Wednesday, February 25, 2009

Readings

Sitting Cash

Safe Money?

Monday, February 23, 2009

Bad Guys, Bad Banks

Article

Geithner Bad Bank Alternative

Friday, February 20, 2009

Giant Bear Miscalculation

Indexes following the DJIA around on the downside as of mid session with every chart patternist drawing their line in the sand. Dow Theory folks, on the inter-connected weakness of the DJIA Transports and the DJIA itself, are declaring a new primary bear market. They should have read BaseOp2 post of October 07 to get short. Anyway, charts are photographs, not maps. The markets are at the end of process of complete capitulation as the dire forecasts make any arguments about any new comparative investment opportunitie as valuable as informational fliers being handed out on a street corner. The calls to raise cash by the sale of virtually all asset classes is starting to meet the spread leg of the G's backstops. These trades are in the process of finding homes in the inventory of wired investors laying the foundation for great wealth. While there is no question these markets will result in a landscape which will be altered for many years, never before have there been so many openings to ride guarantees against risk. A look at the corporate bond market is clear evidence the play has begun.

The remnants of things the general public had grown to love in order to keep pace with any type of wealth scenario will be somewhat altered. Unfortunately, real estate will not be the launching pad for the broader speculative elements of the economy. Speculative trading of all kind will not provide the added lift to stocks and commodities and will be weaker in form and numbers except for those with keen insight. Just like the bulls October of 2007, the bears are showing the ability to make a giant directional miscalculation.

Thursday, February 19, 2009

Wednesday, February 18, 2009

Public/Private Deals

Bailout starting to pay off for the G. That will only continue as the public/private deals start to unfold into the second quarter.

Articles: Treasury Pads Coffers In Bailout

Profit In Toxic Bank Assets

Tuesday, February 17, 2009

Bear Bubble

Indexes having to take it as market psychology reflecting the bear bubble. Except for some redemptions occurring, mostly a professional trade pushing prices lower. The overall trend is a flattening of the downtrend which is now over done.

Automakers Ford and Chrysler looking for more cash and to defend job losses they will get it.

Sunday, February 15, 2009

Brain Loss

Indexes continued lower into Friday as the hand wringing is reaching full force. Disappointment that the stimulus package has restrictions on executive bonuses for those institutions taking governmental tax proceeds is adding to the whining. Republicans endorse the concept that compensation restrictions may cause a 'brain drain' or a 'loss of talent' on Wall Street. Well considering those are very two things the Republicans have suffered from for decades it is no surprise they are empathetic with Wall Street and its own inability to show it ever had talent.

Look for more sorry ass action as the indexes look to pound in a futile fashion the bottom of the downtrend begun in October of 2007.

Thursday, February 12, 2009

Dead Bear

Traders have to size up the terrain constantly and come up with a plan of attack, whether in the pit, where I learned, or from behind the screen where so many of us now reside. In reviewing the action, I cannot help but think the red side of the card is done. There is just too little benefit to keep on pounding these indexes even given the most dire of downside predictions. Time to declare that the bear is done for awhile and maybe for a significant period of time. The bullside may not be as glamorous as the idiot markets of the past, but selling is going to pay lower wages.

Wednesday, February 11, 2009

Wall Street's Record

Markets did not like the Geithner plan on Tuesday, but that may be good news considering Wall Street has a great record of misreading actual market conditions. Here are some of the things the Wall Street thought were valid; Wall Street believed in the concepts such as....

(1) the shortage of stock theory, markets would continue to move higher as companies bought their own stock back leading to continually higher prices.

(2) technology would change the world and create a ' new economy '

(3) believed rating companies such as Moody and Standard and Poor's

(4) subscribed to the shills who produce the upside bias of cable business news stations

(5) that many of the impressive returns of the old Big Five were anything more than favorable marks of bad assets

(6) believed they really represented free markets.

Politically of coarse, they continued to promote vast expansion of governmental subsidisation of corporate America by slashing their taxes and ultimately accepting historic bale outs.

Tuesday, February 10, 2009

AIG Spells PIG

Article in Bloomberg about the trading going on at AIG.

Monday, February 9, 2009

Cash For Your Trash

The great free and efficient markets of conservative claim are all about being in position to be a part of privileged business welfare class. Bank/Brokerage, insurance companies, and other large corporate institutions have placed themselves at the front of the line for preferential treatment in nearly all realms of government subsidies decade after decade. The scope and scale of the taxpayer underwriting is described in this article in Bloomberg today.

Thursday, February 5, 2009

Bank Friends

What do the boys know about Monday's Geithner announcement?

As of the close since Jan 20 lows for the Big 3

GS Jan 20th low 59.13 today's close 92.85 +57%
JPM 17.70 24.54 +27.8%
MS 13.10 23.19 +77%

Pump and dump or In before the launch?

Hang On

The markets behave as if they were at an end of a rope with the interventionist crying to just hang on, help is coming. But worries continue over just what relief will appear in the Geithner presentation next week, which the markets will listen to after Friday's jobs number. The reshuffling of the new risk parameters continues to drag on the pricing of stocks, indexes, and options. The latter of which has taken the biggest beating in all the unwinding of the make believe world of the last eight years. For example, outstanding calls and puts have fallen 46% to 153 million, the lowest total in three years. Seems the math models used to calculate option values have blown up and now made pricing much more expensive. Most have never been any good anyway as LTCM proved. Now with declining hedge fund activity, less option pricing is being implemented.

Tuesday, February 3, 2009

Waiting For Details

Market selling abated on Tuesday as unknown intervention stimulus details remained largely a mystery. The Obama team led by Geithner of Treasury is compiling components which will be released next week. The job's number on Friday will be over shadowed by that news unless it is expressly bullish. Not that the new folks in Washington know anything either, but there have been enough strategic intervention goof ups to provide a learning curve for what will be an enriched tactical assault on the bear. If it works, the bulls can enjoy some needed relief. If it doesn't, then new lows will appear and the base building will begin all over again.

Monday, February 2, 2009

Nationalize Bank Trade

Bank stocks on Monday morning acting more and more as if it is just a matter of time before the troubled banks are nationalized. As a trader one tries to think ahead of the news event but obviously this one is a bit tough. My first reaction is that since the move has been so powerful on the downside, avoiding the short side on big intervention news is a must. Except for the particular bank stocks, who would be essentially be drilled or become worthless, a significant amount of selling would step back from the market. Depending on the elements of the overall nationalization and details of the remaining stabilization package, voids in ranges could create extreme risk profiles.

Reading

The Risk of Life Insurance

The Pill That Navigates