuation due to changes in energy prices, inflation has been running below the Committee's longer run objective, but longer term inflation expectations have remained stable." Excessive asset inflation is apparently not a concern and in fact is celebrated by them. Stocks used to be a discounting mechanism, no longer it seems.

Bottom line, data dependent they will be with the results of which still remaining a very subjective measure. This therefore gives us more cloudiness on what they are thinking in terms of when to slow down because if they didn't do it in September, who knows what objective will be hit for them to decide to change. For now though, we have to assume they still love QE, except Esther George who dissented again.

• I added to my QQQ short.

I added to my net short exposure on the Fed announcement.

I increased my PowerShares QQQ (QQQ) short.

• Break in!

No taper, but economic outlook a bit more optimistic.

Interestingly, took out rate commentary with only a 25-30 bps drop. Too much fine tuning?

Should hit both bonds and stocks (modestly).

• I purchased more shares at $72.30.

I paid $72.30 for more ProShares UltraShort 20+ Year Treasury (TBT) just now.

• Here are his musings at midday.

Midday musings from Sir Arthur Cashin:

Limp ADP payrolls data helps ten year yield but equities don't want to double down on yesterday's bull bet.

Run rate at 12:30 projects to NYSE final of 630/700 but likely to be boosted by post 2:15 flurry.

• I shorted more shares at $181.79.

Today, I have added to my IBM (IBM) short at $181.79.

• This is the fourth day in a row of Russell 2000 Index underperformance.

• Run, don't walk, to read Dan Freed's column on Bill Erbey and the Ocwen complex.  

Run, don't walk, to read this brilliant and comprehensive column on Bill Erbey and the Ocwen (OCN) complex by Dan Freed on our flaship site.

Anyone involved in Ocwen, Altisource Portfolio Solutions (ASPS), Home Loan Servicing Solutions (HLSS), Altisource Residential (RESI) or Altisource Asset Management (AAMC) should read Dan's tome.

• I would rather be short SPY.

I have received a number of inquiries from subscribers on whether iPath S&P 500 VIX Short-Term Futures ETN (VXX) should be purchased given the complacency that exists today.

My answer is no. I would rather be short SPDR S&P 500 ETF Trust (SPY) -- in fact, I currently am -- and what follows is my explanation.

Below is a VXX chart.

There is little question that the implied volatility of stocks is very low now, both on an absolute basis and relative to the last year. This reflects the consensus view that market risk is low and that the market has climbed consistent to new highs.

In recent periods, the implied volatility (VXX) has risen only when stocks have corrected meaningfully.

Small pullbacks have had a limited impact on the VXX. In the last week and a half, the realized volatility has been 6% with implied at 12%.

Seasonally, November-December tends to experience low realized volatility.

The VXX is based on VIX futures, which embed a very high forward premium and possess a large negative carry. As an example, the VIX is 13.41 but January forward VIX is 16.85. So if the market is flattish between now and January, the negative roll yield is rotten.

Additionally, the long VIX futures have a skew delta, so as the market rises toward higher strike prices, implied volatility falls.

This means if you are long VXX it is the equivalent of being short the stock market coupled with large negative carry.

Stay away from the product.

• If OER equals home prices, then the CPI should be up higher than 2.2%.

Riddle me this.

The BLS uses owners' equivalent rent to calculate housing costs, which is an important component on the Consumer Price Index.

Here is how it is calculated.

OER represents about 25% of CPI.

According to Case-Shiller (reported yesterday), national home prices rose by 12.8% year over year. (Note: The rate of gain was the largest since the housing bubble in February 2006.)

But OER (housing) is calculated to have risen by only about 2.2% (annualized) in the CPI today.

If OER equals home prices (which it should), the CPI would not be up 2.2% (annualized reported rate); it would be up 2.5% higher or up 4.5% (annualized!). Even if OER was calculated by actual rents, it would be much higher than the reported figure.

Call this more "screwflation of the middle class."

And a bunch of hogwash in calculating consumer price inflation.

• Let's take a look at the overnight and early-morning price action in the major asset classes.

The rundown:

• S&P futures are up 3;
• Nasdaq futures are up 14;
• Japan is up 1.2%;
• China Shanghai is up 1.4% -- SHIBOR concerns, which have dominated the last few days, seem to have faded into the background since yesterday's reverse repos from the People's Bank of China (and this despite the one-day repo rate gained 51 basis points, to 5.0781%, today, the highest level in three months);
• European markets are up;
• euro is up;
• crude is down $0.70;
• gold is up $4; and
• the 10-year U.S. note yields 2.49% (down 2 basis point day over day).

Worth mentioning:

• Stocks extended their strong October skein yesterday. The Russell 2000 lagged for the third consecutive day. Apple's (AAPL) shares collapsed late in the day. Bespoke noted that Apple's price action (on an earnings report day) was the worst from opening to close (in percentage terms) since January 2005. Jason Goepfert at SentimenTrader noted that the last time Apple's shares opened up 1% and closed down 2% on the same day that the SPDR S&P 500 ETF Trust (SPY) hit a yearly high was Oct. 11, 2007, which was at the peak of the bull market (hat tip Bill King, The King Report).
• I made a nice daytrade on the short side in Apple yesterday, which I covered. Additionally, I added to my Direxion Daily Small Cap Bear 3x Shares (TZA) and ProShares UltraShort Russell2000 (TWM) longs, expanded my PowerShares QQQ (QQQ) short and established an IBM (IBM) -- when all else fails on sales/profits, buy back! -- short on Tuesday.
• Markets are higher around the globe. Asia is particularly strong. I have not traded thus far in the premarket.
• To summarize my view, arguably, the global stock markets continue to be materially sourced in central bank policy rather than economic fundamentals. All traders and investors should be cognizant that the a market that has disconnected from economic fundamentals is vulnerable to a change in sentiment and/or an exogenous shock.
• According to technical mavens, Apple might have experienced an engulfing top. There is also a possible SPY-engulfing candlestick. 
• Bond yields (10-year) have hit the bottom of my projected range (2.5% to 2.85%). As mentioned previously, I took a long TBT position about a week ago, and I added to the long on Monday.
• Retail sales missed. 
• This morning, the CPI will be released. According to Case-Shiller, home prices rise by 12.8%. Yet the government reported last month that housing inflation only rose by 2.2% (owners' equivalent rent). Given the weighting of OER in consumer prices, if OER was reported as real home price inflation, the CPI would be 2.5% higher (more than double the reported figure).
• The World According to Peter Boockvar --
  
  As stocks continue to melt higher, I think Mr. Ben Bernanke should ring the opening bell of the NYSE tomorrow morning after today's FOMC meeting. Updating the scorecard, his $850b of asset purchases year to date has managed to generate $4.4T of equity market cap gains with only about $440b of nominal GDP growth. It's an amazing multiplier that deserves a cheer from Wall St. Main St on the other hand, not so much. The new found excitement post the end of the shutdown and debt ceiling news continues to stretch sentiment. II said Bulls rose another 3.1 pts to 52.60 after jumping 7.2 pts in the week before. This is the highest level since May. Bears fell another 2 pts to 16.5, the lowest since May '11. Those expecting a correction are at the smallest amount since early August.
  
  Another drop in mortgage rates sent refi applications up by 8.7% w/o/w to the most since August but purchase applications remain lackluster. After reaching their lowest level of the year two weeks ago, they rose just .7% last week and 2.3% this week. Also out today will be the ADP October jobs report and September CPI.
  
  Unemployment in Germany rose by 2k in October, about in line with the estimate of no change. Economic confidence in October for the EU rose to 97.8 from 96.9, .6 pts above the forecast and the highest since August '11. The euro is little changed in response but European markets continue higher following the US and Asia.

In the news:

• The New York Times -- "When Class Trumps Identity";  and "Meet the Makers" (Friedman).
• The Wall Street Journal -- "The Outrage Arrives"; "The ObamaCare Awakening."

Some possible economic and earnings catalysts:

• Eurozone confidence measures for October (6:00 a.m. EDT).
• U.S. CPI for September (8:30 a.m. EDT, +0.2% estimate, core +0.3% estimate).
• U.S. ADP employment report for October 8:15 a.m. EDT, (150,000 estimate).
• FOMC decision (2:00 p.m. EDT statement, no press conference).
• House/Senate budget conference expected to meet for the first time.
• Sebelius testimony on ObamaCare.
• Obama to speak in Boston on health care.
• ECB officials Weidmann and Asmussen speak.
• Analyst meetings -- ARMH, JBL, KR, MAT, TGT.
• Earnings before the open -- ADP, AIT, AMT, ARW, Barclays, BWA, CFR, CMCSA, DBD, EGN, Fiat, GM, GLW, GRMN, H, HES, HPY, JNY, LVLT, MSM, PCG, PX, S, Sanofi, SEE, SPW, TEL, WLT.
• Earnings after the close -- AHL, ALL, ARRS, ATML, CACI, CARB, CAVM, CSC, EQY, EXPE, FB, HOS, IPI, IRF, ISIL, JDSU, KRFT, LNC, MCHP, MET, MOH, MUR, PL, POWI, ROVI, SAM, SPWR, SWKS, TRN, V, WTW, XL.

• BlackRock's Larry Fink sees bubbly conditions emerging.

Yesterday, BlackRock's Larry Fink suggested that bubbles have emerged, that the bond markets are now overzealous and that the Fed needs to taper soon.

Fink noted the following:

• a near-record narrow spread between Treasuries and high-yield securities;
• a 2.5% 10-year U.S. Treasury yield vs. a normalized 4%-plus yield;
• near-zero short-term rates vs. an equilibrium level of 2.5%; and
• record-high financial conditions indices.

While not discussing stocks directly, it can be inferred that Fink thinks that stocks, too, might be overvalued.

As I have recently surmised, the U.S. stock market appears to have disconnected with the real economy, as economic data and corporate profits have taken backseat to quantitative easing.

The general expectation and growing consensus is that QE will continue to trump anything else unless a recession is entered, growth accelerates dramatically or valuations grow more bubbly.

Stay tuned.

• Walt Mossberg and Dave Pogue review the new iPad Air.

Here are Walt Mossberg's and Dave Pogue's reviews of Apple's (AAPL) new iPad Air.